[Marxism] The economics behind the USA-Iran thaw

Louis Proyect lnp3 at panix.com
Sat Jan 18 08:58:27 MST 2014


NY Times JAN. 17, 2014
Sanctions Eased, Iran Gets Feelers From Old Trading Partners
By THOMAS ERDBRINK

TEHRAN — For critics of the interim nuclear agreement with Iran, Hossein 
Sheikholeslami might seem to embody their worst fears.

Mr. Sheikholeslami has been busy in recent weeks, since the deal was 
agreed to in principle, shuttling back and forth between the capital and 
the airport to welcome all the guests: parliamentary missions from old 
European trading partners like Germany, Italy and Finland, which are 
eager to renew contacts.

Excitement over the interim agreement, which will ease some provisions 
of the American-led sanctions on Iran but essentially leave all of them 
in place, has not extended to American companies. They remain extremely 
wary.

Nonetheless, critics of Iran in the United States Congress and 
elsewhere, who are pushing for even stiffer sanctions, have expressed 
dismay over the European trade missions. They see them as a signal that 
Iran is open for business, leading to an end of the Islamic republic’s 
international isolation, which they say is what brought the Iranians to 
the negotiating table in the first place.
Multimedia Feature: Timeline on Iran’s Nuclear Program

“As we have warned, and I say this with regret, the sanctions regime has 
started to weaken and very quickly,” Israel’s prime minister, Benjamin 
Netanyahu, said Sunday in Italy. “If tangible steps are not taken soon, 
it is liable to collapse, and the efforts of years will vanish without 
anything in exchange.”

But that is not the way it looks to Iran’s business leaders, who say the 
deal has generated a great deal of interest but little else. Even when 
the easing begins, now set for Monday, it will continue to be nearly 
impossible to transfer money into and out of the country. “Most 
companies want to scope out the landscape,” said Rouzbeh Pirouz, the 
chairman of a Tehran-based investment firm, Turquoise Partners. “But I 
don’t think many of them will actually sign contracts and start putting 
money into this place very quickly.”

That has not stopped a parade of people, mainly European politicians and 
business representatives, from visiting the Islamic republic, which, 
with 70 million people and a sizable middle class, is the world’s last 
major isolated market.

In the first two weeks of the year, Iran welcomed more delegations from 
Europe than in all of 2013.

“The Europeans are waiting in line to come here,” said Mr. 
Sheikholeslami, the international affairs adviser to the head of Iran’s 
Parliament, Ali Larijani, who has been receiving many of the 
high-profile visitors. “They are coming to seek benefits and to get 
ahead of their international rivals.”

Italy’s foreign minister, Emma Bonino, has been here, as has a former 
British foreign minister, Jack Straw, in his capacity as the head of the 
Iran-Britain Friendship Committee.

The prime ministers of Italy and Poland have also scheduled visits. 
Trade delegations from Ireland, Italy and France are expected in coming 
weeks.

American companies have shown some interest, of course. In September the 
head of President Hassan Rouhani’s office, the former director of the 
Iranian Chamber of Commerce, Mohammad Nahavandian, held a closed-door 
meeting with leading chief executives in New York. In March, an Iranian 
investment company is organizing a $15,000-a-ticket seminar in New York 
on business opportunities in Iran.

Where Mr. Netanyahu sees risk, Mr. Sheikholeslami — who in 1979 was one 
of the students who held 52 American diplomats hostage, touching off the 
crisis that ruptured the countries’ relations — sees opportunity. “The 
sanction regime imposed on us is falling apart,” he said. “The Americans 
wanted to impose their will on the world and isolate Iran, but big 
companies are seeking the potential of Iran.”

Critics of Iran in the United States have also expressed anger at Russia 
— which has always rejected the American-led sanctions strategy as 
arrogant — over a reported Russian agreement under negotiation with Iran 
that could provide Iran with billions of dollars’ worth of food and 
equipment in exchange for oil, which Russia would then sell.

Foreign Minister Mohammad Javad Zarif, who was visiting Moscow on 
Thursday, was quoted by the Russian broadcaster Rossiya 24 as saying 
such a deal was not on his agenda for discussion. And Obama 
administration officials have suggested that if such a deal was in the 
works, it would be a sanctions violation.

Still, those frustrated with the administration’s policy toward Iran say 
the reported Russia-Iran deal is a clear example of how the sanctions 
effort is about to collapse and relieve the pressures on Iran.

What is true, said Mr. Pirouz and his business partner, Ramin Rabii, is 
that the Iranian economy has picked up since Mr. Rouhani came to office. 
“But that is not happening solely in expectation of some sanctions being 
lifted,” Mr. Rabii said. “It is because of his appointments of competent 
managers who are undoing some of the damaging economic and monetary 
policies designed by the previous administration.”

Under Mr. Rouhani, who has been in office for nearly six months, Iran’s 
economy has made some small strides. Inflation has come down to 35 
percent from 42 percent in December, the Statistical Organization of 
Iran reported. Unemployment continues to be very high, though there are 
no reliable measures of the rate. The national currency has stabilized, 
and Iran’s stock exchange has been setting records.

“What Iran’s government really should do is leave the economy to the 
private sector,” Mr. Pirouz said. “While an improvement over the 
previous situation, some of Mr. Rouhani’s men are still in favor of a 
planned economy, so in my view certain problems will persist, even if 
some sanctions are lifted.”

Many multinationals have long eyed what they view as the virgin Iranian 
market, where many highly educated consumers are thirsty for jobs and 
Western products. Iran’s infrastructure, including that of its oil 
industry, needs a complete overhaul.

“We need over $200 billion investment in our oil and gas sector alone,” 
said Saeed Laylaz, an economist close to Mr. Rouhani’s government. Iran 
needs multibillion-dollar injections in its heavy industries, its 
transportation sector and airlines, he said. “On top of that, we need to 
acquire new management skills and services. Basically, we need 
everything the other emerging nations needed a decade ago.”

A senior United States official, speaking on the condition of anonymity, 
said last week that sanctions would remain firmly in place, and that any 
company breaking them would be punished. “We tell everybody with 
interest in the Iranian market to be very careful not to break any 
sanctions, as they will face the consequences,” the official said.

For the most part, local Iranian producers cannot understand what all 
the hubbub is about.

“Many politicians and well-connected businessmen might be excited,” said 
Bahram Eshghi, the owner of a bus manufacturing company. In September he 
said he was basically doing nothing at work because even the Chinese 
were afraid to do business with Iran. The lifting of some sanctions or a 
more positive atmosphere has not changed that significantly, he said.

“Sure, we will be able to buy some spare parts, but I still can’t make 
an international money transfer,” he said. “Which big brand will be 
willing to come to Iran and work under such conditions? None.”

Mr. Eshghi, a burly man with thick hair turning white, said that only 
one thing mattered to the multinationals. “They will come only when the 
U.S. allows banks to make money transfers,” he said. “It is as simple as 
that.”





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