The dilemma of return : years of isolation impede Iran’s return to markets
In the recent past , Iran ended years of diplomatic and economic isolation over its nuclear program , after reaching a nuclear agreement with countries in the group (5 +1), which Tehran considered it as a return of life into the country after years of exclusion.
Today, Iran is trying hard to renovate the damage done by years of international sanctions on its economy, which has reached to serious stages of this period, so it sought to seek help from neighboring and international parties to circumvent the sanctions to be able to continue in this critical phase of the country’s history.
I’m not here in a position to tell the history of Iran’s isolation or merits, but is a simplified introduction to the conditions experienced by Iran, which Iranians and their allies reduce its consequences saying that Iran is strongly returned to the markets global, as if nothing has happened, and those went on to exaggerate the Iranian economy and make it a competitor to the major economies in the region ; as it is compared to the Saudi economy, for example, which is illogical comparison known by the economists and politician based on compassion and exaggeration .
Yes, Iran has returned to the markets, but what is missing that the world is accelerating and does not wait for any one, noting that the technological developments and race in the development of economies is very huge , and today we are on the threshold of “fourth industrial revolution” how can we say that Tehran keep pace with emerging economies, in banking work, economic legislation, and international relations which is deprived of it for years?
The return of Iran to world markets is facing many of the political and economic challenges and obstacles , which may make it delayed to the real return to international markets, and among the most important of these challenges, especially the US actions on the elimination of the financing of terrorism are still exists . ”
Tehran, which is striving today to attract investments , it needs to investment worth 200 billion dollars to develop the oil industry (the lifeblood of Iran’s economy) and the energy sector, the estimated amount by experts in order to regain its position in the markets of oil and energy.
Tehran faces also obstacles related to the tense relationship with neighboring countries, which the experts see it as a hesitated factor by a lot of the oil companies to deal with Iran, in particular those dealing with the global oil giant, Saudi Arabia, not to mention , the reluctance of Western companies for the trend towards Tehran, noting that the Iranian-Russian relations does not encourage rapprochement between them, which is the justification reason for western companies.
on the production policy , Iranian energy Minister, said, “Iran will work to raise the production capacity to the status it was before the ban, and the increase in production during the current year amounts ranged from 600 thousand to one million barrels per day.” But experts believe that Iran is facing the problem of customers for sales of oil.
Falling down of global oil prices was the biggest challenge in front of the return of Iran to the oil market, which deprived Iran of gains of billions of dollars and limited gains in most sectors that depend on oil.
As regards the gas sector , experts see in the field of energy that poor infrastructure and difficulties in obtaining liquefaction technology and geopolitical restrictions , may prevent the achievement of the dream of Iranian gas projects, LNG, at least until the end of the current decade.
the infrastructure are crumbling , including roads, bridges, sewage, electricity and basic services so the individual suffers a big problem , There is a need to rehabilitate it , which is another challenge in front of the Iranian government.
The banking sector is not with the best case than other sectors, regarding fines imposed on institutions that made it in a state of the anxiety of dealing with the Iranian institutions, especially as we mentioned earlier that some issues remained unresolved, such as related to the terrorism.
Washington has imposed heavy penalties on several banks, for violating sanctions imposed on Iran, including BNP Paribas, which was imposed on it in 2014 a fine of up to $ 8.9 billion.
the experts see that the uncertainty experienced by the banking institutions in Iran , may deprive the last of the huge investments which are needed to support the desired development operations.
the annual report of the Fund noted about Iran that “the significant decline in oil prices and the difficult financial situation is for companies, banks and delays in individual and corporate investments waiting for the lifting of sanctions largely caused to the slow-down of economic activity” in Iran , Consequently , and Fund predicted that the growth is retreating from three percent in 2014 to around zero percent in the year 2016, as the World Bank expects Iran to record of the lower growth rate in the Middle East and North Africa region by 0.9% for each of them in a year .
according to a report of the World Bank, the environment of business practice is difficult , where Iran was ranked 130 out of 189 countries surveyed by the report of business practices for 2015. in the Middle East and North Africa, Iran occupies a back seat that it does not precede only Algeria, Djibouti, Libya, Syria, the West Bank and Gaza Strip.
according to a study of college Raton for business works of the US city of Philadelphia, the Iranian economy is suffering from high unemployment, which a volume of unemployment up to(14%), and government estimates the need to save about 8.5 million jobs over the next two years, in order to reduce the unemployment rate to 7 % this year. And perhaps , funds that Iran will be able to lift its freeze , will contribute in the creation of new projects, but it is not sufficient to solve the problems of unemployment in Iran.
On the political front , the political and military tensions that prevailed in the Middle East and interventions of Iran in the wars in the region, directly or indirectly, raises the risks of investing in Iran, noting that these abuses have led to isolate Iran from the Arabian Gulf states and cut off business relationships in billions of dollars on a background of burning of Saudi embassy in Tehran.
Not to mention, the internal problem and political conflicts between the Iranian politicians, which reached a crescendo ahead of parliamentary elections scheduled for the late of this month, and oil conference in London was postponed , which is the fifth time because of the sanctions. But this time it seems that internal disagreements about the structure of the oil and gas investment contracts prevented any announcement of the terms of trade.
The way of the return of the Iranian economy to the world market will not be paved as imagined by some people, but would be gradual, noting that the road is long before the return of the Iranian economy properly, and faces serious domestic economic crisis, which is imposing on Tehran and the maker of political and economic decision to reconsider the structure of the economy, and not to ignore its aggressive and external behavior and role and behavior which may increase the suffering.
Rawabet Research and Strategic Studies Center
