This update aims to provide a brief overview of key developments which have occurred in Iran during the past month and to highlight areas of future interest. In particular, the update covers notable developments in both the political arena and key economic sectors.

1. Political developments

A number of significant political events affecting Iran have taken place in the past month:

  • Elections – elections were held for both the Iranian Parliament (the Islamic Consultative Assembly) and the clerical Assembly of Experts on 26 February 2016. This was the first time that elections for the two bodies had taken place simultaneously. Voter turnout was moderate at 62% nationwide. The results saw conservatives take around 46% of the vote, reformists 37.5% and independents 16.5%. This represents sizeable gains for reformist and pro-government groups after the conservative movement had dominated previous elections. Significantly, all 30 of the seats available in Tehran were taken by reformist or pro-government candidates. 69 further seats will be determined in elections in April. The early results have been described as a boost for President Rouhani and his progressive policies, in particular the Joint Comprehensive Plan of Action ("JCPOA") nuclear disarmament deal with the US.
  • JCPOA compliance and US relations – The International Atomic Energy Agency ("IAEA") published its first report since the implementation of the JCPOA on 26 February 2016. The report confirmed that Iran was complying with the terms of the deal. However, Iran subsequently undertook two ballistic missile tests in early March, firing rockets a distance of 850 miles. This, coupled with the US house of representatives passing the Iran Terror Finance Transparency Act which is designed to prevent President Obama lifting certain sanctions under the JCPOA, has led to fresh concerns for the health of the improved relationship between the Iranian and US governments.
  • Russia lifts sanctions – on 11 March 2016, President Putin signed a decree lifting all former sanctions preventing Russian organisations from trading with Iran. However, simultaneously, the decree imposed fresh sanctions against trading with certain Iranian individuals and entities and also trading in nuclear materials in accordance with the recommendations of the UN Security Council. This brings Russia entirely into line with the UN's approach and has been regarded as a positive step as part of the settlement of the Iranian nuclear program.

2. Developments in key economic sectors


This month, Iran's oil production momentum faltered owing to slow uptake from foreign investors.

  • Increase in oil exportation slower than expected – Despite earlier claims from the Iranian government that Iran had succeeded in raising its exportation of crude oil by 400,000 bpd, the International Energy Agency ("IEA") reported on 11 March 2016 that current output in 2016 had only increased by 300,000 bpd. The IEA stated that the slow progress was due to: "the wariness of banks and ship owners to do business with Iran." Output currently stands at 1.4 million bpd, with a further increase of 150,000 bpd predicted in March. This remains low compared to Iran's pre-sanctions exports of 2.2 million bpd. In particular, European offtake has been lower than expected.


Over the last month, significant activity in Iran's mining sector continued with a number of deals following the US$10 billion deal with Japan announced on 12 February 2016, and further deals with European companies worth over US$6 billion agreed at the end of January.

  • Mittal Steel sign €1 billion iron mining and processing deal – on 8 March 2016, it was reported that Mittal Steel signed a deal, worth apparently around €1 billion, with Mahan Industries and Mines Development Company to establish iron mining and processing facilities in the southern province of Kerman.
  • Societe Generale to work with Iranian mining industry – the head of the Middle East region at Societe Generale, Richad Sounderdjee, announced at the beginning of March 2016 that the bank wanted to co-operate with Iran's mining industries, stating: "the sector has much potential for development and we hope to start cooperation as soon as possible".


  • Siemens signs energy agreement with MAPNA – Siemens, after its $1.6 billion rail infrastructure deal in January, announced at the beginning of March 2016 that it had signed an extensive energy agreement with MAPNA, an Iranian power and infrastructure group with the third highest turnover in the country, to help modernise Iran's power infrastructure. The initial deal will involve Siemens providing around 20 gas turbines over the course of a decade, starting immediately with two generators for a power plant in Bandar Abbas in the southern region of Dogerdan.  The agreement is hoped to eventually involve wholesale upgrades to Iran's overall power and electricity system.  The eventual value of the agreement is not yet known but is likely to be substantial. Siemens CEO, Joe Kaeser, was quoted as saying that Siemens would: "help the Iranian people develop a sustainable, affordable and modern electrification system to support the country’s economic and social development."


