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HomeMiddle EastAfter Iran Nuclear Deal, Thaw in Foreign Business Opportunities Will Be Slow

After Iran Nuclear Deal, Thaw in Foreign Business Opportunities Will Be Slow

TEHRAN — “Happy nuclear deal” said Cyrus Razzaghi, a business consultant here, when he picked up the phone on Wednesday.

Mr. Razzaghi has been trying to make a business of organizing seminars and meetings for European and American companies interested in Iran, but it had been a bit slow until now. Even though, technically, many of them could have done business here despite the sanctions, they feared damage to their reputations if they were seen working with the Islamic Republic.

He is expecting a surge in visits, but nothing concrete for a while at least. “Now, they are gathering information, doing due diligence on potential partners,” Mr. Razzaghi said. “But this is not an overnight change.”

He also warned that after 37 years of isolation, Iranian business culture was its own beast. “Sometimes Iranian businessmen ask for hundreds of millions of dollars in foreign investments, but refuse to pay for a feasibility study that costs less than $100. Many think only about now and not the future.”

Interactive Feature | The Iran Deal in 200 Words A short overview of important highlights from the Iran nuclear deal.

Over the last 20 months of nuclear negotiations, Iran’s leaders have been selling the country to their counterparts as a unique investment opportunity, flirting with giving Western companies access to one of the largest untapped markets in the world.

Now, a day after Iran, the United States and other world powers reached a historic agreement that could see the dismantling within months one of the strictest sanctions regimes in the world, it is clear that the opening, to the extent that there is one, will take some time to show results.

The most significant change, Mr. Razzaghi and many others say, will be when Iran regains access to the Swift system, the global electronic banking system that is essential for doing business in the contemporary world. “That means that all will be able to send money to and from Iran, and that is crucial for business,” he said.

Potentially, the nuclear deal signed on Tuesday will open up the world’s second-largest natural gas reserves and fourth-largest oil reserves, along with a decrepit and outdated energy sector that needs hundreds of billions of dollars and foreign technology and expertise to reverse a long-term decline. Iran’s airliners are decades old, in many cases.

Graphic | The Iran Nuclear Deal – A Simple Guide A guide to help you navigate the talks between global powers and Tehran.

The deal could also bring an underserved population of 76 million to multinationals and smaller companies. People are clamoring for iPhones, for example. But few here expect the gates to be flung wide open.

Some years ago, an enterprising entrepreneur in Tehran somehow received permission to open a McDonald’s, said Jamshid Edalatian, a German-educated economist. “Within days it was stormed by anti-American protesters,” he said. “Those people are still around. Don’t expect to see the Golden Arches and Starbucks logos here in Iran anytime soon.”

Still, there is an unmistakable excitement bordering on euphoria for many entrepreneurs in Tehran at the prospect of the lifting of sanctions that in many cases have nearly wrecked their businesses. “Iran had become an island, disconnected from the world,” said Fatemeh Moghimi, the chief executive of a transportation company. In the last weeks, she has ordered her employees to start freeing their schedules for longer international trips, she is hiring new drivers and is planning to invest in a new fleet of modern trucks.

“Trade will pick up, cargo ships will once again sail into our ports and when they do, they need trucks to deliver their goods,” Ms. Moghimi said. “This deal is like a bridge of peace, connecting our island to the world. Good times are coming.”

The government is eager to attract capital and expertise, but equally eager to avoid Westernization in the form of logos, brands and pop culture. In recent months, multinationals with less visible products, like pharmaceuticals, food and construction, have been visiting Iran regularly and want to open offices in Tehran.

Shargh, a reformist daily newspaper, reported on Wednesday that the oil ministry plans to increase production after years of decline. Iran was once the second-largest oil producer in the world, pumping 4 million barrels a day. Until 2005, when sanctions began to scare off Western companies, most oil giants had offices here and Royal Dutch Shell, Statoil of Norway and French Total were involved in huge natural gas projects.

The government is now planning a road show for international oil companies, beginning with London in December. “Foreign companies will surely come back to Iran,” Roknoddin Javadi, head of the National Iranian Oil Company told Shargh. “We want to return our oil trade to presanction level.”

While the companies may be anxious to come back and go to work, that does not mean an immediate gusher of oil. “Just the removal of sanctions will not heal this desperate patient,” said Reza Zandi, an Iranian journalist specializing in the energy industry. “The good thing is that oil companies are desperate to come here and spend money.”

Graphic | Who Got What They Wanted in the Iran Nuclear Deal Here is a look at what Iran and the United States wanted, and what they got.

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(via NY Times)