Iran will welcome foreign partners and investment when sanctions are lifted as the country seeks to boost its economy after the July 14 nuclear agreement with the world powers, President Hassan Rouhani has said. But he has also cautioned would-be foreign investors to face tough terms on partnership or investment.
“If foreign companies think they can take control of a market of 80mn people, they are mistaken, and we must not allow it,” Rouhani said on Saturday. “Foreigners must bring investment and technology and partner with Iranians so that both sides can benefit.”
Clear signs are now emerging that it won’t just be smooth ride for outside investors and Tehran will impose tough terms that could clash with US regulations even after sanctions are lifted.
Business delegations from around the world have flocked to Tehran since the nuclear agreement, which could see international sanctions lifted in early 2016 and open the $420bn economy with a large middle class to world markets. The nuclear deal euphoria has prompted such global majors as BP and Royal Dutch Shell to express keen interest in developing Iran’s oil reserves.
But for every investor who sees an opportunity, there are others who expect the same old imbroglio. Decades of hostile relations and tight scrutiny by the US Congress and Treasury could hold many investors back.
Iran may not see a quick economic rebound from a potential nuclear deal, according Roubini Global Economics. The benefits wouldn’t take hold before the second half of 2016, with growth now constrained by low oil prices, cautious foreign investors and uncertainty about Iranian government policies, says the study.
Foreign companies could get into trouble in Iran if they partner with an entity under non-nuclear sanctions or share technology with potential military applications, experts said. The greatest risk would be if they end up linked to the Islamic Revolutionary Guards Corps (IRGC), which controls much of the economy and often hides its financial interests. Much of the IRGC will remain under terrorism-linked US sanctions. “The risk of investing in a business in which there is either an overt or hidden IRGC interest is probably the single greatest risk facing investors who are exposed to US or EU regulatory regimes,” said Nicholas Bortman, partner at risk consultancy GPW.
There are lingering fears over record US fines imposed on companies that violated sanctions, including $8.97bn on BNP Paribas and $233mn on oil-services giant Schlumberger.
Iran has long been a difficult market for investors. It attracted an average of only $1.1bn of foreign direct investment between 1996 and 2004, before major economic sanctions were imposed on it, according to the UN Conference on Trade and Development. FDI has increased since then, but remains far less than in fast-growing emerging economies elsewhere due to restrictive labour laws and business rules, red tape and other obstacles.
Global investors and energy majors now need to be cautiously optimistic about the apparently tantalising offers amid lingering uncertainty over how the Iranian situation unfolds.



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