By Andrei Skvarsky.
A London-based Iran-focused solicitor argues that Iran needs to make quite a bit of effort to make foreign investors feel safe about tapping into its vast business opportunities after the anticipated lifting of some of the international sanctions against the country.
Otherwise there would be major risks, obstacles and uncertainties in store for any bank or company that tried to do business in post-sanctions Iran, Azadeh Meskarian of Zaiwalla & Co. Solicitors, a London-headquartered international firm with expertise in sanctions, arbitration, litigation and mediation, warns in an article.
“Working around the Iranian economy and complex politics can be tricky and requires assistance,” she says in her article, entitled “Investing in post-sanctions Iran”.
Lifting sanctions against the Islamic nation, which has the world’s largest reserves of natural gas and fourth-biggest oil resources and hopes to obtain about $30bn in a bid to quintuple its oil production, “would not necessarily mean an immediate return of foreign banks to Iran”, Meskarian says.
Iran is under a complex set of sanctions, some imposed by the United Nations, some by the United States and some by the European Union. Its required compliance with all the provisions of the JCPOA, its July 2015 nuclear agreement with world powers, would be a long process.
It is expected that in the first half of 2016 Iran would have some of the sanctions lifted if it complied with key points in the JCPOA by the so-called Implementation Day, a date that has not yet been set.
With the rest of the restrictions remaining in place indefinitely, foreign banks would most likely hesitate to go back to Iran. They would apparently be afraid to make a faux pas that would earn them a massive fine from the United States, according to Meskarian, who cites fines of $258m paid by Deutsche Bank recently for dealing with US-sanctioned Iranians and Syrians.
Tehran will need to fully meet international regulatory standards and “deal with significant money-laundering concerns” before foreign banks could venture to return, the lawyer says. She also suggests that Iran revise its intellectual property legislation.
Banks and companies might have one more deterrent – the sanctions that have been lifted may snap back if Iran is accused of departing from the JCPOA, she warns.
As yet another possible red flag, the state-owned National Iranian Oil Company (NIOC) is going to retain its exclusive ownership of all of the country’s oil and gas resources, Meskarian says.
There have, however, been moves both within and outside Iran to facilitate a foreign capital flow into the country.
Delegations from various European countries have been visiting Iran exploring investment opportunities in its tourism, transport, technology, food, aviation, machinery, oil and gas industries, Meskarian says.
She also mentions the Iran Petroleum Contract (IPC) project by Canada-based oil and gas company Naft Energy and the Iranian government that aims to bring Iran’s oil production to about five million barrels a day from about one million the country has been producing since its oil and gas sector came under sanctions.
The project would involve package agreements that would cover exploration, development and production phases and remain in effect for estimated periods of 15 to 20 years.
One of the landmark cases on Zaiwalla & Co.’s success record was the firm’s 2013 suit for the annulment of British government sanctions against Iran’s Bank Mellat imposed for the lender’s alleged support of Iran’s nuclear programme. Britain’s Supreme Court ruled the sanctions to be unlawful.