Iran's grand re-en­try

The Pak Banker - - 4EDITORIAL - Shahid Mehmood

THE 1979 rev­o­lu­tion turned Iran into a pariah state. Vir­tu­ally cut off from the en­tire world and left to fend for it­self, the coun­try went through some dif­fi­cult times. Now, af­ter years of ne­go­ti­a­tions, Iran has re-en­tered the world stage.

The thing to note, though, is that this is no or­di­nary en­try. It's a grand re-en­try. This can be eas­ily gauged by the events that un­folded within the first 10 days of the end of the sanc­tions on iran. Iran's reen­try onto the world stage was ex­pected by al­most all who were fol­low­ing the te­dious and pro­tracted ne­go­ti­a­tions be­tween Western na­tions and Iran over the lat­ter's nu­clear pro­gramme. But the speed at which the first 10 days of the end of sanc­tions yielded such mas­sive deals sur­prised quite a few. What's be­hind this hurry? And what does Iran have to of­fer?

Within the first 10 days, Iran signed mam­moth trade and busi­ness agree­ments with China, Italy and France. The Chi­nese pres­i­dent, along with an en­tourage of min­is­ters and lead­ing Chi­nese busi­ness­men, was the first dig­ni­tary to land in Tehran. His trip re­sulted in a $600 bil­lion trade agree­ment, span­ning over a decade. Then it was the Ira­nian pres­i­dent's turn to visit Italy and France. The visit to th­ese coun­tries also re­sulted in trade and busi­ness agree­ments worth bil­lions of dol­lars.

With 80 mil­lion peo­ple, Iran rep­re­sents a huge con­sumer mar­ket that will sud­denly open up to the out­side world. There­fore, this is too good an op­por­tu­nity to miss. This is not just a guessti­mate. While the ne­go­ti­a­tions over the nu­clear deal were go­ing on, savvy Western busi­ness­men were mak­ing trips to Tehran in or­der to gauge the po­ten­tial of the Ira­nian mar­ket. The spate of hur­riedly signed agree­ments is a re­flec­tion of the fact that the busi­ness­men must have found a huge po­ten­tial. One western diplo­mat termed Iran as a 'gold­mine'. The Bri­tish for­eign sec­re­tary ex­pressed his hope that Bri­tish busi­nesses will 'seize' th­ese op­por­tu­ni­ties.

The lift­ing of sanc­tions im­plies Iran's ac­cess to bil­lions of dol­lars that were frozen since the rev­o­lu­tion. It is highly un­likely that Iran will hoard this amount. What is more likely is that it will spend it on buy­ing equip­ment from in­ter­na­tional mar­ket. It has al­ready made it clear, for ex­am­ple, that it in­tends to buy at least 100 pas­sen­ger planes for its of­fi­cial air­line. Iran's need is a multi-bil­lion dol­lar op­por­tu­nity for Euro­pean air­craft man­u­fac­tur­ers like Air­bus.

More­over, an­other im­por­tant as­pect of Europe's ea­ger­ness to trade comes in the form of en­ergy. About a third of Europe's oil and gas needs are met by Rus­sia, which in turn gives Rus­sia lev­er­age in deal­ing with the EU. With ties strained due to Rus­sian ac­tions in Crimea and Syria, Iran pro­vides a wel­come re­prieve (as an al­ter­na­tive) from de­pen­dence on Rus­sian oil and gas. The en­ergy as­pect comes into play when con­sid­er­ing China's will­ing­ness to ac­cess the Ira­nian mar­ket. As the se­cond largest econ­omy in the world, its econ­omy needs a con­stant sup­ply of en­ergy. Iran of­fers a won­der­ful op­por­tu­nity for Chi­nese com­pa­nies that are in­vest­ing bil­lions of dol­lars world­wide in en­ergy projects. More­over, Iran's ports of­fer eas­ier ac­cess (and shorter route) to Europe, and lies along the old silk route that the Chi­nese are so ea­ger to re­vive in or­der to ex­pand their trade.

Per­haps more im­por­tant, at least from the Chi­nese point of view, are Ira­nian ports of­fer­ing an al­ter­na­tive to Gwadar in case it does not work out as de­sired. More­over, aside from th­ese con­sid­er­a­tions, the global busi­ness com­mu­nity is also aware that Iran is in need of up­grad­ing its over­all in­fra­struc­ture. All th­ese bring am­ple profit op­por­tu­ni­ties to the ta­ble, some­thing that busi­nesses around the globe will be un­wise to ig­nore. This il­lus­trates an un­com­fort­able re­al­ity (rarely ac­knowl­edged openly) about the na­ture of trans­ac­tions be­tween na­tions: if there are prof­itable op­por­tu­ni­ties to be had from en­gag­ing with a par­tic­u­lar coun­try, then other dis­com­forts could be ig­nored. Don't for­get that this is the same Iran that still spon­sors and sup­ports Hezbol­lah and the As­sad regime in Syria, some­thing that led it to in­cur the wrath of world com­mu­nity (in­clud­ing Italy and France). But now that prof­itable op­por­tu­ni­ties beckon for the com­pa­nies of both th­ese na­tions, they did not hes­i­tate for a mo­ment to court Iran. In short, eco­nomic op­por­tu­ni­ties trump other con­cerns, in­clud­ing ter­ror­ism.

In­dia is an­other ex­am­ple that re­flects this as­pect of for­eign pol­icy. Al­though it never went through the cir­cum­stances that Iran had to en­dure, its hu­man rights abuses are some of the worst in the world. And when it comes to hu­man rights abus- es, Euro­pean na­tions are the most vo­cif­er­ous in de­mand­ing sanc­tions against the per­pe­tra­tors of the abuse. Yet In­dia also rep­re­sents one of the big­gest con­sumer mar­kets in the world, and of­fers gi­gan­tic profit op­por­tu­ni­ties for busi­nesses. The heads of Euro­pean states pay reg­u­lar vis­its to In­dia to lobby for deals like pur­chase of fighter jets. The re­cent visit by the French pres­i­dent was not meant to dis­cuss hu­man rights vi­o­la­tions or the grow­ing wave of in­tol­er­ance un­der the Modi sarkar, but to sign a bil­lion dol­lar deal for the sale of French jet fight­ers.

All this raises a per­plex­ing ques­tion. Pak­istan is home to more than 180 mil­lion peo­ple, which is con­stantly in­creas­ing. This in it­self rep­re­sents a mar­ket that is dou­ble the size of Iran. Yet China is will­ing to only sign agree­ments worth $46 bil­lion un­der the CPEC with us, while it finds lit­tle hes­i­ta­tion in sign­ing a $600 bil­lion agree­ment with Iran.

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