The 116-strong French delegation, with representatives from major companies like Total, Lafarge and Peugeot, was the largest of its kind from Europe since a landmark nuclear deal reached with the major powers in November gave Iran limited relief from crippling US and EU sanctions.
French employers' union vice president Thierry Courtaigne said the delegation, which arrived in Tehran Monday, wanted to assess the commercial opportunities opened up by the easing of Western sanctions.
But a senior US official said Secretary of State John Kerry had telephoned his French counterpart Laurent Fabius to tell him that the visit -- while from the private sector -- was "not helpful" in sending the message that "it is not business as usual" with Iran.
Testifying before sceptical lawmakers, US Under Secretary of State for Political Affairs Wendy Sherman said Washington was warning the growing number of business delegations heading to Iran that sweeping sanctions remained in place.
"Tehran is not open for business because our sanctions relief is quite temporary, quite limited and quite targeted," said Sherman, who is overseeing the administration's cautious efforts to seal a diplomatic solution to the decade-old nuclear standoff with Iran.
"It doesn't matter whether the countries are friend or foe -- if they evade our sanctions, we will sanction them," she told the Senate Foreign Relations Committee.
Just last month, the US Treasury announced that Luxembourg financial clearing house Clearstream Banking had agreed to pay the United States $152 million to settle accusations it illegally helped Iran's central bank access the US financial system in 2007 and 2008 in violation of US sanctions.
Businesses beating path to Tehran
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The French delegation is the latest in a string of foreign trade missions to beat a path to Tehran since the November deal.
Late last month, a large delegation visited from fellow NATO member Turkey, headed by Prime Minister Recep Tayyip Erdogan, who said the neighbouring countries aimed to more than double trade to $30 billion (21.9 billion euros) next year from $13.5 billion in 2013.
The French were given a warm welcome by Iranian leaders, who promised new measures to encourage foreign investment, particularly in its oil and gas sector.
In a speech to them, Deputy Oil Minister Ali Majedi said Iran's latest five-year plan, running from 2010-2015, calls for $230 billion of investment in its petroleum industry, of which $150 billion would go to upstream activities, according to the official IRNA news agency.
He said nearly all downstream projects, for refineries and distribution, would be offered on a build-operate-transfer (BOT) or build-own-operate-transfer (BOOT) basis.
Major oil companies have steered clear of Iran in recent years because of the strict Western sanctions.
But the prospect of their easing in return for Iran's scaling back its controversial nuclear programme has sparked renewed interest in a country that boasts the world's fourth-largest oil reserves and second-largest gas reserves.
Kerry met with Iran's Foreign Minister Mohammad Javad Zarif Sunday, on the sidelines of a Munich security conference, to discuss the next talks between Iran and global powers, which open on February 18 aimed at reaching a final deal to rein in Tehran's nuclear program.
Many US allies, including Israel, have reacted angrily to America's growing rapprochement with Iran, warning Iran's supreme leader Ayatollah Ali Khamenei, who holds the reins of power, is only interested in winning relief for the hard-hit economy.
Zarif revealed he has "no authority" to discuss the war in Syria with Kerry, tacitly acknowledging the regime's tight grip despite overtures to the West.
US State Department spokeswoman Jen Psaki, who revealed the Iranian admission on Tuesday, refused to be drawn on who would be authorised to speak to Kerry, only adding: "I would point you to the Iranians for how they structure their portfolio."
Tehran has also long been accused of backing Syrian President Bashar al-Assad by providing arms, cash and manpower to the regime as it battles a three-year uprising which has now left over 136,000 dead.
The November agreement between Iran and the P5+1 -- Britain, China, France, Russia and the United States, plus Germany -- requires Iran to scale back its nuclear activities for limited sanctions relief.
The six-month accord, which took effect January 20, is aimed at buying time for a comprehensive agreement that could see sanctions lifted on the oil and gas-rich country with a population of 76 million people.
The interim agreement only loosens restrictions on the export of automobiles, aerospace products, precious metals and petrochemicals, without affecting the far more damaging restrictions on Iran's access to banks and its oil and gas exports.
AFP