The nuclear deal that the US and Europe signed with Iran on July 14 could slowly phase out many economic sanctions, finally allowing western companies to sell their wares in the country and unleashing one of the world’s largest untapped markets for western business.
Iran’s $406 billion economy offers immense opportunity. It’s home to 78 million people, many of whom are young, educated, and well traveled, with money to spend. Already some believe there are 6.5 million iPhones—not counterfeit—in circulation, even though Apple is barred from selling products directly in Iran, wrote American business magazine Fortune.
In many industries, embargoes have contributed to what amounts to 36 years of pent-up demand. Iran’s national airline has planes that are on average 23 years old, and officials say they plan to spend $20 billion on 400 new aircraft over the next decade—good news for Boeing BA, which already provides parts and maintenance under a special permit.
There are few major international hotel chains or car dealerships in Iran, which has hospitality executives and automakers salivating. And Iranian officials say they intend to invest billions in upgrading creaky oil and gas facilities, which could mean a windfall for oil-services firms.
“There is not a single week when we don’t host at least one or two foreign delegations,” says Ramin Rabii, CEO of Tehran investment firm Turquoise Partners. “They all say they want to be the first in Iran,” he says.
That seems unlikely for most US companies. The new deal still faces a bumpy path to approval in Washington, and even if it is approved, certain sanctions will still remain in place. European competitors, by contrast, look set to sign major deals quickly. Mercedes-Benz, Peugeot, and Renault have announced plans this summer to start selling to Iran’s huge auto market, with which they already have deep ties (Iran was Peugeot’s biggest market outside France until 2011). And French hotel chain Accor is set to open a hotel later this year.
Who Comes Out Ahead in Iran?
Winners:
EU automakers: Daimler AG/Mercedes-Benz, Peugeot, and Renault are all well positioned for Iran’s large auto market.
Oil-services companies: Iran says it needs $230 billion worth of upgrades to its energy facilities, good news for Schlumberger and Halliburton.
Airplane makers: Iran plans to buy 400 planes in the next decade, a boon for Boeing and Airbus.
Losers:
Chinese manufacturers: China-Iran trade was $44 billion in 2014, but Chinese companies could soon be sharing their captive market with western competitors.
Russian oil and gas firms: Iran aims to double its oil exports, which could drive down global prices and hit Russia particularly hard in its key markets of Asia and Europe.
Pistachio growers: Nut growers in California have benefited from sanctions, but Iranian farmers are prepping for a big return.
