From bonanza to realism – normalization of Iran perception

Within the last weeks more and more expressions of negative experiences in Iran reached us. In different opportunities, when it seemed to be appropriate, mostly representatives from mid-size  companies complained about the minimal success. We always saw a much more differentiated picture, our expectations are still positive and our mood is still good. So this was reason enough for us to find out, what the swift of mood can be caused. 


The Iran in the good news

In the first year after sanctions fall the newspapers are full of articles about Iran. This is actually a news itself, as in former times a report, article or short notice from Iran in German newspaper was as rare as the news of a new population in the universe. Now we see a lot of literature about the economic situation and of course a wide range of descriptions of all the possibilities in this country. After all, main argument is, there are 78 million people living and they all want the one or the other product of Western origin.

Also we have a lot of publications concerning the Iran as one of the most interesting and beautiful countries for sightseeing in the Middle East. Something I can definitely agree on!


And seeing what happens around the Iran, it is so unlikely that we will see a move of tourists back to the former places to be. So from this point the current reporting of Iran is more or less positive and changed massive against the former news. Even the current participation in the Syrian war is not so criticized as other political movements in other areas of the world have been under heavy reaction. And this is more than welcome as it helps to reduce restrictions or prejudice, but this is also only one side of truth.


Shadows over the good news

And the other side comes also to the surface. More and more we see also articles containing some warnings or risk descriptions of Iran. As the first curtain was raised, everyone thought it will be easy to go to Iran, make some business and have fun! But actually people and mostly mid-size companies realize that is not the land of honey and milk. Due to the still valid sanction of the US, European and moreover German banks do not want to step into business with Iran. This means that the banks with US business are even to reluctant to accept money transfers from Iranian origin. In this context banks are also not willing to step into letter of credits. And as long as Hermes is not fully in Iran – something that should be realized in 2017 – export insurances are not in place. Definitely it is not easy to understand how the sanctions work and who is part of the accepted group of business counterparties and who is not part of this group, it makes it nearly impossible for outsiders to understand and find safe business opportunities.

But going alone through the jungle of a unknown new world is seldom the path of wisdom.


News of progress but normalization

But there is, for our opinion, much more light than shadow. Of course it is not that easy as making business with Italy. But with the settlement of old Hermes debt in June  potentially Hermes insurance is possible for Iran business. As second good news, the Bank of Industry and Mine is back on the international floor and was approved as issuing bank for short-term letter or credits.


So following this path, we see a good progress in the evaluation of Iran as real partner, maybe the picture gets more realistic as it was a few months ago. Anyway, realizing this Iran and its different societies and understanding that they all have their own ideas and agenda, is the first step to a normalization of the relation. Also Iran moves, slowly and always under the constraint of different powerful streams, pulling in different directions, this is also a progress of normalization, even when it takes more time as expected. Everyone looking for a opportunity in Iran should obviously be well aware of this circumstances.


And obviously, in unknown waters a good pilot can prove always very helpful!


Stay tuned


Yours K-Street6 team