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| In Iran, State-Backed Companies Win From Lifted Sanctions | In Iran, State-Backed Companies Win From Lifted Sanctions |
| (about 13 hours later) | |
| TEHRAN — Only weeks into what was widely anticipated to be a helter-skelter, post-sanctions rush of Western money and expertise into Iran, limits to the country’s opening are beginning to emerge as the conservative leadership seeks to limit the reach of Western influences. | |
| Behind the headlines announcing big business contracts with European companies it is becoming increasingly clear that, so far, the only deals being struck have been with the state-backed conglomerates. These are the groups that dominate major industrial and commercial sectors of the Iranian economy and are tightly controlled by pension funds and investment companies linked to state organizations, like the Revolutionary Guards. | Behind the headlines announcing big business contracts with European companies it is becoming increasingly clear that, so far, the only deals being struck have been with the state-backed conglomerates. These are the groups that dominate major industrial and commercial sectors of the Iranian economy and are tightly controlled by pension funds and investment companies linked to state organizations, like the Revolutionary Guards. |
| As a result, little or nothing is trickling down to the lower levels of Iran’s beleaguered but still enormous private sector. “We have a conflict of interest with the government,” said Bahman Esghi, the secretary general of the Tehran Chamber of Commerce. “Because they have outgrown all their competitors.” | As a result, little or nothing is trickling down to the lower levels of Iran’s beleaguered but still enormous private sector. “We have a conflict of interest with the government,” said Bahman Esghi, the secretary general of the Tehran Chamber of Commerce. “Because they have outgrown all their competitors.” |
| All the major international deals signed in recent weeks have involved state or semistate-backed industries. The national carrier, Iran Air, signed at deal to buy more than 100 planes from Airbus. The Iranian Mines and Mining Industries Development and Renovation Organization, one of the largest state entities, started a $2 billion joint venture with an Italian steel producer, Danieli. PSA Peugeot Citroën of France will invest $439 million in carmaker Iran Khodro. | All the major international deals signed in recent weeks have involved state or semistate-backed industries. The national carrier, Iran Air, signed at deal to buy more than 100 planes from Airbus. The Iranian Mines and Mining Industries Development and Renovation Organization, one of the largest state entities, started a $2 billion joint venture with an Italian steel producer, Danieli. PSA Peugeot Citroën of France will invest $439 million in carmaker Iran Khodro. |
| But when smaller private businesses reach out to their foreign counterparts the response they get is still: how will you pay? Nuclear sanctions might be lifted but almost all international banks continue to shy away from the Iranian market because of unilateral American regulations that label Iran as a state sponsor of terror. | But when smaller private businesses reach out to their foreign counterparts the response they get is still: how will you pay? Nuclear sanctions might be lifted but almost all international banks continue to shy away from the Iranian market because of unilateral American regulations that label Iran as a state sponsor of terror. |
| “We are not getting any credit, inside or outside of the country, we can’t make transfers and the government has other priorities,” Mr. Esghi said. Next week Mr. Esghi, the public face of the largest private business ownership organization in the country, will be shutting down his own business, a bus factory, and sending his remaining 14 employees home. The reason, he said, is that there is no work and no prospect of any, even after the lifting of sanctions. | “We are not getting any credit, inside or outside of the country, we can’t make transfers and the government has other priorities,” Mr. Esghi said. Next week Mr. Esghi, the public face of the largest private business ownership organization in the country, will be shutting down his own business, a bus factory, and sending his remaining 14 employees home. The reason, he said, is that there is no work and no prospect of any, even after the lifting of sanctions. |
| “I’ll be the unemployed secretary general of the Tehran Chamber of Commerce,” he said. “Ironic, isn’t it?” | “I’ll be the unemployed secretary general of the Tehran Chamber of Commerce,” he said. “Ironic, isn’t it?” |
| The lifting of the sanctions, Mr. Esghi said, will have some positive effects for those in the private sector who manage to get their hands on some of the money coming in. “But mainly, it seems, the government is getting fatter and fatter,” he said. | The lifting of the sanctions, Mr. Esghi said, will have some positive effects for those in the private sector who manage to get their hands on some of the money coming in. “But mainly, it seems, the government is getting fatter and fatter,” he said. |
| President Hassan Rouhani on Tuesday repeated the government’s aim of achieving 8 percent growth this year, not an unreasonable goal given the influx of frozen assets and the enormous investment needed for Iran to modernize facilities grown decrepit after years of sanctions. But to achieve such growth levels, experts here say, particularly in an era of low oil prices, would require an easing of financial strictures that Iran’s conservative leaders show no signs of tolerating. | President Hassan Rouhani on Tuesday repeated the government’s aim of achieving 8 percent growth this year, not an unreasonable goal given the influx of frozen assets and the enormous investment needed for Iran to modernize facilities grown decrepit after years of sanctions. But to achieve such growth levels, experts here say, particularly in an era of low oil prices, would require an easing of financial strictures that Iran’s conservative leaders show no signs of tolerating. |
| Some analysts say the state-backed conglomerates are the only entities able to handle the $50 billion or so in annual investment that the country needs. | Some analysts say the state-backed conglomerates are the only entities able to handle the $50 billion or so in annual investment that the country needs. |
