This report was originally published in March 2016.
The Islamic Republic of Iran is about to rejoin the world’s leading economies as a global player in business, trade, and finance.
President Hassan Rouhani has worked hard to change Iran’s international relations strategy, signing the landmark International Atomic Energy Agency (IAEA) nuclear deal earlier this year, but there are significant, lingering questions about Iran’s ability to cope with the potential influx of Western investment. Before investors jump at the chance to access this new, tantalizing market, there are a few factors to consider.
- Although the oil embargo and accompanying banking restrictions have been eliminated, countless sanctions tied to Iran’s human rights record and its support of various terror and extremist groups remain in place. Navigating the remaining sanctions can be difficult and may leave investors open to the possibility of becoming the subject of deep US- and Western-government scrutiny.
- Iran’s confusing, arbitrary, and sometimes lackluster regulatory environment, and the propensity for “fixers” to require “extra payments,” can trap potential investors in a web of Foreign Corrupt Practices Act (FCPA)-related issues.
- Should investors face a legal problem in Iran, they will have to seek redress or fight it out in Iran’s relatively opaque and politically influenced judicial system.
If, despite these myriad potential issues, an investor still decides that the operational risk of investing in Iran is worth the potential payoff, performing proper due diligence is essential. Additionally, LEVICK Business Intelligence understands that negotiating the actual investment is only half the battle. Communicating to shareholders the decision to invest in a potentially controversial area can mean the difference between total buy-in, or outright rejection of your long-range plans.
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