[Marxism] The economics behind the USA-Iran thaw
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
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
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
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