| “Our bigger companies are our top priority,” said Amin Amanzadeh, a financial reporter for several Iranian newspapers. “They are the only ones who can handle foreign investment. Also, if they improve the whole economy will.” | “Our bigger companies are our top priority,” said Amin Amanzadeh, a financial reporter for several Iranian newspapers. “They are the only ones who can handle foreign investment. Also, if they improve the whole economy will.” |
| But critics of the quasi-socialist conglomerate system dismiss such claims, saying it is notoriously corrupt and inefficient. More likely, they say, the conservative leadership’s overriding aim is to keep Western influence in the economy and society to a minimum. | But critics of the quasi-socialist conglomerate system dismiss such claims, saying it is notoriously corrupt and inefficient. More likely, they say, the conservative leadership’s overriding aim is to keep Western influence in the economy and society to a minimum. |
| Iran’s hard-line factions do not dispute the point. “Investments through our big enterprises can be controlled,” said Hamidreza Taraghi, an analyst who is close to Iran’s leaders. Really opening up the country, in the way some emerging-market countries have, is out of the question, he said. | Iran’s hard-line factions do not dispute the point. “Investments through our big enterprises can be controlled,” said Hamidreza Taraghi, an analyst who is close to Iran’s leaders. Really opening up the country, in the way some emerging-market countries have, is out of the question, he said. |
| “That would provide leverage to Western governments and investors, leverage they would use to influence our politics, culture and society.” | “That would provide leverage to Western governments and investors, leverage they would use to influence our politics, culture and society.” |
| Iran’s supreme leader, Ayatollah Ali Khamenei, has been emphasizing that point ever since the nuclear deal was signed in July. Most analysts say it will be a long time, if ever, before Iran relaxes controls even to the level of China when it began reforms in the 1970s. | Iran’s supreme leader, Ayatollah Ali Khamenei, has been emphasizing that point ever since the nuclear deal was signed in July. Most analysts say it will be a long time, if ever, before Iran relaxes controls even to the level of China when it began reforms in the 1970s. |
| Already the influx of foreigners that comes with the foreign investments just agreed to will be an issue for the hard-liners who say they protect Iran’s ideology, Mr. Esghi said. There are currently fewer than 1,000 Westerners living in Tehran, a city of 12 million. “Imagine a hundred thousand living here,” he added. “They don’t have the stomach for that.” | Already the influx of foreigners that comes with the foreign investments just agreed to will be an issue for the hard-liners who say they protect Iran’s ideology, Mr. Esghi said. There are currently fewer than 1,000 Westerners living in Tehran, a city of 12 million. “Imagine a hundred thousand living here,” he added. “They don’t have the stomach for that.” |
| For President Hassan Rouhani, who ran on the promise of lifting sanctions and ending Iran’s isolation, the continuing restrictions could pose political problems. Although sanctions were lifted only two weeks ago, Iranians are already complaining about the glacial pace of change. | For President Hassan Rouhani, who ran on the promise of lifting sanctions and ending Iran’s isolation, the continuing restrictions could pose political problems. Although sanctions were lifted only two weeks ago, Iranians are already complaining about the glacial pace of change. |
| “Sure there is money coming in,” said Reza Alaverdi, a porter at Tehran’s grand bazaar as he was pushing a cart laden with locally produced shirts through the narrow alleyways. “It’s just not coming to me.” | “Sure there is money coming in,” said Reza Alaverdi, a porter at Tehran’s grand bazaar as he was pushing a cart laden with locally produced shirts through the narrow alleyways. “It’s just not coming to me.” |
| One of the few indicators of change visible to all, Iran’s national currency, the rial, has not moved since the lifting of the sanctions. “The government wants to keep the price of the dollar high, now that they have access to dollars,” said one money changer who refused to give his name. | One of the few indicators of change visible to all, Iran’s national currency, the rial, has not moved since the lifting of the sanctions. “The government wants to keep the price of the dollar high, now that they have access to dollars,” said one money changer who refused to give his name. |
| The housing market has stalled, as have land prices, a reflection some say of the crash in the oil market. “As long as oil prices are low not much will change,” said Ismael Tabrizi, a watch seller. | The housing market has stalled, as have land prices, a reflection some say of the crash in the oil market. “As long as oil prices are low not much will change,” said Ismael Tabrizi, a watch seller. |
| Those in the private sector have few hopes of fast improvement, said one entrepreneur, frustrated that international partners are not providing credit and banks refuse to make transfers. | Those in the private sector have few hopes of fast improvement, said one entrepreneur, frustrated that international partners are not providing credit and banks refuse to make transfers. |
| The problem he says, is that while the state-backed conglomerates cinch deals with the help of special guarantees, the government is doing nothing to help smaller businesses and entrepreneurs secure credit. | The problem he says, is that while the state-backed conglomerates cinch deals with the help of special guarantees, the government is doing nothing to help smaller businesses and entrepreneurs secure credit. |
| “I just went to a conference in Dubai,” said Kaveh Sheikholeslami, an importer of neurosurgery equipment. All the Western manufacturers wanted to sit down with him, he said. But he could not close any deals. | “I just went to a conference in Dubai,” said Kaveh Sheikholeslami, an importer of neurosurgery equipment. All the Western manufacturers wanted to sit down with him, he said. But he could not close any deals. |
| “I wanted to buy a $30,000 product, but they asked me, ‘Can you transfer to our bank account?’ I had to say no, finished my coffee and moved on.” | “I wanted to buy a $30,000 product, but they asked me, ‘Can you transfer to our bank account?’ I had to say no, finished my coffee and moved on.” |