Jeff Pearce
corporate risk
Inevitable Iran: The Question of Sanctions | Canadian Insurance

Inevitable Iran: The Question of Sanctions

Sanctions against Burma were lifted in 2012, now it's Cuba's turn. Can Iran be far behind? But a better question might be: Should Iran get a turn?

It’s March, and the clock is ticking down yet again over a deadline in the nuclear talks with Iran. Funny how the world at large doesn’t share the sense of urgency the Obama administration and even the regime in Tehran have over the negotiations. In fact, the business world seems to have been proceeding as if Iran will go the way of Burma and Cuba, with relations relaxed in the near future and a shingle out that reads: “Open for business.”

Bombardier would clearly like a piece of that action and has expressed interest, and Iran certainly needs new planes and metro-rail cars. Last October, Iran’s SHANA news agency claimed an Australian company and a Canadian firm, both unnamed, were ready to invest in the country’s gas sector. And that same month, the Wall Street Journal reported that Apple was in preliminary talks with Iranian distributors in London; the scheme would be—assuming sanctions were dropped—to move Apple products through mid-size franchise operations in Iran.

Sergio Marchi, former ambassador and once upon a time Canada’s international trade minister, knows some other players but won’t give out their names. In talking to CRC, he was willing to name the sectors of the firms: oil and gas, international telecoms, mining and financial institutions. He visited Tehran last August, as the primary for his own global strategies consultancy in Geneva, and says he met with a number of companies. Through the autumn, a number of round tables were set up through a particular law firm—which he left unnamed. All the individuals have been “cautious. But that’s part of the Canadian mentality, and I appreciate that, and why shouldn’t we be cautious, given the history of Iran?”

Marchi stresses more than once that if the doors swing open, and Canadian business chose to invest, it would be a bet, a gamble that could pay off or fail.

Sanctions, he insists, have had their effect. “They are biting, and when I was in Tehran, I saw that bite. It’s a very tired-looking Tehran. The investment has dried up from the foreign side, the international side, except the Russians and the Chinese. The buildings need a facelift. The infrastructure clearly needs an overhaul.”

Marchi also insists Iran’s president Hasan Rouhani both needs and wants a re-engagement with the world. He says he met with very senior political people and was pleasantly surprised to discover that ordinary citizens were quite open about politics; ordinary folks want “American movies, American pop culture, and to do business…” He believes the Ayatollah has to be careful “because otherwise, in the medium term, the people can turn, especially since there’s a lot of hope that this guy, Rouhani, could improve the economy, make a deal and improve it even more.” Perhaps. But if you’re going to look at the future of Iran, it’s a good idea to go knock on the door, so to speak, of Kelly Golnoush Niknejad, the founder and editor of the Tehran Bureau. What began as a blog has grown into an independent news organization that has partnered in the past with PBS and currently with Britain’s Guardian.

Niknejad says it’s mostly the IRGC, the Revolutionary Guards, who are the hardliners controlling the economy.

“They benefit enormously from smuggling, but they also benefit from having a closed economy because they have this huge market all to themselves.”

Niknejad points out that the Revolutionary Guard has a very efficient and tight control over the country’s borders, all of which facilitates their involvement in smuggling. If anyone doubts it, consider that a particular brand of Western whiskey gets in through the black market in one part of the country, and surprise—the same brand is the black market choice for other areas.

“They control much of it,” says Niknejad. “If you talk to people, they say, well, it’s the kind of isolation that Iran has been in for such a long time, that builds such a system. It helps them thrive, it helped the Revolutionary Guards thrive, both during the Iran/ Iraq war and the two decades since. So some people believe that the more sanctions, the more isolation, the more punitive the stance, then the more they’ll continue to thrive.”

As for ordinary Iranians, she says, they’re tired of being isolated. “Because things are so difficult, because of all the pressures on them, brought on by more and more sanctions, they don’t have time to think about lofty things.”

Whatever the people might think of their government, they feel they’re the ones bearing the brunt and the punishment of sanctions.

Niknejad cautions, however, against assuming that officials and conservatives all think alike or as a political bloc. “Even if you just go to the hardliners or the fundamentalists or whatever you want to call it, even within that group, there are many factions. I think, basically, those on the conservative end of things—that includes most of the Revolutionary Guard—they are a holdout, because I think they too are afraid of maybe, you know, more dialogue, more opening up, more cultural exchanges will lead to a perestroika….

