Iran, Poland have potential to benefit from complementary markets envoy

Iran, Poland have potential to benefit from complementary markets: envoy

Ambassador of the Republic of Poland to the Islamic Republic of Iran, Jaroslaw Marcin Domanski believes that Iran and Poland have complementary markets and strong potentials to strengthen mutual economic relations.

Making the remarks in an interview with the Tehran Times on May 23, the ambassador underlined all European countries’ willingness, including Poland’s, to reactivate ‘blocking statute’- a 1996 law that would prohibit European companies from complying with U.S. sanctions on Iran. Domanski, in addition, voiced Polish companies’ readiness for exporting their products to Iran as well as making investments in the Asian country.

Following is the full text of the interview:

Q: What is the Polish Government’s plan tosupport its firms in Iran, especially under the current condition that the U.S. has withdrawn from Iran’s deal (known as the JCPOA) and EU seeks to reactivate ‘blocking statute’ against U.S. sanctions on Iran for European firms?

A: First of all, let me tell you that there is a full unity within the EU on preserving the JCPOA. Last week we had a very important summit in Sofia, Bulgaria, the summit of the heads of states and governments of all the 28 member states of the EU. During the summit, the Iranian issue and the JCPOA was very high in the agenda and all the EU Member States unanimously agreed on the importance of JCPOA, on doing all possible to preserve it and on the measures which the EU is to adopt to protect European companies and preserve the full implementation of the JCPOA if Iran implements its commitments. So far, 10 reports have been released by the International Atomic Energy Agency and according to these reports it is clear that Iran has fulfilled its commitments, therefore, the EU agreed that we will do all possible to fulfill ours. In this respect certain measures have been promised, not yet adopted, since the process takes time and as you correctly mentioned the blocking statue is one of them. According to the political declaration of the summit, to which Poland fully subscribes, the formal process to activate the blocking statute has been launched and the aim is to have that measure in practice before 6 August, when the first batch of the U.S. sanctions will take effect.

This will require some work at the EU level in Brussels but probably it will also require some legislative work at the national level which means that all countries, including mine, will have to do some legislative legal work in order to make this blocking statue activated and operational. The second measure which we agreed on is to launch the formal process to remove obstacles for the European Investment Bank to finance activities outside the EU-including European investments in Iran. The first steps have been made and the situation looks promising, the next more technical ones are scheduled to be made by 6 August. There is a strong political will and the decision by the 28 head of states and governments to activate this mechanism, which could also provide certain guarantees for the European companies investing in Iran under the EIB financing. The third adopted element included the measures in sectorial cooperation such as energy, including development of renewable energy as well as energy efficiency in Iran, also transfer of innovations.

Another sector where Iran could expect the EU assistance is the sector of small and medium-sized companies….. Another important issue on which we will be working is related to guaranteeing the bank transfers, also for oil but not exclusively.  So the heads of states and governments mandated the institutions to certain extent its member states to look for a possibility to ensure stable bank transfers and to find a solution which could involve the European Central Bank which could co-operate with the Central Bank of Iran. You know this situation requires non-standard solutions. We have not recently encountered such a complicated situation. So, certain measures which we are developing are willing to implement have not yet been implemented in the past.  But there is a strong will to go forward.

Q: Receiving a shipment of 130,000 tons of Iranian crude oil at the Baltic seaport of Gdansk in mid-April, Poland’s biggest oil refiner PKN Orlen said in a statement: “Delivery from Iran has become a fact. Oil from the Middle East gives us many opportunities. First of all it enables diversification of delivery directions and increases the energy security of the state.” Now, what is Poland’s plan for more purchases of oil from Iran?

A: We know that what is important for Iran is to ensure the export of oil and we are fully committed, here, including my country, to continue importing the Iranian oil.  We just need, given the new circumstances, to find a mechanism which will be protecting our companies on one hand, and would ensure the banking transfers on the other. Last but not least, we would also have to ensure the security of the crude transport.

