Home > 1999-2002 from Middle East, Iran > Tehran reopens for business

Tehran reopens for business

November 7, 2000

By Guy Dinmore
Financial Times
November 7, 2000

Looking over their shoulders as the competition closes in, European and Asian exec-utives are flocking to Iran, putting Tehran back on the business map 21 years after the Islamic revolution.

The attraction is twofold: high oil prices filling Iran’s coffers (foreign exchange reserves exceed debt commitments for the first time in a decade); and a growing belief that the US will lift its unilateral trade embargo within a year.

An effective foreign policy spearheaded by Mohammad Khatami, the charismatic pro-reform president, has markedly improved relations with European Union members, which had been strained. Britain last month reopened cover by its export credit guarantee department. “Iran is open for business,” declared Richard Caborn, the first UK trade minister to visit Tehran since the last Shah left.

Iran’s capital is rising to the challenge. But the difficulties of doing business there make it hard to get rich quick from one of the last important and still untapped emerging markets. The barriers to entry are high: from finding your way around one of the world’s most traffic-bound and polluted cities to dealing with a labyrinthine bureaucracy, still often driven by “revolutionary” attitudes to business.

An early lesson is offered by the challenge of getting into the country. An exasperated investor from the UK recently wrote to the Iran Daily, one of four English-language newspapers, that he would take his money elsewhere as he could not get a visa. However, persistence and the right connections in Tehran are the answer and procedures seem to be improving.

Business negotiations can be drawn-out affairs lasting as much as a year – or perhaps only a matter of days if the Iranian partner feels the product is unique.

Corruption is widespread and has been identified by Ayatollah Ali Khamenei, the supreme leader, as a serious problem. As one Iranian businessman puts it: “Iran is not at the Russian mafia end of the corruption scale but neither is it a completely free economy. We are in the grey zone.”

A few big western companies are rumoured to have offered substantial “bonuses” or “finder’s fees” to win contracts but since a deal may require the consent of several people in different factions it can be unclear who should be offered what.

A good lawyer and a detailed contract are essential. The huge business delegation that accompanied Jose Maria Aznar, Spain’s prime minister, to Tehran last month chose Atieh Bahar Consulting to handle almost everything. Run by a family of US-educated Iranian expatriates who have returned to Iran, the consultancy offers a one-stop service, from the moment the private jet touches down to signing the contract.

It is unfortunate for UK travellers that just as business was perking up, British Airways, for lack of modern aircraft, this month stopped its three-times-weekly direct flight to Tehran. British Mediterranean, a BA franchisee, instead now flies via Baku in Azerbaijan with smaller aircraft. Air France gave up some years ago and it is Lufthansa and SwissAir who are reaping the rewards.

On arrival, do not offer duty-free drinks: Iran is an Islamic Republic and alcohol is forbidden, although tolerance is shown to non-Muslim minorities if they consume at home. And, as most well-to-do Iranians will tell you, a “supplier” can cater for all your needs, from Viagra to champagne.

Public show and private lives are quite separate in Iran: Iranians, renowned for their hospitality and openness to foreigners, are avid party-goers. Before the revolution (as many a sentence begins in Tehran), the well-heeled would stay at the usual places: Hyatt, Hilton, Sheraton and Intercontinental. Still there, but rather worn at the edges, the nationalised hotels are now known, respectively, as the Grand Azadi (Freedom), Esteqlal (Independence), Homa and Laleh. Prices are about Dollars 130 (Pounds 90) for a single room and more than Dollars 200 for a suite.

In the city at large, internet cafes are springing up and satellite television is common. Iranian food, with subtle use of spices and fruit, is regrettably rare in restaurants, staples being lamb and chicken kebabs. But Ali Qapou restaurant offers traditional food and music, while Monsoon is popular with foreigners for its wide range of Asian dishes, including sushi.

The hotel that passed a recent “cornflakes” test – responding to an order for western-style food in the middle of the night – was the Laleh, coming up trumps in at least trying to cater to western demands. Laleh, incidentally, is Farsi for “tulip”, the symbol of martyrdom. Death and sacrifice are themes that resonate through Shia Muslim history, especially since the revolution and during the eight-year war with Iraq that ended in 1988 but at times seems to have finished only yesterday.

In spite of Iran’s image abroad, especially in the US, as a country riddled with fanatics and terrorists, foreign residents in Tehran generally feel secure. The case of Helmut Hofer, a German businessman sentenced to death for having sex with an Iranian woman, had more to do with politics than with philandering and he was eventually released.

Some western oil companies have instructed their staff not to fly on Iran’s ageing fleet of Tupolevs, leased from Russia and used on domestic flights. Yet Iran has not suffered a serious accident for several years.

The Palestinian intifada against Israeli occupation has provoked Iran’s usual denunciations of Israel and its western backers, especially the US. Nonetheless, western diplomats and business residents in Tehran do not feel at risk from retaliation. Iran may also conjure up images of women in black, dressed from head to toe in the chador, the all-enveloping sleeveless cloak that requires clenched teeth to keep it in place while carrying babies or shopping. Many women do wear the chador but others are testing the tolerance of the moral police by raising the hemlines of their coats, exposing their tresses and displaying painted toenails.

Foreign women must cover up with at least a headscarf and coat but apart from such sartorial discrimination they are treated with respect in the world of business. In public an Iranian man may not touch a woman to whom he is not related. This means a business deal may not be sealed with a handshake, except by the more modern Iranian men, but it also means that women are less likely to be harassed in public.

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