Will Asians Delay Lead to Loss in Iran's Post-Sanctions Market?

Monday, November 2, 2015

Mehrdad Pahlevani
Asia Analyst

The proposition that every country’s foreign policy is extension of its domestic politics is an obvious matter, but one of the latest prominent examples in this regard is related to Iran. Iran's presidential polls in 2013 led to the election of an administration by the Iranian people, which after the lapse of two years has been able to resolve its most critical challenge with the West over the country’s nuclear issue on July 14, 2015. Of course, before July 14, political visits to Iran had increased with Iranian Foreign Minister Mohammad Javad Zarif; his American counterpart, John Kerry; the then European Union’s foreign policy chief, Catherine Ashton, and her successor, Federica Mogherini, being media symbols of this political deal, but after the July 14 deal, foreign economic delegations have been engaged in a serious race for coming to Iran.

European countries have so far dispatched more than 20 economic delegations comprising representatives from their private and state-run sectors to Tehran in order to set new frameworks for strategic economic cooperation with the Islamic Republic. At the same time, Asian countries seem to be still in shock, as they have just stood by, watching this process. Iran's economic capacities and importance of Asia in determining the fate of the 21st century are no secret to anybody. However, when discussing the process and result of dawdling by Asian countries for boosting economic cooperation with Iran following the nuclear agreement, three factors must receive special attention. Those factors include “economic culture of Asians,” “Iran's capacities and capabilities,” and “an effective model for economic cooperation between Asian countries and Iran in post-sanctions era.”

1. Economic culture of Asians

Kishore Mahbubani, the prominent and famous Singaporean diplomat, has focused in his book, “Can Asians think?” on economic activities by Asians. He believes that Asians usually start their economic activities in a good manner and welcome the start of many forms of financial and trade activities, but they lack sustainability management and when their companies reach the peak of their economic activities, they forget many requirements and necessary considerations, and only think about profit while embarking on political activities at the same time.

2. Iran's capacities and capabilities

From a geoeconomic viewpoint, Iran is the best bet in West Asia and can serve as the axis of economic activities for many foreign companies that aim to cover the vast regional market. Many commodities that are produced in Iran can be turned into a “brand” and sent to countries like Afghanistan, Iraq, Central Asian states and so on. In doing this, reduction of greenhouse gas emission due to Iran's geographical propinquity to these rising powers is also considered as an additional advantage.

On the other hand, energy, which is both a requirement and a precondition for any form of economic activity is found in abundance in Iran and its price in the country is lower even compared to many of Iran's regional rivals. In terms of statistics, Iran enjoys the biggest educated population in the region and there is still room for new education and participation of this population in production and economic activities. On the other hand, an 80-million-strong population constitutes a major market the loss of which would be a regrettable mistake on the part of other countries. Following the nuclear agreement, that is, under conditions when the threat of war is no more posed to Iran, the above conditions help the country to be potentially capable of turning into the safest country in the region, which can be even able to export security.

3. An effective model for economic cooperation between Asian countries and Iran in post-sanctions era

In view of the economic culture of Asians and Iran's capabilities, it must be noted that if Asian states fail to come up with a new model for economic cooperation with Iran, they will be losers in Iran's market. The efficiency of this model and its adaptation to new conditions will be based on two major elements of “denial” and “requirements of cooperation with Iran.”

Denial or getting rid of old models will call for the following measures:

1. Asians must say goodbye to cumbersome and old economic models, which are rooted in their past actions. For example, they must attach more importance to the factor of “sustainability” in their cooperation with Iran and when they reach the peak of their economic activities, they must avoid of getting involved in political work.

2. Asians must increase their capacity to take risks. If the Iranian market is captured by European countries, there would be neither a major risk nor a major profit left for Asians.

3. Asians must distance themselves from the idea that “Iran has given priority for economic cooperation to the West.” Iran's foreign minister has noted that the country’s foreign policy is based on the national interests, not cooperation with the East or the West. The allegation that Iran's priority for economic cooperation is the West is an idea that has been promoted by major rivals of Asian countries.

4. From now on, instead of looking upon the Iranian market as an outlet for “more exports” and gaining “more profit,” the Asian countries must try to boost the quality of their goods and services in competition with the European states.

Meanwhile, the requirements for economic cooperation between Asians and Iran are as follows:

1. Asians must accept that in the post-sanctions era they have been dawdling for expansion of economic cooperation with Iran. Therefore, any measure they take to make up for this delay must be raid, effective and efficient in order to compensate for the past delay. Unending assessment of economic projects in Iran will only benefit rival countries. In the meantime, more delay in boosting economic cooperation with Iran will prompt the country to look for alternatives.

2. During the period of sanctions, more than 60 percent of Iran's foreign trade was conducted with Asian countries and that period of time has been enough to help Asians learn about the culture of trade with Iran. Now they must take advantage of this asset.

3. If Asians want to delay their entry into the Iranian market until the market reaches profit-making stage, they will be making a big mistake, because high frequency of visits to Iran by European economic delegations is a sign that future prosperity of the Iranian market is guaranteed.

4. In their theoretical puzzle, Asians must imagine a “new Iran,” which on the basis of the game theory, existence of new rivals, unlimited opportunities and foresightedness are the most important pieces of this puzzle. As a result, they must know that any measure they take at the present time, will form the foundation of their future relations with Iran.

Key WordsAsians, Delay, Iran, Post-Sanctions Market, Economic Culture, Capacities and Capabilities, Economic Cooperation, European Countries, Iranian Market, New Iran, Pahlevani

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*Photo Credit: Global Research

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