Even before the crowds on Tehran's streets staggered home on Tuesday night from partying to celebrate the nuclear deal, Iranians and Americans were both assessing the mammoth new potential for business in the country, once U.S. and European Union sanctions that have been in place for decades are dismantled. Iran has around $150 billion frozen in international banks, which when sanctions are lifted will begin filtering into the domestic and international economy.
It could still be months, maybe years, before Iranians sip Starbucks coffee or buy American SUVs at home. First will come the fierce political battle in Washington, where Republican lawmakers have vowed to block the deal in Congress. Both Iran's Parliament and the U.N. Security Council also have to approve the details, which came after 18 months of tough negotiations between the US, Iran, China, Russia, Britain, France, Germany, and E.U. officials.
But assuming that all happens, business executives and investors say the potential in Iran is enormous. Among its population of about 77 million, Iran has a large number of well-educated, tech-savvy youth with close ties to relatives in places like Los Angeles and London, and a fervent desire to end their generation's isolation. Among those Iranians — many of whom will have money to spend — American companies in particular stand to do well, say investment analysts, ironically boosted by the pariah status the U.S. has had since the 1979 revolution. "Iranians love American products," says Amir Ali Handjani, an Iranian-American energy executive based between New York and Dubai. "They will always prefer to do business with Americans and to buy Americans products than others, because they've been told that America is bad for 35 years, and that makes them want them more."
Indeed, even under sanctions, Iphones, for example, have been ubiquitous on the streets of wealthier Iranian neighborhoods, many of them bought during shopping trips to nearby Dubai, a two-hour flight from Tehran, or simply from unlicenced dealers in Iran. Until now, sanctions have blocked Apple, like other U.S. companies, from trading directly with Iran, a fact that the company seems eager to change. Last year senior Apple executives in London met with Iranian distributors to discuss how to enter the market once a nuclear deal was signed, according to the Wall Street Journal.
But Apple is hardly alone in scouting rich prospects. In recent months, as the nuclear talks began to seem like they might succeed, American and European executives have rushed to Tehran to meet business people and to try position themselves to open operations there once sanctions end. "We've hosted more than 180 foreign investor delegations over the last 18 months, mostly from the E.U. but also from the U.S.," says Ramin Rabii, CEO of Turquoise Partners, an investment services firm in Tehran by telephone. "We've seen a lot of venture capital companies come from the U.S."
At this point, almost every sector is rich pickings for Western business. Decades of U.S. sanctions, and nearly a decade of E.U. sanctions, have led to big trade with Chinese, Korean and Russian companies. But those are still seen as far inferior, Rabii says. "There is a general perception that it is easier to do business with Americans than with Chinese or Russians," Rabii says, adding that in many of Iran's family-owned conglomerates, which have existed for generations, there is still a strong memory of having worked with U.S. companies before the 1979 revolution ended the Shah's rule and brought the Islamic Republic to power.
Immediately after Iran and Western leaders signed the nuclear deal on Tuesday, the French automaker Peugeot told the Wall Street Journal that the company was deep in talks with Iran Khodro, a local automaker, to start manufacturing cars in Iran. Until 2011, Iran produced a 1.6 million cars a year, and until 2012 the country was Peugeot's second-biggest market outside France. It abandoned its operation there after GM, which owns a small stake in Peugeot, pressured the company to leave. Now, that pressure is off — and GM itself will likely try to muscle in on Iran's market.
But other industries are also eyeing major business — including hotels and aviation — in a country that in desperate need of overhauling almost every industry. More than one U.S. hotel chain has visited Tehran during the past few months, and found a wide-open market with huge pent-up demand. There is not a single hotel of international standing in all of Iran, for example, since major chains like Marriott and Hilton have been shut out since the 1970s. "We have not had any internationally-managed hotels for four decades," says Rabii, who has met with U.S. hotel chains, but would not name them. "We will have a flood of tourists and business people coming to Iran. We can fill hotels for years, or decades."
Iran is also planning to upgrade its airplanes after decades. Since sanctions shut out the two dominant airplane manufacturers, the U.S.'s Boeing and Europe's Airbus, Iran has hobbled along, buying second-hand airplanes for its national airline Iran Air or fixing their own aging fleet, whose airplanes are an average age of 27 years. Last year Iran Air CEO Farhad Parvaresh told Reuters that it urgently needed about 100 new planes, and would buy them from China or Russia if Western sanctions did not end soon. As it looked like sanctions would indeed end sometime soon, Iran's Transport Minister Abbas Akhoundi traveled to the Paris Air Show in June, and told reporters the country would spend about $20 billion buying about 400 new planes in the next decade. Still, Boeing's regional communications director Fakher Daghestani said in a statement the company would have to wait for the U.S. government to tell them whether they could sell planes to Iran. Until then, "it would be premature to comment."
Not so for other business people. Handjani, the energy executive, says he expects "second and third tier" U.S. companies to open Iran operations first. By contrast, major publicly traded corporations could hold back, waiting to see if the nuclear deal unfolds without great problems, especially since any collapse of the nuclear deal could mean a forced exit for companies. "We won't see Goldman Sachs or JP Morgan in Iran, not for many years," Handjani said.