What doing business in Iran is like for Germans, Deutsche Welle TV Interview vom 4.1.2018
Recent protests in Iran appear to have been motivated by economic frustrations. German businesses are investing in the
country, but so far it's nowhere near enough to overcome Iran's economic stagnation, analysts say.
Thomas Gehbauer is a head of project coordination for German medical equipment supplier Blue Ocean Fourth Millennium. He has been
doing business in Iran for many years, likes and respects the country and its people.
But as in many countries, "corruption, bureaucracy, and slow procedures" are some of the barriers to doing business in Iran, Gehbauer told
DW.
In addition, it can be difficult for German companies to do business there "because we only have smaller [German] regional banks that
accept transactions from Iran — banks that don't do any business with the US," Gehbauer said. "The bigger banks are afraid to get sued [if
the process payments to or from Iran], because they also do business in the US. Doing business is not so easy if you can't find a bank
willing to process your financial transactions."
As of 2015, Germany and Europe no longer apply economic sanctions against Iran, but the US does, and that's why German banks shy
away from the perceived "country risk" associated with Iran, to Gehbauer's frustration: "I think we should be more independent of
American policy than that. There is no legal restriction for German banks to accept transactions from Iranian banks."
Iran hearts Germany
Notwithstanding all that, Gehbauer said business ties between Iran and Germany are important to Iran's development: "'Made in
Germany' has a very good reputation in Iran. As a German, I'm always very well treated when I'm there." The problems are between Iran
and the US, not between Iran and Germany, he said.
As for the recent protests, Gehbauer thinks they're due to increases in food prices and living expenses: "I'm pretty sure that if we have a
stable economy in Iran, the protests will be gone real soon." He doesn't think the protests will change anything long-term. In any event, he
said, "I'm pretty sure the Iranians are smart enough to know what's best for them in the future."
The population in Iran is relatively young, and its expectations for a near-term improvement living standards may be "a little too high,"
Gehbauer said: "Iran needs more investment. In some sectors, like renewable energy, in addition to better equipment, Iran needs a transfer
of know-how from Europe" to improve its performance, because it has no history with the relevant technologies. But in other areas, such as
medical care, all they need is more modern equipment — the Iranians have very well trained personnel in that sector.
Shiraz, a town of about 2 million residents in southern Fars province in Iran, boasts a lot of archaeological and architectural treasures, as well as fine landscapes.
Tourism from Europe to Iran has yet to surge, but could in future improve the country's balance of payments, if Western perceptions of the country change
Their medical expertise may prove all too relevant: Tehran, an enormous city of around 12 million people, is in an area prone
to earthquakes, and a lot of its buildings aren't built to withstand really strong quakes. If and when a powerful earthquake hits the city,
many buildings could collapse, and the number of casualties could be enormous.
It's the economy
Other analysts agreed that the recent protests in Iran appear to have been motivated primarily by anger at the poor state of the economy
and were sparked by the announcement of new austerity measures by the Iranian government.
"People on the streets of Tehran understand the frustration of young people in a country where the unemployment rate is 30 percent for
the young — and they're highly educated, Iran has a very good education system, so a lot of people are underemployed as well," said Eric
Randolph, a correspondent for AFP based in Iran. "There are no silver bullets; Iran faces a lot of structural problems."
There was a year-on-year increase in foreign direct investment of 65 percent from 2015 to 2016, from $2 billion (€1.66 billion) in 2015 to
$3.4 billion in 2016, after economic sanctions against Iran were lifted in the wake of the internationally negotiated deal in mid-2015 that
limited Iran's nuclear enrichment capacities. But that isn't very much in relation to a population of 81.4 million people — it works out to
about $41 per person.
Amir Alizadeh, the deputy managing director of the German-Iranian Chamber of Commerce in Tehran, also told DW that he believed the
main factor that led to the protests was the continuing economic recession.
In economic terms, Iran has had very difficult years recently, Alizadeh said, plagued as it was by stagflation, i.e. high inflation at same time
as recession. Inflation is currently running at about 10 percent. The manufacturing sector has been particularly hard hit by the recession,
he said.
Uneven growth
Last year, on paper, there was an increase of 12 percent in Iran's GDP, but that was due mostly to increased oil prices and oil sales, not to
any improvement in the wider economy: "Industry is not growing at that pace," so it's hard for people to experience the headline economic
growth in a tangible way.
Echoing Gehbauer's remarks, Alizadeh said there were plenty of European and German firms that would like to invest more in Iran, but
many believe they cannot do so yet, because international banks based in the US are legally prevented by the US government from doing
business in Iran, due to ongoing US economic sanctions against the country. This causes difficulties in arranging appropriate financing
packages for foreign investors.
In addition, the Iranian government has "some homework to do" in Iran, including fighting corruption more effectively, making it easier to
do business, and liberalizing markets, Alizadeh said.
Germany is a very important economic partner for Iran, he added, because it was the locomotive of Iran's industrialization in the late 19th
and early 20th centuries, and has been a key partner historically for Iranian industry. The reservoir of goodwill is deep, and the potential
for future business is enormous: "Iranian companies are really eager and willing to work with German companies as partners."