But at the same time, I think they also would be on board in terms of opening things up, maybe in the model of China.”

And while human rights in Iran have always been a high profile issue in Western media, she argues, “For most Iranians, if they’re not involved in politics and if they’re not involved in journalism, they have a pretty open lifestyle.”

A generation from a baby boom in the 1980s doesn’t remember Ayatollah Khomeini, and having grown up with the Internet, display a different kind of rebellion. Knowing certain subjects and individuals are dangerous, young people might rebel through sex with multiple partners. Niknejad says even by standards here, it’s decadent behavior that they mistakenly believe is normal in the West. All of it’s “something that would make Khomeini turn in his grave.”


MARCH, 2012: The party is already underway when Reza and I show up at our friend Mohsen’s small, open-concept apartment in Tehran (I’ve changed people’s names to protect their identities). “I’m Sexy and I Know It” by LMFAO is blaring from the large flatscreen TV in the living room. I remove my headscarf and my manteau, which I have to wear every time I’m in public.

While Mohsen pours us bootlegged vodka with juice, his girlfriend, Sima, emerges from the bedroom. Sima and Mohsen are dating casually, Reza told me before the party; Mohsen is just having fun until he gets his U.S. visa in a few months, and Sima is not that much into him.

Sima is wearing a little black dress and high heels. A thick layer of foundation covers her young face, and her lips are painted burgundy. Her long black hair is parted in the middle. Her nose looks natural, but many women in Tehran have had nose jobs. It’s a sign of prestige and a sign that you’re not frumpy, Reza once explained. That’s why even poor women save up to get a Barbie nose. Plus, he said, because Iranian women have to cover their hair and their bodies in public, they want their faces to be perfect since that’s the only exposed part.

The pizza Mohsen has ordered arrives and all seven of us gather around the kitchen counter to get a slice. The woman standing next to me is drunk. She seems to be in her early 40s. She asks me how I like Tehran and before I answer, she says, “We’re not like people in Afghanistan. We’re modern. We watch satellite TV, and we travel. Tell everyone that we’re modern.”

Every Iranian I’ve spoken to here has reiterated that. Iranians seem eager to differentiate themselves from Arabs, too, whom they see as less modern. That sentiment dates back to the 7th century, when Arabs imposed Islam on the Persians. Early on in our relationship, Reza told me that out of all countries in the Middle East, Iran has the biggest gap between a progressive culture for many of the people and the mentality of a national government.

While we eat, Mohsen turns up the music. I’m surprised because parties are illegal in Iran, so his neighbors could call the cops on us, and they could raid the place. I ask him if he’s afraid. He says he isn’t because, if the cops show up, he can bribe them and they’ll likely leave us alone.

“It’s really open here,” Iman, a young tall guy with a T-shirt and tight-fitting jeans, chimes in. He’s referring to the fact that behind closed doors, many Iranians do illegal things such as watching foreign shows, drinking alcohol, wearing revealing clothes and criticizing the government.

Iman has spent most of his life in the U.S. with his Iranian family. He moved here recently. He prefers living in Tehran because he can support himself—by playing poker. He’s actually really good at it. He can go to parties every night, and he’s surrounded by fun-loving friends who make sure he’ll never be lonely.

That’s what Reza told me after the party. What’s not to like about this life? Sanctions, hyperinflation and oppression, I replied. Still, Reza countered, life here is more fun than life in the West. Here, you don’t have to make an appointment to see your friends three weeks from now; they’re always available. An out-of-the-blue phone call, he argues, isn’t considered an invasion of privacy. And Iranians know how to entertain themselves because they’ve become good at leading double lives and circumventing restrictions—just like the Islamic regime has in the face of foreign sanctions.

Three years have passed since that evening, but the Iranian underground culture of partying, drinking alcohol, and casual sex hasn’t changed much. That’s what my Iranian friends tell me. So if sanctions ever do fall, those Western businesses lining up to bring new gadgets and products may live by the motto, “the enemy of my enemy is my consumer.”

—Yaldaz Sadakova

Copyright 2014 Rogers Publishing Ltd. This article first appeared in the March 2015 edition of Corporate Risk Canada magazine