Philip Hammond is the first British foreign secretary to visit Iran in 11 years. On Tuesday, November 29, 2011, the British government announced the closure of its embassy in Tehran and called its diplomats to London.
In a move to display improved ties between Iran and the UK, Hammond visited Tehran at the head of British politico-economic delegation on Sunday, August 23, to reopen the embassy following four years of severed diplomatic relations. Parallel with the British embassy in Tehran, the Iranian embassy in London was also reopened.
Analyzing the changing circumstances in Iran following the sanctions relief, UK's Daily Telegraph wrote: "UK companies are already falling behind French and German rivals to enter Iran as European governments launch charm offensives in Tehran."
In July, Martin Johnston, the Director General of the British Iranian Chamber of Commerce, described Tehran-London trade as growing, saying that the BICC will send a delegation of representatives to Iran for holding talks with Iranian officials.
Even though the volume of trade between Iran and the UK has never been very impressive in comparison with other European countries, and the latter has stood moderately among other 28 EU members in trade with Iran, trade practices with European countries, including the UK, has undergone a considerable downfall for Iran after the sanctions intensified on Tehran in a bid to curb its nuclear activities.
The Brits are well-informed that Iran's $400b oil and gas industry located in the world's energy heartland is incomparable with the past in relying on crude resources now that it enjoys a well-educated workforce and technological advancements which was made possible under the sanctions in the past decade.
Iran's GDP is estimated to cross $2,500b within the next ten years provided that the country returns to international markets and acquires high-level savvy in its projects.
This is far from reality for a country whose current economic growth rate is less than 8% annually, but given its economic prowess and potential GDP of more than $370b to $400b, a bright prospect can be envisaged for Iran's economic growth.
Oil, gas, refining and petrochemical industries, along with downstream sectors, would need $600b of investment for their renovation and development to enjoy high-tech growth. There is also much to do about energy consumption intensity in Iran. Its energy consumption is far from efficient which requires much work for its optimization.
To lower its energy intensity, Iran needs to renovate all the low-quality facilities, goods and equipment which it imported from China and India over the past years, and revise its energy infrastructures. All of this needs timely financing.
In addition to a miscellany of energy resources and mineral reserves, Iran enjoys 15 land and water borders and sits at the crossroads of Europe, the Near East, Central Asia and the Caucasus which gives it strategic and excellent geographical privileges; the Brits are quite aware of it!
Meanwhile, the UK, with a population of 64 million and GDP of $2,945b in 2014, has an unemployment rate of %6.2 and by 2014, its foreign debt amounted to $8,795b.
In 2014, exports fetched United Kingdom nearly $503b, while the country imported $802b worth of goods.
It can be inferred from these figures that the UK desperately needs to expand its economic relations at the international level, especially with Iran.
According to the figures released by Eurostat, the UK's imports from Iran in 2011 amounted to 420 million euros. This figure dropped dramatically in the years of severe sanctions to 39 million euros in 2014.
Likewise, before the sanctions intensified in 2011, British exports to Iran amounted to 203 million euros but dropped to 113 million euros in 2014.
Due to the low volume of trade between Iran and the UK over the last years, it can be postulated that the Brits have always preferred political relations with Iran over economic relations. This miscalculation has made to always lag behind competitors on both sides of transactions with Iran.
English companies, led by oil giants BP and Royal Dutch Shell, know that any delay in entering the lucrative market in Iran could inflict irreparable damages to their businesses.
This could be one reason why representatives of English companies including Deputy CEO of Shell accompanied British Foreign Secretary Philip Hammond in his meeting with Iranian Petroleum Minister Bijan Zangeneh in Tehran.
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