Daily Bulletin


The Conversation

  • Written by The Conversation
imageIran's economy is now open for business with more outside countries.David Holt/flickr, CC BY-SA

The potential for US business to engage with Iran can be summarized in one sentence: Iran exports crude oil but imports gasoline. Why? The Iranians lack sufficient capacity to refine their own oil for domestic use.

This bizarre fact underscores how, hemmed in by sanctions and the limited world view of their theocracy, Iranian technology and installed equipment is years, even decades, behind the West – not just in the energy sector, but across the board in most industries.

Their economy is already the biggest in the Middle East, with the exception of Turkey. And with a population of 80 million having an average middle-class income of around US$13,000 per capita – a reasonable estimate despite widely fluctuating exchange rates – Iran comprises a large market, hungry for the latest technology and upgrading of its industries. The investment potential is enormous and will remain so for decades.

But will American firms immediately benefit? Probably not as much as Chinese, Russian and European companies, who will be the first at the gates of Tehran.

Faced with a hostile Congress and historical ties to Israel, President Obama has to strike an untrusting and gradualist stance toward Iran. US regulations can only be eased over time, while Russia and China (two of the five negotiating nations) have already begun to make billion-dollar deals. German and French company representatives are already in Tehran. Moreover, the official opprobrium of the mullahs in charge of Iran is still directed principally against the US as “The Great Satan.”

Eager Iranian youth

But that epithet should not fool or scare American corporations into staying away from the Iranian market. Although demographic data in Iran are uncertain, recall that 57% to 62% of Iranians, or 45 to 50 million people, were born after the revolution that brought the mullahs to power. To the under-30 crowd, or approximately 60% of the country, the rhetoric of the revolution and anti-American sentiment has the same background presence as the weather or air pollution in Tehran – persistent background static with no great long-term relevance.

Under the chādor – the outer garment forced on Iranian women – blue jeans, lacy and even risqué underwear and designer brands are the rage. (One of the subordinate considerations on the part of the US delegation led by John Kerry may have been the notion that easing of sanctions can lead to a greater zeal on the part of Iranian youth to engage with the West and absorb Western ideas.)

imageIran has 10% of the world’s oil reserves but only 4% of production due to lack of infrastructure investment.Alireza824/wikimedia, CC BY-SA

From a commercial angle, it is a “win-win” story for both the Iranians and the US. Iranian youth are open and eager for western ideas and brands. The Iranian economy badly needs upgrading, to bring it up to Western standards. The potential is large. Iran has 10% of world oil reserves, but has only a 4% market share currently.

This has two implications. American oil-field services technology can play a big role in augmenting Iran’s oil production. At the same time, letting loose more crude from Iranian oil fields could further reduce global oil prices.

The mega-billions that Iran’s industrial revamping (covering all industrial sectors) would cost can be easily be financed once Iranian oil exports can resume at their normal (pre-sanction) levels.

US companies have a great opportunity, but are likely to be at the back of the queue for a while – unless they can be legally represented by their foreign affiliates and subsidiaries to minimize the “American” association. Either way, Iran represents a newly opened market many US companies can’t ignore.

Farok J Contractor does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

Authors: The Conversation

Read more http://theconversation.com/what-the-iran-nuclear-deal-means-for-american-business-44747

Writers Wanted

Despite more than 30 major inquiries, governments still haven't fixed aged care. Why are they getting away with it?

arrow_forward

Mathias Cormann wants to lead the OECD. The choice it makes will be pivotal

arrow_forward

The Conversation
INTERWEBS DIGITAL AGENCY

Politics

Prime Minister Interview with Kieran Gilbert, Sky News

KIERAN GILBERT: Kieran Gilbert here with you and the Prime Minister joins me. Prime Minister, thanks so much for your time.  PRIME MINISTER: G'day Kieran.  GILBERT: An assumption a vaccine is ...

Daily Bulletin - avatar Daily Bulletin

Did BLM Really Change the US Police Work?

The Black Lives Matter (BLM) movement has proven that the power of the state rests in the hands of the people it governs. Following the death of 46-year-old black American George Floyd in a case of ...

a Guest Writer - avatar a Guest Writer

Scott Morrison: the right man at the right time

Australia is not at war with another nation or ideology in August 2020 but the nation is in conflict. There are serious threats from China and there are many challenges flowing from the pandemic tha...

Greg Rogers - avatar Greg Rogers

Business News

What Few People Know About Painters

What do you look for when renting a house? Most potential tenants look for the general appearance of a house. If the house is poorly decorated, they are likely to turn you off. A painter Adelaide ...

News Co - avatar News Co

Important Instagram marketing tips

Instagram marketing is one of the most important approaches for digital advertisers. If you want to promote products online, then Instagram along with Facebook is the perfect option. After Faceboo...

News Co - avatar News Co

Top 3 Accident Law Firms of Riverside County, CA

Do you live in Riverside County and faced an accident and now looking for a trusted Law firm to present your case? If yes, then you have come to the right place. The purpose of the article is to...

News Co - avatar News Co



News Co Media Group

Content & Technology Connecting Global Audiences

More Information - Less Opinion