Following the nuclear deal of July 14, Iran has, in the past few days, been host to a large number of foreign business delegations and trading companies. Prior to the agreement, the world would hide any keen interest among foreign traders in Iran’s market. However, after the nuclear breakthrough, they have begun to express this interest more openly. The Joint Comprehensive Plan of Action (JCPA) allows foreign firms to invest in Iran’s oil and gas, automobiles, hotels and other sectors. Furthermore, it allows Iran to trade with the rest of the world and use the global banking system such as SWIFT. What is SWIFT? The Society for Worldwide Interbank Financial Telecommunications (SWIFT) provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardised and reliable environment. Prior to this agreement, SWIFT had imposedan embargo on Iran’s foreign transactions, which dented the Iranian banking sector.
During the period of stiff sanctions, Iranian domestic industries also suffered a great deal of losses due to an embargo on the import of spare parts. Currently, the ground is prepared for Iranian manufacturers to easily purchase foreign spare parts and transfer modern technologies. Such modifications in the technology of the domestic industry will boost Iranian domestic production. Moreover, Iran will likely be a lucrative target for foreign investors due to the large number of industrial parks, townships and rich energy resources. Recently, Iran’s deputy minister, Mehdi Karbasian, announced that Iran plans to increase its steel production capacity by more than double in the next five years.
Iran, home to the world’s biggest natural gas reserves, plans on projects ranging from steel to aluminum production, gold mining and copper. According to the Iranian ministry of mining and cooper industry, German, French and Dutch delegations have visited Iran in the past few weeks. Iran has more than 3,000 mines in operation, mostly privately owned, with nine percent of the world’s gypsum production and two percent of molybdenum and nitrogen output, according to a 2010 report by the US Geological Survey. Oil producers such as BP and Royal Dutch Shell have expressed an interest in developing Iran’s crude reserves.
Moreover, the relief in sanctions will have a direct impact on the Iranian pharmaceutical industry. Pharmaceuticals and medical equipment do not fall under international sanctions but the Islamic Republic has been facing shortages of drugs for the treatment of 30 illnesses, including cancer, heart and breathing problems, thalassemia and multiple sclerosis (MS) because Iran is not allowed to use international payment systems. According to the World Health Organisation (WHO), more than 220 patients died from hemophilia in 2014 due to a shortage of medicine caused by the economic sanctions on Iran.
Likewise, the Iranian automotive industry has shown positive signs in the past few weeks. It has signed various agreements with companies in Afghanistan, Azerbaijan and Russia. Iran’s automotive industry is the second most active industry in the country, after its oil and gas industry, accounting for 10 percent of Iran’s GDP and four percent of the workforce (700,000 persons). The relief of sanctions will increase car exports and will create economic opportunities for the unemployed youth of Iran. Furthermore, after the Iranian Revolution in 1979, the US ended its economic and diplomatic ties with Iran. However, the JCPA has provided a chance for the revival of economic and diplomatic ties between the two countries. In this regard, Iran seems more active in developing economic relations with the US. According to Abolfazl Hejazi, a member of the Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA), Iran wants to set up a chamber of commerce between Tehran and Washington. If this plan materialises, it will be a game changer of economic and political strategies in the Middle East. Since the inception of JCPA, Iranian traders and diplomats have been working on this objective and the Constitution of the Islamic Republic also allows them to establish ties with any foreign investor. Iranian traders are only prohibited from trading with the Zionist regime.
These are a few positive signs of the rehabilitation of the Iranian economy after the end of intensification of western sanctions and there are many more to come in the next few months. It is hoped that the revived interest of foreign investors will not only benefit Iran economically but also pave the way for regional development and stability.
The writer is a freelance columnist