  • Iran invites Boeing for talks – the US government granted Boeing a licence to hold talks with Iranian airlines on 17 February 2016. A further licence will be required in order to actually make sales but both sides have made public statements in relation to a possible agreement. Iranian transport minister, Abbas Akhondi, was reported as stating that Iran was interested in purchasing at least 100 planes from Boeing (a similar number to the Airbus deal) if planned talks progress well. Should a deal of this size occur alongside the Airbus deal, Iran would be quadrupling its commercial air fleet within a decade.


This month, Iran's banking sector showed signs of positive activity after a lack of movement in the immediate aftermath of the lifting of sanctions, possibly due to concerns around ongoing US sanctions.

  • Network International in firm talks with Iranian banks – Reuters reported on 6 March 2016 that the CEO of Network International ("NI"), the largest payments processor in the Middle East and Africa, has stated NI could begin working with certain major Iranian banks by the end of the year. Bhairav Trivedi stated that NI had held major talks with a number of the largest banks in Iran about the possibility of NI processing debit, credit and other transactions in Iran.
  • Iran courts European banks – The Iran Central Bank has publicly encouraged European banks to re-  establish links with Iran, noting that it has "asked the International Monetary Fund to review our regulations so other countries' banks feel reassured". The results of the review are not expected to be published until 2018 so it remains to be seen whether European banks will gain confidence whilst US sanctions remain in place. A number of European banks have expressed their interest, such as Raiffeisen Bank International, and European export credit agencies ("ECAs") are continuing to open-up to business in Iran - the Italian ECA (SACE) helped to fund the Airbus deal last month and the UK and Spanish ECAs (UKEF and CESCE respectively) have also announced that they are ready to support companies doing business in Iran.
  • The Export-Import Bank of China ("EXIM") agrees to fund multiple projects – EXIM has reportedly  entered into an agreement with the Iranian bank, Bank Tejarat, to jointly fund a number of Chinese projects in Iran. This comes on top of an earlier agreement in January in which EXIM agreed to provide funding for a high- speed rail project between Tehran and Mashhad (see further details below).


This month, diplomatic and economic interest in Iran has continued following the removal of sanctions and more countries have visibly geared up efforts to take advantage of the opportunities offered by Iran.

  • Oceania – Iranian Foreign Minister Mohammad Javad Zarif has undertaken an 11-day diplomatic tour of South-East Asia and Oceania, most recently visiting New Zealand and moving on to Australia on 14 March 2016. The results of the tour have yet to be announced but ministers from both Oceanian countries have expressed positive hopes of renewed trade. Prior to sanctions imposed in 2006, Iran had been New Zealand's fifth largest export market, and before Australia imposed sanctions in 2008 annual exports to Iran peaked at US$1 billion.
  • China – Following January's “Joint Statement on Comprehensive Strategic Partnership” in which China and Iran agreed to increase bilateral trade by more than 10 times to US$600 billion in the next decade, a number of Chinese firms are announcing that they are on the cusp of significant deals in Iran. According to Reuters:
    • state-run China National Transportation Equipment & Engineering Co Ltd is in the process of finalising a US$3 billion rail project to connect Tehran with Mashhad, in North-East Iran
    • with EXIM reportedly funding 85% of the cost; and – state-run Dalian Shipbuilding Industry Co. is reportedly in talks in relation to upgrading Iran's container ships and oil tankers in a deal which could be worth up to US$12 billion

Neither deal has been confirmed at this stage.

  • Vietnam – the Vietnamese president, along with a 200-member delegation (including numerous government ministers), arrived in Tehran on 13 March 2016 to meet with President Rouhani and Ayatollah Khomeini seeking close economic and diplomatic ties with Iran. A trade forum between the delegation and the Iran Chamber of Commerce, Industries, Mines, and Agriculture is also being organised which could well result in significantly increased bilateral investment in the near future.