Dividends of Iranian deal more than just an economic pay-off
ADVERTISEMENTTheir economy gasping for air, Iranians expect a new crossdraft from the release of their frozen assets, part of the breakthrough deal trimming their country’s nuclear ambitions.
How those assets will bounce back, and how quickly, is far from fully predictable. De-toxifying the international regulatory atmosphere will be complex, but meanwhile, President Rouhani is keeping the message to his people simple.
Rouhani said: “Today is a new beginning, the beginning of a better future for our young people, and the beginning for our beloved Iran to accelerate its development.”
Major companies want to accelerate back into this market of some 80 million consumers. The general figure being floated is of some $100 billion in Iranian assets set to be unfrozen, personal or governmental assets, which by right means the assets of the Iranian people.
In response to his president’s promise, one Tehran store owner said: “Sure, it can be a new start. Our oil production will change, and in the end the economy. As far as I know, European countries are ready to invest in Iran and to have Iran invest there.”
Another retailer said: “No one would negotiate without a purpose. Sure, they’ll profit from our country, but it will be really good for us.”
Luxury brands are eagerly poised to satisfy shoppers’ desires. Coke and Pepsi are among the food players. Then there are the tobacco companies, and cars. Big oil and gas multinationals are also ready, willing and able.
Many companies were present in Iran already, but were knocked hard by the sanctions.
Jeremy Stretch, Head of FX, CIBC London, said: “If we are going to see the removal of sanctions not just in the oil market but particularly in the energy sector, we will see a flow of funds coming back into the domestic market. Of course, the removal of sanctions and the embargo potentially opens the way for some degree of inward investment, and I think that is going to be hugely significant.”
Not only the trade in oil after a long hiatus will get huge sums flowing, so will the modernising of infrastructure, if things go as hoped.
Yet even with weapons and technology sales restricted for at least five more years, many Israelis fear Iran’s windfall will be put to dangerous use.
Iranian affairs specialist Eldad Pardo, at the University of Jerusalem, said: “Iran will be able to export more oil and gas and there will be a lot of sanctions lifted. Actually this agreement allows Iran to build a nuclear industry and we believe that in ten, fifteen years Iran will become a nuclear power.”
Private sector investment is a key stabiliser.
If Iran did not see its economic reward, it might break its commitment to the security aspect of the deal — verifiable limitations on its nuclear activities — triggering a snapback to sanctions.