Weekend Argus (Saturday Edition)
Iranian business hails imminent end of sanctions
DUBAI: Iranian investment banker Ramin Rabii says he shouted in joy when he learned that Tehran and world powers had reached a deal which promises to lift economic sanctions on Iran. Then he called colleagues to discuss the business implications.
Rabii, managing director of Turquoise Partners, a Tehranbased investment firm with about $200 million (R2.4 billion) of assets under management, has been grappling for years with the results of the sanctions: unstable growth, high inflation, international banking restrictions and hard currency shortages.
The agreement on curbing Iran’s nuclear programme, reached on Thursday, will – if confirmed in a final deal by a June 30 deadline – begin to ease those crippling problems for Turquoise and thousands of other Iranian firms.
“We’ve been preparing for this moment for 10 years,” Rabii said by telephone, adding that in the months leading up to the deal Turquoise was in touch with hundreds of potential foreign investors about opportunities for them if sanctions were lifted.
He said the company now planned to develop its asset management and brokerage businesses, and would hold road shows for investors in Europe and possibly Dubai.
Frozen out of the international banking system, its foreign trade slashed by the sanctions, Iran looks likely to become the biggest country to rejoin the global economy since post-Communist eastern European nations in the early 1990s.
The resulting boom could create tens of billions of dollars worth of business for both local and foreign companies and shift the economic balance in the Gulf, which has so far been heavily weighted towards the rich Gulf Arab oil-exporting countries.
“Precautionary talks have already started between Iran and some big Western investors” in areas such as oil and autos, said Iranian-born economist Mehrdad Emadi of London’s Betamatrix consultancy. “Now there will be accel- erating momentum.”
He predicted annual growth of Iran’s $420bn economy would rise by as much as 2 percentage points to over 5 percent in the year after a final nuclear deal. It could accelerate further to 7 or 8 percent in the following 18 months – matching the growth of Asia’s “tiger economies” during their boom years.
Iran’s trade with the EU, which totalled € 7.6bn (R99.6bn) last year, could balloon 400 per- cent by mid-2018, Emadi said.
The complex web of financial, shipping, energy and technology sanctions woven by the US, the EU and the UN is expected to take years to remove, even if a final nuclear agreement is reached and implemented smoothly.
As a result Iran’s oil exports, cut by the sanctions to about 1.1 million barrels per day from 2.5 million bpd in 2012, may not start rebounding before next year.
But the single most damaging sanctions measure, the US Treasury’s use of Section 311 of the USA Patriot Act to identify Iran as a money- laundering area, could be lifted quickly by the Obama government, analysts believe.
This would have a big impact on trade and investment by letting foreign banks deal with Iran without fear of being targeted by US officials. – Reuters