August 28, 2015

SNAPPING BACK TO NORMAL:

Little Satan leverages hell : Businessmen sense an opportunity, even if Britain lags behind its rivals (The Economist, Aug 29th 2015)

[N]ow that the two are talking to each other again, the economic opportunities in Iran, with a population of 80m and an entire economy to rejig after years of isolation, might trump lingering distrust and suspicion. To that end Mr Hammond was accompanied by seven senior businessmen, to test the waters, and the message from the Iranian side was clear. As Simon Moore of the Confederation of British Industry, one of the delegates, puts it, "the Iranians want to acquire the technology to rebuild their country and their economy", and they are keen for British companies to help.

Before sanctions were imposed, Britain was one of the top three traders with Iran. But trade has tapered off significantly in recent years, as Britain enforced the sanctions more strictly than others--another sin that the aggrieved Iranians were keen to lecture their British guests about last weekend. The result, says Ali Akbar Ahsan, a consultant at the economic advisory group Magellan Capital, is that Britain lags far behind European rivals such as France, Italy and Germany, which reduced their trade with Iran far less than Britain did. They have also been quicker to send large trade delegations to Iran since the nuclear agreement.

Nonetheless, British expertise in several sectors is much sought after in Iran. In particular, there will be a lot of demand for construction, architectural and engineering companies, as Iran attempts to make good years of neglect of its airports, ports and roads. British companies will also have a role in rebuilding the oil and gas infrastructure. Help in environmental technology, such as desalination, was also mentioned, as was biotechnology.

The Iranians are also keen to regain access to London's capital and insurance markets. This area will be fraught for British banks. They will have to work out whether they can reconcile any new dealings in Iran with the demands of American regulators enforcing that country's financial sanctions. Certainly, in this sector at least expect British companies to proceed with caution.

Posted by at August 28, 2015 7:28 PM
  

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