Betting on Rainbows Over Tehran

rainbows

The nuclear deal with Iran is fuelling many ambitions and expectations: Multinational companies and governments are eager to cash in on the potential of a booming economy free of sanctions (549 billion dollars in 2014) while at the same time, governments are wooing Tehran as a political and military ally.

But all these expectations seem to be far removed from the realities of the regime in Tehran and its economic, political and military agendas.

The negotiations with Iran have made one thing very clear: With Tehran, it’s either Khamenei’s way or the highway and the pot of gold at the end of the rainbow may remain elusive to most wannabe deal-makers. What they will soon realize is that making deals with Iran is an uphill slippery climb.

 

The New Iranian Bazaar

bazaar_picGovernmental trade delegations from all over the world have been landing in Tehran since Rouhani took office but the pace is picking up: A German delegation visited Tehran in the hopes of increasing trade to 12 Billion Euros, an Indian delegation with the hopes of increasing its 15 Billion Dollar trade with Iran and even a US delegation was sniffing out prospects while a Belgian delegation is on its way to Tehran in May and the UAE is preparing to send a delegation in May as well.

These follow delegations in the past by China, Russia, turkey, Nicaragua, UK, Austria, France, Latvia, Switzerland, Azerbaijan, Belarus, Tajikistan, Greece, EU, Spain, Poland, Italy, Sweden,  South Korea, Mexico, Ireland and many many more.

But it isn’t only governmental trade delegations who are taking a closer look at Iran’s economy – business organizations such as the Young Presidents’ Organization (YPO) and Pathfinder are also hitting the streets in Tehran looking for the proverbial pot of gold.

Add to these delegations private businessmen and one can understand that the traditional Iranian bazaar has moved into conference rooms and hotel lobbies, regardless of past/present/future sanctions as is vividly outlined in this article by YPO member, Ned Lamont.

 

Russia & China Lead the Way

Russia China sign deal to bypass U.S. dollarMeanwhile, government leaders are rushing in to close specific deals with Tehran with Russia and China at its head.

Both Russia and China have both announced deals to build nuclear reactors. Russia has not only inked a 5-year food for oil deal, it has set up a special “trade bank” and after ditching the US dollar as its basic currency, is now doing business with Iran in Rubles (inviting Turkey and Argentina to do so as well) . Add to this the controversial sale of S-300 missiles and the picture is becoming clearer that with or without sanctions, Russia is cashing in on the détente with Iran.

China has been busy as well: Its current trade with Iran is estimated at 50 Billion dollars and China. Not only is China weary that a nuclear deal will divert business to other entrepreneurs, it want to increase trade to 60 Billion dollars.

 

Chasing Rainbows

rainbowAll is well and good as long as the Tehran’s nuclear and military ambitions don’t lead to an increase in sanctions and a military response. Within hours/days, Iran may turn into a war zone. This may not hurt military deals with Russia/China but this will definitely dampen the chances of cashing in on Iran.

And how will the governments working with Iran react to such a scenario? Specifically, how will Russia and China react? Is such a scenario probable? Depends on who you ask.

But what is certain, based on the backbiting following every nuclear deal with Iran, is that dealing with Iran is never as easy as it seems.

 

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