While young Iranians take to the streets calling for change, many European companies active in Iran are quietly hoping the country resolves the crisis soon.
Investors say their greatest fear is that neither the Iranian authorities nor the opposition back down over the contested June 12 election, potentially leading to a violent suppression of protests -- and more pressure on foreign businesses to stop trading with Iran.
Most of these companies, aware that their investments in Iran are politically contentious, decline to talk openly about Iranian politics.
A number of business officials in Germany and Iran's other main trading partners in the European Union said they believe Mahmoud Ahmadinejad will remain president -- peacefully or after a bloody crackdown on protesters.
"Destabilization and shooting would lead to much more political pressure" on companies to stop trading with Iran, said a German business official.
A new, reformist government might usher in a thaw in relations with the West and open up more of the economy to foreign capital in the long term.
But in the shorter term, changes of administration can mean uncertainty for existing investments as new officials might cancel or change business contracts. "Ironically an Ahmadinejad victory means more short-term to medium-term stability," says Amir Cyrus Razzaghi, head of Ara Enterprise, a Tehran-based business consultancy that advises foreign companies.
European businesses have long done business in Iran, even though some governments have tried to curb activity there.
The German government has been trying to discourage firms from trading with Iran through verbal appeals and by scaling down export-credit guarantees by more than 90% since 2004. It hasn't had much effect: German exports to Iran have declined only 10% since their peak of €4.4 billion ($6.11 billion) in 2005.
"Present political complications have no effect on our business dealings," says Helene Rang, a consultant and chief executive of the Near and Middle East Association, a club for German companies that trade with the region.
Among the German companies doing business in Iran is Siemens AG, which sells Iran equipment for its energy and medical sectors. Siemens declined to comment on the political situation.
Italy, whose government hasn't stood in the way of investment in Iran, is its largest European trading partner, with €2.2 billion in exports to Iran and €3.9 billion in imports last year.
A wide range of Italian companies, ranging from car makers to pharmaceutical companies, operate in Iran. A spokesman for Eni SpA, which operates one of Iran's biggest oil fields, declined to comment on how the election outcome could affect their business. Fiat SpA, which produces passenger cars in Iran, also declined to comment.
France has taken a stronger line with Iran. In 2007, the country enforced United Nations and European Union sanctions against Tehran, banning the export to Iran of certain products -- essentially military equipment or equipment with dual use. Late last year, the French government further restricted trade.
Among the main French companies doing business in Iran are PSA Peugeot Citroën SA and Renault SA, which produce cars there through joint ventures. Neither company would comment.
Italian knitwear maker Benetton Group SpA has shut down stores in parts of Tehran. Members of Benetton's key clientele -- young, middle-class Iranians -- are joining protests. "We have the maximum respect for the Iranian government," said company spokesman Federico Sartor. "We can confirm the interest in staying in Iran, because it's a young and dynamic market for us."
—David Gauthier-Villars contributed to this article.
Write to Marcus Walker at marcus.walker@wsj.com and Stacy Meichtry at stacy.meichtry@wsj.com
