Majority of Business Leaders Blame Trump for Slow Iran Investments


By Esfandyar Batmanghelidj (source:

Source: Iranian daily Kaenat

As President Donald Trump threatens to de-certify Iran’s compliance with the
JCPOA, the political environment around post-sanctions trade and investment has
grown more contentious. Yet, at the same time, after extensive negotiations with
leading multinational companies, Iran has witnessed landmark agreements signed
across industries, with billions of dollars of investment committed and
financing agreements inked. For those business leaders continuing to push ahead
in Iran, and for the Iranian public to whom they are accountable, the question
is what to make of such contradictions.

To examine this and other questions, Bourse & Bazaar partnered with IranPoll to
conduct a
unique survey
 focused on economic attitudes and business confidence in Iran.
The survey was conducted in August 2017 and covered a representative sample of
700 Iranians.

Several of the questions centered on post-sanctions investment and the political
importance of the JCPOA. But perhaps most notably, 70% of Iranians surveyed
believe that multinational companies are “moving slower than they could” to
trade and invest in Iran following the lifting of international sanctions. Of
this group, a significant 76% of Iranians identified “pressure or fear of the
United States” as the key reason, compared to just 16% would blamed Iran’s “weak
business environment.”

It is certainly sensible for Iranians to blame Trump’s antipathy towards the
nuclear deal as a primary reason for the slow pace of Iran’s post-sanctions
economic recovery. But this view might unfairly discount the inherent
difficulties of investing in Iran, a fact that the
Obama administration
 highlighted when concerns over the slow pace of
economic engagement first emerged in early 2016.

It seemed a reasonable assumption that the “experts” who are the business
leaders or policymakers actually trying to make trade and investment happen
might have a different, more nuanced view than the Iranian public. The barriers
to trade and investment in Iran are very real. The country ranks 120 in the
World Bank’s “Ease
of Doing Business
” rankings, having actually fallen three places in the last

Results of the “Expert” Survey

To investigate this assumption, IranPoll and Bourse & Bazaar administered an
online survey
 that collected responses from just over 250 “experts,” sampled
based on their active involvement in Iran trade and investment matters. Of these
respondents, 79% held either a master’s degree or PhD, and 70% were
professionals from European or Iranian private-sector enterprises. The remainder
worked in state-owned enterprises, government agencies, or policy institutes.
Importantly, 70% of respondents considered themselves to be either somewhat or
well-informed about investing in Iran.

In an amazing example of statistical congruence, 70% of the expert respondents
surveyed believe that multinational companies are “moving slower than they
could” on trade and invest in Iran. Of this group, 76% blame “pressure or fear
of the United States” for the slow movement, with just 17% blaming Iran’s
challenging business environment. These proportions directly mirror the results
seen in the survey of the Iranian public. How can it be that these experts, who
know all too well that Iran is a difficult place to do business, are seemingly
discounting those difficulties in the face of Trump’s rhetoric?

The answer may lie in the slow and steady progress that has been made in Iran
trade and investment in the last year. Major contracts signed in 2017 include
the first
major post-sanctions investment
 in Iran’s oil sector, the first
automotive investment
 majority owned by a foreign multinational, and the first
equity stake
 taken by a global financial institution in an Iranian financial
services firm, in addition to several major financing agreements and even more
unheralded deals. This overall momentum, hidden to all but those watching Iran
most closely, suggests that business leaders, as well as the regulators and
policymakers with whom they work, have gained a sharper understanding of how to
conduct business in the country. Although Iran’s economy remains rife with
obstacles, business leaders are proving more adept navigators. For example, in
the same survey, 74% of respondents said that they believe they know the right
people to conduct business in Iran. As business leaders gain confidence in their
own abilities and greater means to manage challenges within their control, the
turmoil in Washington remains the key complication to trade and investment

But if the business leaders are able to recognize American rhetoric as
superficial, why exactly is it slowing the pace of trade and investment? This is
likely because the rhetoric is impacting decision-making not for those closest
to projects in Iran but for those stakeholders on whom they rely.

