American Corporations will Likely be at the Back of Iran's Business Queue in the Beginning

One can summarize the potential for US business to engage with Iran 1 sentence: Iran exports crude oil but imports fuel. Why? The Iranians lack adequate capacity to refine their own oil for domestic use.

This weird fact underscores how, hemmed within by sanctions and the restricted worldview of their theocracy, Iranian technology and set up equipment is years, even years, behind the West – not just in the power sector, but across the board in many industries.

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

However, will American firms immediately benefit? They will most likely not benefit as much as Chinese, Euro, and European companies, who will be the first at the gates associated with Tehran.

Faced with a hostile Congress as well as historical ties to Israel, President barack obama has to strike an untrusting as well as gradualist stance toward Iran. US rules can only ease over time, while Russia and China (two five negotiating nations) have previously begun to make billion-dollar deals. German born and French company reps are already in Tehran. Moreover, the official opprobrium of the mullahs in charge of Iran still principally direct against the US because “The Great Satan.”

Eager Iranian youth

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

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

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

This has two ramifications. 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 might further reduce global oil prices.

The mega-billions that Iran’s commercial 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 legally represented by their international affiliates and subsidiaries to minimize the actual “American” association. Either way, Iran represents a newly opened market many US companies cannot ignore.

What the Iran nuclear deal method for American business is republished with permission from The Conversation