PARIS (Reuters) -- PSA/Peugeot-Citroen's talks on a manufacturing venture with Iran's biggest carmaker are being undermined by anti-French sentiment in the country, CEO Carlos Tavares said.
PSA has "developed proposals" with its long-time partner Iran Khodro, Tavares said, but progress is being hindered by a backlash over France's tough line during the talks preceding a July 14 breakthrough deal under which sanctions will be lifted in return for limits on Iranian nuclear activities.
"The negotiations are taking place in a climate that is fairly hostile to France, because the country's role during the period under sanctions was not appreciated," Tavares said today.
Iran Khodro said the French carmaker must account for its decision in 2011 to exit Iran under sanctions before signing any new deals, state-owned Press TV said.
Hashem Yekke-Zare, managing director of Iran Khodro, said the firm was in discussions with several companies and suggested that Renault, another French firm, could replace PSA as Iran Khodro's main partner.
PSA and Renault both enjoyed a strong position in the Iranian market before international sanctions on Tehran were introduced in 2011, forcing them to exit.
Tavares said PSA is still in discussions with other potential Iranian partners. Earlier this month, PSA said it aimed to establish local car production with its partner after sanctions lift, with a view to eventually exporting vehicles to other markets.
French Foreign Minister Laurent Fabius arrived in Tehran for a one-day visit on Wednesday. He sought to smooth over any strains in the relationship created by France's hard line during negotiations on the nuclear agreement. Fabius said that carmaking, agriculture and the environment would be a particular focus of a high-ranking French economic and business delegation due to visit Iran in September.
Some Iranian hardliners want to block French business deals because of France's close relationship with Gulf Arab governments that are locked in a regional power struggle with Tehran as well as its stance during the nuclear negotiations.
