Rouhani vows to privatize Iran’s car industry

Iran’s President Hassan Rouhani said on Tuesday that the privatization of the country’s car industry is a key mission in the economic agenda of his administration – an announcement already seen by analysts as a sign that Iran is already preparing to open up its economy to world markets.

President Rouhani in his remarks emphasized that people should be happy about the quality of cars in Iran, adding that the only way for this to happen is to have private sector corporations produce cars.

“The satisfaction of people is of special importance to the administration. To close the doors and to produce cars and impose them on the people and tell them that this is the only thing you can choose is not an acceptable logic to the administration,” he told a conference of auto producers.

“Everyone should struggle for the satisfaction of the people and we need to take serious steps toward this direction in the car industry. Iran’s car industry should be completely privatized and become competitive.”

Iran is the Middle East’s largest auto market with a population of 80 million who bought 1.1 million cars in 2014.The automobile industry is seen as Iran’s biggest non-oil sector, accounting for nearly 10% of the country’s gross domestic product (GDP). Iran Khodro and SAIPA companies account for more than 90 percent of the total domestic production in Iran.

Nevertheless, almost 17,000 people die in road crashes each year which many blame on the poor safety standards of cars produced by the country.

Rouhani further emphasized that his administration has over the past few years strongly supported the state corporations that produce cars by devising heavy tariffs on imports of cars. He specifically mentioned a plan to provide loans to people as another key step that his administration had taken to encourage consumers to purchase cars.

However, the president emphasized that the administration's abilities to support the state car producers are limited and cannot continue eternally.

FOREIGN PARTNERSHIP

Rouhani further emphasized that Iran welcomes the formation of joint ventures between Iranian and international automakers, stressing that such ventures should not only satisfy the domestic market but also answer the needs of the regional markets.

He added that partnerships with international carmakers offer a quick way to improve the industry's technology and safety.

"There is a shortcut... We have to start partnerships with prominent world carmakers. We will reach to the optimum point in technology, protecting the environment, saving energy and safety," AP quoted Rouhani as saying.

He further emphasized that partnerships with foreign carmakers will serve the best interests of all sides, and increasing the competitiveness of the local market can only help strengthen the industry.

"The government will never be a good manager in industry, including the car industry. The sector should be completely privatized and competitive," he said. "The partnership will drive us ahead."

During his landmark visit to France in January, Rouhani oversaw the signing of a key agreement between the French carmaker PSA Peugeot Citroën and Iran Khodro to produce cars in Iran.

The deal whose value is estimated to be €400 million envisages the production of 200,000 cars a year in Iran.

Discussions over similar projects have also been going on between Iran and other global automakers including Renault (France), Fiat (Italy), Suzuki (Japan) and Daimler (Germany).

Zarif to meet Kerry amid Iran's frustration

Foreign Minister Mohammad Javad Zarif has called on Washington to stop meddling in Iran’s relations with other countries ahead of a meeting with his US counterpart.

Zarif is expected to meet John Kerry in New York on Tuesday before the US secretary of state flies to Saudi Arabia to join President Barack Obama at a summit with Persian Gulf Arab leaders.

The meeting follows complaints from top Iranian officials that the US is not fulfilling its part of a nuclear agreement reached in July.

Zarif said Monday he would urge Washington to “seriously” live up to its side of the deal and stop interfering in Iran’s banking and financial ties with other states.

Iran's top diplomat is in New York to attend a UN debate on Sustainable Development Goals and attend the signing ceremony of the Paris climate change agreement.

Zarif said the visit is "a good opportunity to prevent groups hostile to Iran from implementing their Iranophobic projects" after the nuclear deal.

“It is time to rebuild trust with the institutions which suffered losses from their links with Iran in the past. They have to be given assurances that they will not suffer from such links in the future."

The minister said there is no hurdle on the way of healthy economic ties between Iran and the US but Tehran does not have plans to forge such relations for now.

Ahead of his visit, Zarif said he would ask the United States to ease restrictions on non-American banks doing business with the Islamic Republic.

“Iran will definitely put pressure on the United States to pave the way for the cooperation of non-American banks with Iran,” he said on Saturday.

“The other party, particularly the United States, is required to implement its commitments in banking cooperation,” he said at a Tehran news conference with visiting EU foreign policy chief Federica Mogherini.

On Friday, Governor of Iran's Central Bank Valiollah Seif hit out at the US and the EU for failing to honor the nuclear agreement by keeping Iran locked out of the international financial system.

US administration officials have ruled out granting Iran access to the US financial system or direct access to the dollar.

In a speech at the US Council on Foreign Relations, Seif complained that “almost nothing” has been done to reintegrate Iran into the global economy since implementation of the nuclear deal in January.

“Unless serious efforts are made by our partners, in my view, they have not honored their obligations,” he said.

Seif warned that failure to do more to integrate Iranian banks into the global economy could jeopardize the nuclear agreement.

Effective implementation of the agreement must be done “in such a way that Iran’s economic and business activities will be facilitated,” he said. Otherwise, the deal “breaks up on its own terms.”