Rouhani - A Solid Foundation for Change?

Inevitably, there is much discussion and analysis about the character, beliefs and outlook of President Rouhani. As a senior Iranian Cleric, the traditional Western perspective would be of an intransigence and hardline approach to domestic and international affairs. This perhaps underpins the suspicion that many in the West (particularly in the US) continue to air following the recent Geneva Agreement.

It is also an important factor for anyone planning (as I am doing) on a commercial relationship with Iran. Can we really make investment plans without a confidence about the medium term political outlook?

My analysis suggests that whilst nothing can be certain, the indications are good. A few examples

1. He attended Glasgow Caledonian Unversity where he studied for an M.Phil and a Ph.D. Such experience living and studying in the West must have made its mark and I believe that Glagow culture is very inclusive (there is far more animosity between Glaswegian Protestants and Catholics than between Glaswegians and anyone from other cultures!!)

2. His thesis importantly reflects a view that Islamic thinking can evolve. In it, he wrote "No laws in Islam are immutable.........Islamic laws have been developed out of certain conditions and necessities of the time and space. This flexibility must be known as the essential feature of Islamic Law"

3. It is a nonsense to believe that he can immediately assume overt Western leanings as this would cause domestic unease. He is treading a tightrope between maintaining credibility with the more conservative elements in Iran whilst satisfying the more liberal elements amongst the Iranian population (which I believe are now the majority, particularly in the cities) and ensuring that the rest of the world will lower sanctions.

4. He speaks good English so doesn't rely on translators when speaking with foreign leaders.

5. His public comments have been impressively balanced between the nuclear issue and the importance of restoring economic health to the country. Iran is a very young country with demographics that the likes of Italy and Japan can only dream about! However, being a young country means that you have to offer economic opportunities to the population. I believe that Rouhani understands (and has explained to the more conservative elements) that unless the country can access international markets again, the Islamic Revolution is under threat. Having had the initiative to study in the West, I believe that it is likely that he has a far greater command of international politics and history than the likes of Ahmadinejad ever did!

Inevitably, and rightly so, there will be extensive analysis of Rouhani in the weeks, months and years ahead. It is right that all of us that are looking at Iran with commercial eyes, understand the importance of political leadership in the country.

Sanctions

A sign that everyone is getting prepared for early reduction in Sanctions.

http://america.aljazeera.com/articles/2013/11/25/sanctions-againstirancouldbegineasingnextmonth.html

A New Beginning

Last weekend, an agreement was signed in Geneva that represents the first step towards Iran returning to the global commercial community. The details of this are well covered elsewhere so I wont repeat them, but those that have glanced at my other blog (a Scotsman in Asia) will know that I have been anticipating this for some time. 

Iran is an amazing country that is much misunderstood given the hostility with the West that has existed since the Islamic Revolution. It is not my job to repeat history as I am looking forward and I strongly believe that whilst hurdles remain, economically it is probably the most exciting country in the world today, taking over that mantle from China. Lets just pause for a few highlights (I apologise if you disagree with certain statistics but the overall gist is accurate)

•2nd largest reserves of Oil in the World (1st being Saudi Arabia)

•2nd largest reserves of Gas in the World (1st being Russia)

•World’s largest zinc reserves.

•Over 10% of the known reserves of Copper in the World

•4.5 billion tons of iron ore resources with 2.5 billion tons categorized as recoverable.

•Proven reserves of 320 tons of Gold

•Abundant reserves of other minerals

•A population of 75 million of which significantly over half are aged under 35.

•A Highly educated workforce with a literacy rate above 91% (97% for adults aged between 15 and 24)

It is my belief that the agreement last weekend marks the first steps towards a full relaxation of economic sanctions and I'd go even further to say that Iran will become a key relationship and friend of the US and other Western countries in the future.  However, lets not get ahead of ourselves, lets just look at what can be done immediately. 

Firstly, Iran requires a massive investment in infrastructure. Everything from roads to airports to oil refineries to power generation.....it is almost never ending. One look at the age and state of the country's aircraft provides a taste for the state of many other parts of the economy. 

Thankfully, the country has an under-explored wealth of natural resources. As such, it should have increasing access to the international financial markets so it can finance the necessary infrastructure. Of course, the race to supply money and equipment by the likes of China will also help. However, it is my belief that Iran will not want to become overly behoven to China (or the US) in the way certain emerging African countries have become. 

My intent in starting this blog is not to become the pre-eminent Iranian blog. That is far better left to people currently based in Iran and Iranians abroad who currently have a more accurate insight. Rather it is to reflect my observations as an outsider that sees probably the biggest macro-economic opportunity left in my lifetime and wants to become involved. 

I am sure that I am naive on many things, but so long as I recognise that, it is ok. I am sure that in my journey, I shall make mistakes. Heaven knows I've made plenty of mistakes in my past. However, if I am correct in my overall perspective that so long as we treat Iran and Iranians with respect and ensure that commercial terms are fair (to everyone....I dont intend to be a pushover!), then fun can be had and money made! 

I have already signed contracts preparing for the lifting of sanctions (but fully intend to respect the law and not jump the gun) and am looking forward to this blog becoming an interactive debate and exchange. 

cheers, Fraser