On Saturday the first concrete steps were taken to rehabilitate Iran in the global economy, when it was announced that many of the international sanctions gradually imposed on the country over the last 15 years or more had been lifted. In a move that has taken many by surprise in how quickly it has come about, a frantic day of diplomacy was marked with prisoner swaps, public announcements from ministers on all sides made via television, press and Twitter.
The announcement also vindicates the barrage of excited commentary and positive predictions – including ours – about a market that some describe as the last major global economy to remain untapped. Indeed the significant uptick of work that Diligencia has been carrying out on Iranian companies and individuals over the last three months, suggests that companies have been similarly positive – confident enough even to explore opportunities, meet prospective partners and conduct detailed due diligence.
Leaving aside for one moment the many practical challenges of doing business in Iran, the issue foremost in companies’ minds appears to be the entanglement of business interests with the various organs of the Iranian state. And rightly so, when you consider that Iran has been a closed economy for a sustained period of time, and a place where there is clear tension between the constellation of interest groups that make up the Iranian regime: conservative and reformist, hardline and Western-oriented, civilian and military. The latter in particular will give even the most risk tolerant companies pause for thought, especially when they consider the threat of remaining US sanctions, including on companies who do business – directly or indirectly – with elements of the Iranian Revolutionary Guards. To mitigate this risk, knowing full details of company ownership and the extent of corporate interests of the individuals you are talking to, is critical. Fortunately this is quite feasible given the relatively large amount of company information on the public record in Iran, albeit unstructured and fragmented. More on this in a future post.
There are also other non-sanctions related issues simmering in the background, not least the diplomatic row between Iran and Saudi Arabia that is a reminder of the fraught relationships within the region that can be upset when balances of economic power begin to change. For now, however, some of the main obstacles blocking the path of companies looking to engage with Iran have been removed and we can all expect further deals to come.