Alfa Laval was one of many Swedish companies that tried to re-enter the Iranian market after the Joint Comprehensive Plan of Action (JCPoA) deal was struck in 2015, but the industrial company has now announced that it is scrapping plans to expand in Iran. “Doing business in a country such as Iran is not straightforward. The banks are a critical part of the equation; the financial transactions are not simple and require a lot of work,” says Peter Torstensson, vice president of communication at Alfa Laval.
One of the problems is that sanctions are making it impossible to carry out US-dollar transactions.
Five deals worth SKr 2.9 billion were struck with Iranian partners during the Swedish delegation’s visit to Iran at the weekend. Scania, led by CEO Henrik Henriksson, signed two new agreements for a total of 1,350 buses. Henriksson described their relationship with Iranian partner, Mammut, as a way of “spreading the Swedish model”.
However the political risks for those investing in the country are high. The business climate is nervous, not least because of Donald Trump and American sanctions.
Karsten Stroyberg, who is responsible for Danske Bank in the region, the only bank apart from SEB that helps Swedish companies in Iran, says, “It is very complicated and very limited… You cannot have any Americans in the company, you cannot have any American dollars or companies in the agreement.”
Later this week Prime Minister Stefan Löfven will head Sweden’s third delegation to Iran in just over a year. Despite this, Sweden’s exports to Iran have actually fallen in the past year.
Business Sweden’s Magnus Almén says this is because “business takes time” and that many companies are starting from scratch after the easing of sanctions.
Nevertheless a number of companies, including Ericsson and AstraZeneca, stayed in Iran when sanctions bit hardest, and Mohsen Tavakoi, a management consultant and former Iran director for Ericsson, is convinced that those who chose to stay in 2012 made a wise decision in terms of business. “It was a sign of commitment to the country, not the government,” he says.
Companies in the Swedish delegation will include ABB, AstraZeneca, Danske Bank, Ericsson, Sandvik, Scania, SEB, Tetra Pak Iran, Volvo Cars, Volvo Group, Bombardier and the Wallenberg Foundation.