Insider news & Analysis in Iran

By INU staff

INU - On Sunday, CBS’s 60 Minutes aired an interview with Iranian President Hassan Rouhani. In keeping with his dubious moderate credentials, Rouhani made positive references to recent international developments that he described as the “first steps toward decreasing enmity” between the United States and the Islamic Republic of Iran. But as News Max noted on Monday, Rouhani largely evaded his interviewer’s questions about anti-American rhetoric and chants of “Death to America” among Iranian hardliners.

By many accounts, these expressions of enmity have actually grown stronger since the signing of the nuclear accord between Iran and the P5+1 on July 14. Both before and after that signing, Iranian defense officials and members of the Revolutionary Guard Corps made various comments asserting that Iran was prepared for war and would win in any conflict with the West. As recently as last week, Supreme Leader Ali Khamenei renewed his calls for the destruction of Israel while also urging all Iranian authorities to stand firmly against any form of Western influence, whether political, economic, or cultural.

By dodging questions related to this rhetoric, Rouhani has arguably given additional fuel to the concerns of those who believe he is not serious about rapprochement with the US. Those who reject the notion of his moderation tend to accept that he is pursuing rapprochement to the extent that it will secure sanctions relief, but not to the extent that it will allow for an end to human rights abuses or animosity toward the West, much less a foundational change in the theocratic structure of the Iranian regime.

On Monday, the day after Rouhani’s interview aired, an editorial appeared in the Chicago Tribune, authored by Patrick Kennedy and arguing that such a foundational change out to be the precise platform of the US government with respect to Iran policy. Kennedy expressed concern that the Obama administration has been willing to look the other way on many of Iran’s abuses in the interest of securing a nuclear deal. And he indicated that the original intention behind nuclear negotiations was to “contain a hostile Iran, not befriend it.”

This sentiment is sure to guide ongoing criticism of not only the Obama administration’s approach to Iran policy, but also the broader Western rush to engage with the Islamic Republic and its oil and import markets. Iran is already set to receive as much as 150 billion dollars in unfrozen assets once the nuclear agreement is implemented. And some have speculated that the actual figure could be much larger than that once individual recipients of sanctions relief are factored in.

Thus, many critics of rapprochement are especially concerned about the additional effects that could be seen as a result of large-scale European and North American investment in economic development projects and purchases of Iranian goods. Economic ministers, business delegations, and other officials from European countries like Germany, Britain, and France were quick to arrange visits to Tehran just after the signing of the deal. This prompted critics to grow nervous that the West would not be factoring Iran’s actual behavior into its business decision-making.

This nervousness can be expected to grow in the near future as more signs of the same rush to investment continue to accumulate. On Monday, AFP reported that the French government had officially opened a business development office in Tehran to facilitate economic collaboration and to try to overcome what French Agriculture Minister Stephane Le Foll described as “fierce competition” from companies based in American and elsewhere in Europe.

French trade with Iran has been under 565 million dollars since 2013, but in 2004 it was valued at 4.5 billion dollars. And it is certain that at least some figures in French foreign and economic policy are eager to reestablish old relationships. In fact, to a certain extent, those past relationships may not have been entirely abandoned in the first place.

Last week another AFP report noted that the French company AccorHotels had already arranged to open two hotels in Iran. The report indicated that the parties involved were set to sign a contract finalizing the deal on Tuesday and that the hotels would open as early as October 15. It is of course difficult to imagine the entire process of implementing such a plan to proceed so quickly unless some aspects of it had been arranged in secret prior to the formal opening of the Iranian market.

 Secretive cooperation between the two countries is not without precedent, either. French economic interest in Iran is strong enough that in 2003 the French government reportedly conducted a raid and initiated a court case against the Paris-based Iranian dissident group the People’s Mojahedin Organization of Iran, in exchange for favorable trade agreements. The court case concluded only this year, with acquittal on all charges due to lack of evidence.

This background provides specific context for the fears of those who resist rapprochement between the West and the clerical regime. But now the potential for unsavory cooperation extends beyond France and includes virtually the entirety of Europe, as well as the Americas. Some companies have been more cautious than others about investing in Iran, for fear that its behavior will not sustain the current trend toward rapprochement.

Some businesses have noted that it remains to be seen what Iran’s new contracts will look like, and indeed Reuters reported last week that these are not expected to be released until early November. But this month, President Rouhani gave a hint of what restrictions might be built into those contracts when he insisted that foreign businesses would be expected to hire Iranians, partner with Iranian companies, and generally “share the wealth.” The idea of local partnerships is further cause for concern among political critics of the regime, given that a large proportion of Iranian businesses are owned in whole or in part by the Revolutionary Guards and other hardline elements of the regime.

Still, this will presumably not come into consideration for many of the businesses and governments currently exploring the Iranian markets. With the contracts that would necessitate partnerships still more than a month away, the current climate of “fierce competition” will be a larger determining factor.

Germany is reportedly well in line with France in terms of their mutual eagerness to engage with the Iranian economy. The Wall Street Journal reported last week that dozens of German business leaders had attended a major business conference in the Iranian city of Isfahan, illustrating part of a vigorous push for expanded relations.

Reuters added, also last week, that Germany’s Volkswagen had expressed eagerness to enter the Iranian automatic market, as had its Czech division, Skoda. And illustrating the fierce competition in this market in particular, France’s Peugeot and Renault are vying for the same.

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