Rouhani’s Win Cheers Iran Business Leaders

Iranian business leaders were relieved on Saturday after moderate President Hassan Rouhani, a proponent of foreign investment and engagement with the world, had secured another four years in office, the Wall Street Journal wrote in an article. Excerpts follow:

Mohammad Lahouti, the head of Iran Export Confederation, an industry body, said domestic and foreign investors had been sitting on their hands waiting to see if Rouhani would triumph over his main conservative rival, Ebrahim Raisi.

A Rouhani loss could have slowed deal-making, especially with foreign investors wary of hard-liners’ emphasis on economic self-reliance.

“If Rouhani had not won, the world would be waiting to see the new economic policies and the new way of interaction with the world, and it could take longer to make such investments,” Lahouti said.

The official pointed to the postponement in February by France’s Total SA of a decision on whether to invest in a $2 billion gas project, which he attributed partly to skittishness over the uncertain election.

“Ever since electoral activities started and different ideas about investment surfaced, many foreign partners postponed to ‘wait and see’,” he said.

Total did not immediately respond to a request for comment.

Rouhani has long sought to lift Iranian businesses’ fortunes by making it easier for them to transact with the world, part of a strategy to spur job creation for young people and lift economic growth.

Iran’s economy is set to grow at 3.3% this year, the International Monetary Fund estimates.

Ascending to the presidency in 2013 on a platform of prosperity through better relations with the world, Rouhani’s team led negotiations toward the landmark 2015 nuclear deal that removed sanctions on Iran in exchange for curbs on its nuclear program. Much foreign investment has since come into the country. Major joint ventures were signed between French carmakers and their Iranian counterparts, hundreds of business delegations flew in to explore opportunities, and the government revived its aging fleet of jetliners, with multibillion-dollar purchases from Boeing and Airbus.

But the deal has not lined the pocketbooks of most Iranians, some say, noting that it gave a boost to Iran’s energy exports, but wider economic impact remains limited as many foreign financial institutions are still wary of dealing with the country.

In the wake of his reelection, business leaders cautioned that Rouhani will face an uphill battle as he works to expand Iran’s economy. Unemployment stands at more than 12% and the country ranks 131st of 176 countries in a Transparency International corruption index.

Ahmad Pourfallah, managing director of Secco Iran, a building-materials manufacturer, said Iran still had not reintegrated into the global banking system after the nuclear deal as rapidly as traders and investors had hoped.

Despite the lifting of sanctions, large international banks have avoided doing business with Iran, after regulators in the US fined many of them billions of dollars for continuing to deal with the country when sanctions were in place.

For other business leaders, the chief concern is continuing to make space for the private sector by reducing the government’s role in the economy. The Iranian state has significant business holdings covering swaths of the economy. “We are demanding that the private sector of the country should be the body implementing the economy,” said Ferial Mostofi, a mining, agriculture and trading company executive. “The government should only supervise and devise the policy, not interfere in the economy.”