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| Iran Khodro - Peugeot's joint venture partner in the Islamic Republic |
The Reuters headline could not be more clear: "France's PSA suspends joint ventures in Iran to avoid U.S. sanctions." French carmaker PSA Group, Europe's second largest automaker, has begun the process of halting its investments in the Islamic Republic of Iran in response to the withdrawal of the United States from the Joint Comprehensive Plan of Action (JCPOA).
The JCPOA was, in my opinion, a flawed agreement that traded sanctions relief for Iran in return for a delay in its quest to acquire a nuclear weapons capability. Since U.S. participation in the JCPOA was mandated by an executive order of former President Barack Obama without Senate ratification (required for international treaties), it was subject to revocation by President Donald Trump via the same mechanism.
Inherent in that withdrawal from the JCPOA is the restoration of American sanctions on Iran. They have come incrementally, targeting both individuals and organizations in the country. What has real teeth, however, are the "secondary" sanctions, those sanctions against individuals and organizations who choose to ignore U.S. sanctions and continue to do business with Iran. This is what is driving (pardon the pun) Peugeot to reassess its investments in Iran - fear of American sanctions on the company.
The message is quite clear - companies can do business with the United States and its $18.5 trillion economy, or with the Islamic Republic, whose gross domestic product is about the same as the state of Maryland. Companies who ignore the sanctions also risk being cut off from the U.S. financial system, the kiss of death in international business.
Peugeot follows other major businesses in suspending dealings with Iran, including Total, Siemens, Allianz, Maersk, BP, and GE. The sanctions will also affect proposed commercial aircraft sales to Iran by Boeing and Airbus.
On a lighter and more personal note. Peugeot has a long history with the Iranian automobile industry. In 2007, Peugeot's partner in Iran, Iran Khodro, partnered with a Syrian government-owned company (it is a socialist state, after all) to produce a car in a joint Syrian-Iranian auto factory in the environs of Damascus.
The car was a direct copy of the Iranian-built Samand, which was itself a derivative of the Peugeot 405. Since the car was mainly built for the domestic Syrian market, the name chosen for the car was the Sham.
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| Syrian President Bashar al-Asad at the wheel of a Sham automobile |
I wrote a short article about the joint venture when it was announced in 2007: What's in a name? - the Syrian-Iranian car company
Here is the article in its entirety.
A Syrian state-owned company and an Iranian public company are jointly manufacturing a car in Syria. The car is based on a Peugeot design.
Having lived in Syria for a few years, cars make an interesting issue. Prior to the mid-1990's, it was almost impossible to import a car as a private citizen. When restrictions were relaxed, cars imported into Syria carried a 100 percent duty. An indigenously produced car will certainly find a market and replace many of the antique cars kept running only by creative repairs by innovative Syrian mechanics.
Although it will not be a problem in Syria and it does not look like the car will be marketed in the English-speaking countries, they have decided to name the car with the old name for Syria and the Syrian dialect word for Damascus - the Sham automobile.
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| My Syrian driver's license |
I hope the car is well-built and easily repaired, since accidents are quite common, and the mandatory state-owned insurance coverage is basically worthless. My wife was in a fender-bender - when I translated the police report, the other driver, who was clearly at fault claimed that the accident was the will of Allah. The police accepted that and it was the official cause of the accident.
The Sham - going on sale next month. From the people who brought you Hizballah.
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