German Trade

Reopening the Silk Road to Iran

Tohid Tunnel Iran Borna MIr Fotolia
The Tohid Tunnel in Tehran. German firms hope for infrastructure project contracts.
  • Why it matters

    Why it matters

    Iran is seen as a guaranteed growth market for exporting countries after economic sanctions were lifted on Saturday. Germany in particular stands to benefit.

  • Facts


    • Daimler Trucks said Monday it had signed letters of intent for a joint venture to produce and sell vehicles in Iran.
    • In 2014, German firms sold goods worth some €2.4 billion ($2.6 billion) to Iran, about half the level of 2005.
    • Germany’s Chambers of Commerce and Industry said the volume could reach €10 billion soon.
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Wolfgang Bernhard wasted no time. Within hours of Saturday’s announcement that Western sanctions against Iran were finally being lifted, the head of Daimler’s truck division was sitting on a plane bound for Tehran.

Sunday is a working day in Iran, so two contracts were quickly signed. Soon Daimler, the parent company of Mercedes, will be making engines, axles and trucks in Iran again. “There’s great pent-up demand for commercial vehicles, especially trucks,” said Mr. Bernhard. Mercedes trucks had always had an “excellent reputation” in Iran.

For Daimler, the deals mark a return to well-known territory. It was making trucks in Iran until the embargo was imposed in 2010. Then the factory shut down, the machines were packed into crates and the employees sent home — but they kept on being paid by the Iranian government. Everyone was certain that the sanctions would be temporary, that the factory would quickly start up again. And that is exactly what’s about to happen.

Iran is one of the few guaranteed growth markets for 2016. While China’s boom is faltering and demand in the former growth markets Russia and Brazil has plummeted, the hopes of exporters around the world are pinned on Tehran after it was brought in from the cold. Harsh international trade sanctions were lifted on Saturday in return for the country’s hardline government honoring a deal to curb its nuclear ambitions.

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