China has agreed to extend a credit line of $10 billion to Iran as the Islamic Republic struggles with economic recovery amid structural issues, US sanctions, and attempts to bring in foreign investment for key sectors.
China’s State-owned CITIC Group Corporation and a consortium of Iranian banks signed the agreement on Thursday for instructure projects in areas such as energy, the environment, transportation, and management of water resources. The deal is the largest between China and Iran since the signature of the July 2015 nuclear deal.
Valiollah Seif, the head of Iran’s Central Bank, said loans could be received as soon as October. He said the Bank had
shown “extensive flexibilities” toward CITIC in confirming the agreement, without elaborating what those flexibilities are.
A CITIC official had said in September 2016 that the consortium of 44 firms was considering $10 billion of financing, mostly in Iran’s steel, copper and coal projects.
The Rouhani Government has hailed economic recovery as an outcome of the nuclear agreement, implemented from January 2016. However, the restoration of foreign trade and investment links has been hindered both by the US sanctions, which threaten punishment of firms that deal with Iran, and by conflicts over ownership and management within the Iranian economy, including the large stake of the Revolutionary Guards.
Iran finally signed a $4.8 billion contract with France’s Total this summer for development of the South Pars gas field, and smaller deal have been confirmed with French automobile manufacturers. However, other showcase deals have struggled: Tehran has only taken delivery of a few of the almost 200 airplanes that it agreed to purchase from France’s Airbus and the US manufactuer Boeing.
Iranian Oil Minister Bijan Zanganeh has said that the energy sector alone needs $200 billion in investment for development.