Commercial Agenda Advances

Reading the headlines on Iran, driven by Trump’s soundbites, it would be easy to
believe that Iran is an untenable place to do business in the current political
environment. Yet, the “country managers” who run business divisions in Iran for
multinational companies have made considerable progress over the last year in
pushing forward a commercial agenda. This contradiction may explain why 69% of
respondents in the expert survey felt that international media outlets are not
an accurate source of information about Iran’s “trade and investment

The slowdown occurs when the question of Iran crosses the desks of
decisionmakers further from the point of contact. By dint of their progress,
country managers increasingly need to draw on support from other parts of their
multinational organizations and suppliers and partners in order to execute
strategy. Most crucially, as a project reaches contract stage, it becomes
imperative to find a financing solution. This requires the country manager to
both bring his senior executives on board with the project plan and then seek
engagement from a financial institution. When critical decisions reach this
wider circle of stakeholders, headlines become far more salient. These
stakeholders cannot draw on firsthand experience to bolster their confidence in
an Iran-related commercial decision and rely instead on the incomplete picture
painted in the international media. Understandably, they find it difficult to
act decisively in the face of uncertainty, particular when personal or company
reputations come into play.

In this way, Trump’s rhetoric is slowing the momentum of trade and investment
prior to any snapback of sanctions. No doubt, Trump’s impending decision on
decertification of Iran’s compliance with the JCPOA does make snapback a
potential outcome. Tellingly, 68% of Iranian respondents and 63% of non-Iranian
respondents in the expert survey considered snapback a likely or very likely
outcome of decertification.

However, in this intervening period, during which there has been no instrumental
change in US policy, the reported slowdown in trade and investment helps
demonstrate a deficiency in how deal supporters are counteracting Trump’s
message. The critical point is that Trump only has his message. Given the track
record of his administration, he is unlikely to have a cohesive Iran policy at
any stage, even if he decides to decertify.

Deal supporters in Washington ought to define the economic scope of sensible
Iran policy more clearly and thereby support business confidence more actively.
The imperative here follows directly from what it means to offer “sanctions
relief.” As a policy tool, sanctions impose political ideology on economic
structures. The act of sanctions “designations” makes a normative judgement
about the objective composition of an economy, defining the acceptable level of
commercial relations with certain economic actors. Consequently, crafting an
effective post-sanctions policy requires its own congruence between ideology and

In the case of Iran, the objective reality that trade and investment are
incentivizing structural liberalization in Iran’s economy needs to be expressed
and valued in ideological terms. Encouragingly, European stakeholders have
become more assertive in presenting such a vision. Helga Schmid, secretary
general of the European External Action Service, stated in a recent speech at
the 4th Europe-Iran Forum, “We recognize that it is important that the benefits
of the Iranian deal are felt directly by the Iranian people and Iranian
businesses. This is necessary for the success of the deal, but it is also in the
interest of the EU, its Member States and economic operators.”

Deal supporters in Washington should likewise be more confident in declaring
that, where sanctions relief allows, companies ought to be free in engaging in
trade and investment in Iran. Commerce not only helps preserve the nuclear deal
but it can also help incentivize financial, industrial, and legal reforms, in a
manner akin to how enterprise has helped successfully open economies in Eastern
Europe, Latin America, and Southeast Asia. Of course, this amelioration will
only take place in the medium to long term. But in the near term, a tactical
insistence on stronger messaging around economic engagement is necessary to
support those stakeholders whose work is so crucial to the quid-pro-quo of the
deal and whose activities are fundamental to winning the hearts and minds of an
Iranian public already so hopeful that engagement will deliver a brighter

About the author:

Esfandyar Batmanghelidj
has spent the last 5 years working on projects related to “business diplomacy”
between the West and Iran. He is the founder of the
Europe-Iran Forum, the leading
annual gathering for business, government and civil society leaders committed to
Iran’s economic development, and the executive editor Bourse & Bazaar, a digital
business publication with a focus on Iran. He is a graduate of Columbia

… Payvand News – 10/12/17 …

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