Mega-deals await as Iranian President starts European trip in Rome

Rome/Paris: Iranian President Hassan Rouhani flew to Italy on Monday at the start of his first official visit to Europe, looking to sign multi-billion dollar contracts to help to modernise Iran`s economy after years of crippling financial sanctions.

Heading a 120-strong delegation of Iranian business leaders and ministers, Rouhani will spend two days in Rome before flying to France on Wednesday, hoping to burnish Tehran`s international credentials at a time of turmoil across the Middle East.

While diplomacy will figure high on his agenda, trade ties are likely to dominate the headlines, with Iran announcing plans to buy more than 160 European planes, mainly from Airbus , on the eve of Rouhani`s departure.

Officials in Rome said Italian firms were set to sign deals worth up to 17 billion euros ($18.4 billion) over the next two days, including in the energy, infrastructure and steel sectors.

The deals will give a boost to Prime Minister Matteo Renzi, who is struggling to revive Italy`s underperforming economy.

A pragmatist elected in 2013, Rouhani championed a deal with world powers last year under which Iran curbed its disputed nuclear programme in return for the end of U.N., EU and some U.S. sanctions this month.

Other U.S. sanctions remain in place, however, and some Western companies such as banks are expected to take a cautious line towards deal-making with Iran in order to avoid falling foul of Washington.

Rouhani is anxious to prove to Iranians that the nuclear accord, contested by many hardliners, was worth it and will help ease their prolonged economic hardships. He also wants to promote Iran`s position as a major regional player and key to any solution to the long-running conflict in Syria.

During his visit to Italy, he will meet Renzi, Pope Francis and local business leaders. He is set to meet French President Francois Hollande in Paris on Thursday.

Rouhani had been expected in both countries last November, but cancelled the trips following an attack by Islamic State militants in Paris that killed 130 people.

Italian President Sergio Mattarella said at Rouhani`s first official engagement in Rome that the battle against Islamic State and fundamentalist extremists was "the number one threat facing the international community".

Greeted by an honour guard at the president`s Quirinale Palace, Rouhani smiled broadly for photographers before heading into a series of meetings.

Building trust

Europe was Iran`s largest trading partner before sanctions, with Italy and France seen as particularly close to Tehran. Both countries sent large trade delegations to Iran last year in the wake of the nuclear accord, laying the groundwork for tie-ups.

Among the deals being readied for Italy was a pipeline contract worth between $4 billion and $5 billion for oil services group Saipem , a source with knowledge of the matter said. Saipem was not immediately available for comment.

In addition, Italian steel firm Danieli will sign commercial agreements worth up to 5.7 billion euros with Iran, a company spokesman said. Infrastructure firm Condotte d`Acqua said it would sign deals worth up to 4 billion euros.

Italian business leaders, including the heads of oil firm Eni and carmaker Fiat Chrysler Automobiles , are due to attend a dinner for Rouhani on Monday, hosted by Renzi. At the request of the Iranians, no wine will be served. France refused the same request so there will be no state dinner in Paris.

While Italy was not involved in the nuclear talks, France was, and it took a hard line towards Tehran in the negotiations. It has also been outspoken in its condemnation of Iran`s support for Syrian President Bashar al-Assad and sceptical of the country`s other Middle East interventions.

"Trust needs to be built. It`s like love. It is only the proof of love that counts," said a senior French diplomat.

"On the nuclear accord the relationship is relaxed, but not on the other subjects. There is no change on the Iranian position for now on a number of regional issues ... so the idea (of the visit) is to open a new page," the diplomat said.

The boss of oil group Total , Patrick Pouyanne, is among top French executives who are expected to hold one-on-one meetings with Rouhani.

The trip to Europe comes as global diplomats are trying to arrange the first peace talks in two years to end the Syrian civil war. Shi`ite Muslim Iran is Assad`s strongest ally, while European countries back his mainly Sunni Muslim opponents.