Q: Last October, the Exports Guarantee Fund of Iran (EGFI) and Poland’s Exports Credit Insurance Corporation Joint Stock Company (KUKE) signed an agreement to bolster banking and insurance cooperation. What achievements have the two sides gained since then?

A: In the framework of this agreement two significant contracts were signed based on that instrument which meant that Iranian companies could apply for credits from one Polish bank. Unfortunately they have not come into fruition, as in both cases Iranian companies did not fulfill the requirements of the banks. These are significant projects but I cannot disclose more details since the negotiations between these companies are conducted under non- disclosure agreements.  I can only tell you that we hope it’s not over and we do believe that these two agreements will be implemented.

Q: In addition to the sectors you named i.e. energy, development of energy efficiency in Iran, development of renewable energy, technologies, development and help in the sector of small and medium-sized enterprises, in which fields Iran and Poland can boost their bilateral trade?

A: I think we have very complementary markets and a strong potential. Let me tell you that Poland is almost 40-million-people country which is very strong and competitive also, given quality price-parity in certain sectors and we could certainly develop our presence in these sectors in Iran. But first of all, on the Iranian side, of course, oil and gas. It perfectly matches our country’ strategic policy on energy diversification. We are currently over dependent on the supplies from one country, and the clear policy of our leadership is to change this balance. Iran oil can be easily processed in the Polish refineries and is a perfect product for us, on the one hand. We are also interested to share our experience with Iran in heavy industries sector such as mining of coal and cooper.

We are already quite present in the Iranian market in the mining technology sector with the Polish FAMUR Group, which supplies a substantial share of the equipment to the Iranian mining sector. We also have a very strong position in the copper industry and technology. Poland is one of the biggest producers of copper in the world and we have a very advanced experience in the sector. We are also thinking about agriculture and our experience in this sector would be very important and also in terms of quality and price parity it would be quite attractive for the Iranians.

Pharmaceutical products, medical equipment, which is again of high quality and comes in reasonable prices,  as well as cosmetics, new technologies, renewable energies, water management, are the sectors in which Poland is very strong and competitive… and here is a very important message I want to pass: all Polish products meet exactly the same standards as the French, Italian, German or any other European products should meet in order to access the EU Single Market but they quite often are cheaper so here we are much more competitive. So, we would encourage Iranian customers to buy Polish products as they are of a good quality and respect high EU standards.

Q: Besides the banking transactions, what other impediments do see on the way of expanding our bilateral trade?

A: The main obstacles are certainly related to the fact that Iran is a big, interesting, but still unknown market to our entrepreneurs.  I think more time is needed to get familiar with it. Let me tell you that Polish businessmen, during the last 20 years, have been mostly focused on the EU markets, which are relatively easy, there are no problems with standards, borders, taxes, customs, banking transfers, and they have benefited from these markets and have developed their businesses. The time has come to look broader. Also including the investments, we are always talking about investing in Iran and there are some companies which would be ready to invest here.

I know that there is a trend in Iran which was launched by the Supreme Leader to foster the domestic products but we are also able to develop these products using our advanced technologies here in Iran. But this new environment for the Polish companies is sometimes a little bit too complicated and looks difficult. So, I think more time is needed, some more assistance from Polish Trade Office in Tehran (which opened last year) but also a substantial help from the Iranian partners is needed. Then the knowledge of the local reality. It’s a very specific market which is different from the EU markets. A little bit of time is needed to explore it better and the Iranian business partners will be perfect facilitators for the Polish companies in this regard.

Q: Is the Polish government going to offer any incentive package to the Polish firms which are aimed at cooperating with Iran?

A: This is something which we will have to be thinking in line with these declarations and the new circumstances. We had the state-run Polish bank, BGK, which was able to provide credit lines but given current general circumstances, the situation is unclear. What we expect and what the EU expects from us and what our leaders had agreed upon is to elaborate the new instruments, including at the member states level, not only at Brussels level, before the 6th of August we will be thinking on the concrete instruments and measures which we might apply given the new circumstances. So, I will be able to tell you more about this in near future.