Amid Tensions With America, Businesses Flock to Iran

EghtesadOnline: Right now, the US is doing the rest of the world a big favor by locking itself out of one of the largest and more attractive pre-frontier markets: Iran.

News ID: ۷۷۸۵۹۲

20 August 2017

Most of the world is clamoring to do business with the country. But for the US, Iran is near the top of US President Donald Trump’s “naughty” list, reads an article published by Singapore-based investment research firm in American financial news website ValueWalk. Excerpts follow:

Economic sanctions have prevented western investment in and trade with Iran–a pivotal power in the Middle East, which is the world’s 29th largest economy (just ahead of the UAE and Norway)–for more than 35 years.

That started to change in July 2015, when a long-negotiated deal on Iran’s nuclear development program paved the way for normalization of relations between the US and Iran. It looked like Iran was slowly edging its way into the global economy, Financial Tribune reported.

Within Donald Trump’s first week presidency, he signed an executive order barring citizens of seven Muslim-majority countries, including Iran, from entering the US. Iran promptly reciprocated by banning American citizens from visiting the country.

Then this summer, Trump announced several new sanctions on Iranian individuals and groups. Iran is now threatening to back out of the nuclear development program agreement. But that has not stopped the rest of the world from beating a path to Iran.

The Iranian Business Boom

It’s not every day that a relatively wealthy nation whose nearly 80 million citizens have been deprived of investment is suddenly open for business.

That’s why businesses around the globe are jumping at the chance to do business with Iran.

For example, China is financing a new $2 billion high-speed railroad in Iran. This is part of China’s massive One Belt, One Road infrastructure project, which will help China cement strategic interests across the globe. You can bet that China is greedily eyeing Iran’s enormous infrastructure needs (the country’s physical and transportation infrastructure is rundown and in need of a serious overhaul).

As a very small first step, India is spending $150 million to develop a port in Iran. India believes the port will open up export markets in Afghanistan, the South Caucasus and Central Asia.

And it’s not just emerging markets working with Iran. France and Germany have recently signed deals with the country.

French automaker Groupe Renault has signed a $775 million joint-venture deal with Iran’s Industrial Development and Renovation Organization and company Parto Negin Naseh Group.

German automaker Volkswagen has also started importing cars to Iran again—for the first time in 17 years.

And Iran’s massive energy sector is the target of French energy giant Total, which is investing $1 billion in a huge offshore gas field in Iran.

Energy, cars and infrastructure are often among the first investments in new markets. So make no mistake, these deals are just the beginning.

Iran’s isolation from the West and its desire to do business with foreigners present an enormous opportunity. As mentioned, physical and transportation infrastructure is rundown and in need of a serious overhaul.

Rebuilding Iran could take many years and hundreds of billions of dollars in investment.

There’s a big opportunity for people to get rich from selling stuff and services to Iranians.

It’s not every day that a country appears on the global investment scene, readymade and starving for investment.

This is the type of opportunity where you can make life-changing gains.