Executive Summary:
The story of Iran’s post-sanctions economic recovery is so far one of great expectations and frustrating delays. On the two-year anniversary of the implementation of the Joint Comprehensive Plan of Action, this report examines the “economic implementation” of the nuclear deal. Multinational companies remain committed to the Iranian market, but the much-needed flow of external finance, including foreign direct investment, has yet to materialize. The provision of external finance has been hampered primarily by external factors, and not challenges endemic to Iran’s business environment. Drawing on a unique survey commissioned by International Crisis Group and Including over sixty senior executives, this report details how the risk of sanctions snapback and rising political tension, largely amplified by the rhetoric of the Trump administration, have caused material delays in the Iran investment plans of some of the world’s largest companies. While Trump has this week opted to reissue the sanctions waivers that keep the United States in the nuclear deal, the act of decertification alone has already compounded delays—51 percent of executives report that their company’s investment plans were adversely affected by Trump’s October announcement.
Against this backdrop, the nuclear deal is sliding into “zombie state.” Neither totally dead, nor totally alive, the deal exists in an ambiguous position that stymies most commercial actors. To address chronic uncertainty, European stakeholders ought to spearhead a technical, programmatic dialogue on the obstacles preventing external finance flows to Iran. In doing so, business leaders will be better positioned to bring their stubborn optimism and valuable pragmatism to bear in support of the quid-pro-quo that underpins the nuclear deal. This rare optimism should not be taken for granted—a staggering 91 percent of executives surveyed for this report still believe that their companies can be commercially successful in Iran. Given the recent protests in the country, which have made the political imperatives of job creation and economic reform absolutely clear, policymakers should extend every effort to support the success of these companies, whose investments were expected by Iranians as a central outcome of the nuclear deal.