Would new market legislation really help so stop the evasion of the foreign companies from Iran?
I have decided this week to focus on the foreign companies which have implementations in Iran. Indeed two weeks ago there was a discussion berween the United States and the other permanent members of the UN Security Council on possible new sanctions agains the country because on the Tehran's nuclear program. The country decided to sweeten the legislation concerning the foreign investments on its financial market. The problem nowadays is that some big foreign companies have announced their aim to stop their activities in the country in support to the US's policy. How have been perceived this news by the newspapers? Indeed this problem cannot only be seen with just a financial view, because even if it is the foreign investments on the Iran's financial market which are concerned, it cannot be separated from the political view. There are many issues in this subject, and so lots of points of view coming from the newspapers.
Newspapers Articles:
The news concerning the new legislation on the Iran's financial market has been displaid by Les Echos. The French newspaper explains in its article entitled "Iran wants to seduce investors", that the restriction concerning the funds transfers out of Iran have been raised and that the limit of hte foreign participations in the capital of the national companies has been carried from 10 to 20%.
The author states Ali Saleh Abadi, the director of the Audit Board of the stock market transactions: "The government puts forward from now on more incentive measures and less condition with the foreign investors. The investors will be exempted from taxes and will not be subjected any more with excessive payments". This new legislation seems to be good news for Les Echos. Abadi is quoted in a positive aspect even if the author specifies at the end of its article that companies are more reluctant because of the Uranium's program.
In this article only the conditions of the new legislation are developed, with an only small flat given at the end and explaining the companies' reluctance. The discussion concerning the sanction is not mentioned at all.
But this is the case in the Financial Times on its article entitled "Iran central bank in sanction spotlight". The author introduces its article, explaining that the USA tries to convince Russia and China to include Iran's central bank in a United nation sanctions resolution against Tehran's nuclear program. Indeed the article focuses on the Bank Markazi (Iran(s Central Bank), which is reproached by the USA to have had illicit activities. The author quotes Matthew Levitt, a former US Treasury Official who is now at the Washington Institute for Near East Policy: "The central bank (Bank Markazi) remains the one major financial institution which officials have been involved in Iran's illicit activity but has not yet been targeted. Closing that loophole would have a major impact on Iran's ability to finance its proliferation and other illicit activities".
Bank Markazi is also quoted, saying that it has always adhered to the best international practices and has respected international laws, and then the government, which insists saying that its nuclear program is purely peaceful. But the author goes on, specifying that Washington is seeking measures on finance, energy, inspection of cargoes coming from Iran, and wants to push an agreement on a complete embargo on arms sales to Iran.
This article doesn't take into account the news concerning the new legislation for foreign companies, but focuses on the politial issues.
The Herald Tribune in "Companies feeling more pressure to cut Iran ties", focuses on the big firms which have announced the end of theit artivities in the country. The article first list Ernst & Young and Pricewaterhousecoopers, which have both publicly "shun" the Islamic Republic. Then it is the turn to General Electric, Huntsman, Siemens, Caterpillar, Ingersoll Rand, Daimler, but also the Royal Dutch Shell and the Malaysian state oil company which decided to leave after its current contracts ended.
The author explains that with the sanctions since the last three decades, American companies do not have big businesses in Iran, but that the federal government had awarded more than $107bn in contracts payments, grants and other benefits over the past decade to foreign American companies which were in Iran. This companies' evasion could have huge impacts for Iran. Mark D. Wallace, a fromer ambassador under Mr. Bush presidency explains: "You're seeing the regime standing at the precipice and if a few more companies pull out they don't have the ability to access international services, goods and capital, they're in real trouble".
The article specifies that foreing businesses have been an important course of support of Iran in the recent years. Some figures are given to reinforce the author's point of view. Indeed, inthe last five years, 41 foreign companies have helped Iran to develop its oil and gas sector, which is not a small participation, considering that the sector represents more than half of Tehran government's income.
I also tried to find some articles extracted from Iranian newspapers in order to cover the largest points of view's panel, and to see have is seen the issues from the opposite side.
The article entitled "Ahmadinejad says he and Obama should not act hastily" comes from the Tehran Times. This article only focuses on quotations of the Iran's President against the US Government. The author quotes Ahmadinejad in different interviews about the US sanctions: "The resolution (presented to the International Atomic Energy Agency) was not based on any legal or lawful framework but surely a political, politicized act. It reduced public confidence in the negociation process in Iran" (Al Jazeera's interview). "The iranian nation is able to withstand the pressure of the United States and its allies". These quotations which constitute the article have really strong positions and display threats towards the USA: "Any connections and contracts with Iran, the pathway to Iran, will be shut permanently".
The author sides with the Iran's President. according to Ahmadinejad, these sanctions are not coming from any legal problem, but are only coming from political issues from the USA towards Iran.
On the contrary the Iran Times prefers to choose a positive tone in "US Firms fault sanctions on Iran". The author quotes Jim Fine, a legislative secretary for foreign policy:" I have seen very little evidence that the USA is still working on the engagement track". Then it is mentioned that that these measures would penalize foreign companies that export gasoline to Iran rather than Iran. This article trics to give back confidence to the Iranians readers, explaining that such measures would have more negative impact for foreign companies than the country.
My point of view:
I think that discussions between the USA and Iran will become really tense, and I do not know how this will end.. maybe a third war..?? Should the companies flee Iran and side with the US policy, even if they have implementations which are beneficial for their activities? I think the business will be harder and harder in the future in this country which semms to turn back tje clock since the election of ahmadinejad. TO my point of view the new legislation to attract foreign investors is the last desperate try before cutting the international relations. The companies which are stopping their activities will find other markets, but I do not think that Iran will find new foreign investors...
The music of the week:
The nocturne in C minor, Chopin. We can firsst hear the sadness of Iran, isolated country, and then the anger of Ahmadinejad...
Sources:
"Iran central bank in sanctions spotlight", Financial Times, 25th of April 2010
"Iran wants to seduce foreign investors", Les Echos, 26th of April 2010
"Companies feeling more pressure to cut Iran ties", the Herald Tribune, 23rd of April 2010
"Ahmadinejad says he and Obama should not act hastily", Tehran Times, 6th of May 2010
"US firms fault sanctions on Iran" Iran Daily, 10th of May 2010
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