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Iran, South Korea Sign Record Deal

Iran has secured its biggest post credit line deal since the Joint Comprehensive Plan of Action, (JCPOA), Iran’s nuclear deal with world powers, in a deal with South Korea, local media have reported.

The $9.4 billion deal between South Korea’s Eximbank and Iranian banks was signed in Seoul on August 24.

Iranian media immediately celebrated the news of the deal as a great achievement for President Hassan Rouhani’s new administration.

“The $9.4 billion finance by the Koreans will break a big barrier. Those banks that were afraid of cooperating with Iran can now finance Iranian projects. It is expected that after the Korean banks, Japanese banks and later European banks will be more comfortable working with Iran,” the state news agency IRNA maintained.

In an article for the financial daily Jahan-e San’at, Iranian Central Bank Governor Valiollah Seif called the loan a sign of a “return of global trust in Iran’s banking system,” following problems created by sanctions for the country due to the suspension of international financing contracts.

Meanwhile, state-run Press TV said, “The celebratory tone on Saturday, mostly reflected in the pro-government media, also exposed the pressure Rouhani faces due to his administration’s nuclear agreement with the West and raising questions about its tangible results for the country.”

A spokesman for South Korea's export credit bank, contacted by AFP, said the deal would finance projects in Iran by companies from the Asian country.

"Under the agreement, Eximbank will provide an 8 billion euro ($9.4 billion) credit line for those banks so they can help finance various projects in Iran that are awarded to South Korean companies," said the bank spokesman.

However, according to Bloomberg, although the level of foreign investment post-JCPOA in Iran has been less than expected, the billion-dollar-contracts already signed with Iran will not allow the signatories to easily leave the agreement in future.

The latest report by the United Nations Conference on Trade and Development (UNCTAD) also verifies the fact that the flow of foreign investment in Iran has been slow.

According to the assessments made by UNCTAD’s experts, the volume of direct foreign investments in Iran for 2016 showed an increase and reached to $3.3 trillion. Nevertheless, UNCTAD reiterates the volume is still much less than at the height of sanctions imposed on Iran in 2011 and 2012.

France-based economic analyst Fereydoun Khavand says, “The low level of foreign investments in Iran clearly indicates that signing JCPOA, in spite of its significant capacities, has not been able to end Iranophobia at an international level.”

“Capital is cowardly, so to speak, and it does not go where there is no security; this agreement represents the existence of security in the Iranian economy,” Abbas Argoon, a member of the Tehran Chamber of Commerce, Industry, Mines and Agriculture told IRNA on August 26.

Based on the objectives of Iran’s sixth five-year development plan (2016-21), $65 billion of foreign investment should be absorbed in various sectors, said Akbar Qahremani, deputy director of the Organization for Investment Economic and Technical Assistance of Iran.