Geopolitics

Iran, Islam And Capitalism — Contradictions Set To Explode

In anticipation of international sanctions on Iran being lifted at the beginning of 2016, European executives are chomping at the bit to do business there. But how will a market economy play with the Islamic regime?

Watching Tehran's Azadi tower
Watching Tehran's Azadi tower
Guillaume de Calignon

-Analysis-

TEHRAN â€" The Islamic Republic of Iran is an astonishing country, seen from the enlightened Western world. It's a land where religion prevails over politics, where the agriculture minister starts his speech, "In the name of the merciful God," where a religious chant precedes interventions from officials, and where the portraits of the martyrs of a war that killed one million people flourish across the capital.

In the Imam Reza Shrine in Mashhad, the country's second-largest city, near the border with Turkmenistan, pilgrims strike their chests while singing invocations to the Shia saint. Women stroll in black chadors covering them from head to toe. This description confirms the prejudice we've been dwelling on for the last 35 years.

But of course, Iran is more than that stereotypical image. It's also a place where you can meet young people in their thirties such as the dynamic and trendy executives at Aftabnet, a Tehran-based advertising agency. With the latest iPhone in hand, they respect all of the Western dress codes, except for the women's veils. They even created their own theater company to break the regime's lead weight. Their plays are dark and violent, and their verses are delivered in Persian to the background of a South London DJ, Burial, and his syncopated music.

Iran President Hassan Rouhani, presented as a moderate when he was elected in 2013, decided to pacify his country's relationship with the West. The July nuclear deal signed in Vienna opens up new prospects for this Middle East giant, with its 78 million inhabitants and its multi-millenary history.

Opportunity knocking

With international sanctions ending at the beginning of 2016, Western companies from Germany, Spain, Italy and France are rushing to Tehran. At the end of September, 130 French executives from companies big and small traveled to Iran with the employer federation MEDEF.

"We used to be a thug state, a member of the axis of evil for 35 years, and now we've become the place to be," says Zahra Azmoudeh, a French woman of Iranian origin who created her own consulting agency in December 2013 to act as a bridge between French and Iranian companies. Executives are careful not to sign any contracts yet, though, not until the official end of the embargo, for fear of American reprisals. But they are networking and getting the lay of the land.

France has high expectations for this promising market in which it almost lost control. Last year, exchanges with Iran represented a mere 469 million euros ($503 million). The sanctions regime forced Paris to look for other supply chains in China, South Korea and Turkey. "We know there's going to be fierce competition among companies, especially among European companies, to secure new markets," Agriculture Minister Stéphane Le Foll said during his visit to Tehran with French entrepreneurs.

"But France can take advantage of its cultural ties with Iran, the result of previous relations,” he added. At the time of the Shah, French was the dominant foreign language, and France is betting big on this soft power. As proof of this proximity, the French embassy in Tehran is on an avenue called Neauphle-le-Château, the name of a small village not far from Paris where Ayatollah Khomeini took refuge in the late 1970s, before heading the Islamic Revolution of 1979.

"We're very happy to welcome France," says an enthusiastic Mohamed Satei, managing director of rail operator Sina Rail. "We love French cars. Just look at the streets." There's lots of Peugeot and Renault." There are indeed six million Peugeot in circulation in Iran, while the country's hands-down favorite car, the Peugeot 405, gives the heavily polluted city of 15 million people a bit of an 1980s vibe.

Against all odds

But except for this detail, Tehran is very much a 21st century city, with its impeccable highways and its 400-meter-high Milad Tower, built in the early 2000s. Despite 35 years of sanctions, the country's economy has done impressively well. Even former President Mahmoud Ahmadinejad"s catastrophic policies haven't drowned the country.

Iran has two national car manufacturers, important steelworks and harbors. The country's level of development appears to be much bigger than that of its neighbors. An average of 700,000 students graduate from university each year. One Iranian women describes her country as "the Middle East's Germany" and praises its industrial culture. It's a bold prediction, but it might not seem so far-fetched 20 years from now.

Especially when we consider that Iran is sitting on a pile of gold, black gold. The country boasts the world's second-largest oil reserves â€" behind arch-enemy Saudi Arabia â€" enough to finance its much-needed modernization.

"Because of the sanctions, we haven't been able to upgrade our industry," explains Akbar Torkan, an adviser to Rouhani. "Our car production capacity is one million vehicles per year, but we're lagging behind in terms of design and technology."

Iran President Hassan Rouhani in Tehran in August 2015 â€" Photo : Iran's Presidential Office/Xinhua/ZUMA

But there is one short-term problem in this idyllic description of the future. Because the current price of crude oil is under $50 per barrel, revenues will be much lower than those expected by the government. Too bad. Iran has already found the perfect argument to "sell" its potential to the West. "Iran is a stability hub in an troubled region," Torkan says in reference to the wars raging in Iraq, Syria and Yemen.

Iran's transportation needs are immense, which is good news for Airbus, Peugeot and Alstom. Tehran is planning to purchase 400 commercial airplanes over the next 10 years, and intends to build 12,000 kilometers of new railways, to buy 1,000 locomotives and 5,000 wagons. These plans also include construction of a high-speed rail that will connect Tehran and the historical city of Isfahan, in central Iran, in two hours. In terms of automobiles, Iran wants to become a production leader by building three million vehicles per year, two million for its national market, and one to be exported.

But there are many pitfalls that Westerners should know. The first involves financing. There isn't a single Western bank working in Iran, and the record $9 billion fine BNP Paribas paid to the U.S. for having done business with Iran (among others) dampened any potenial enthusaism. For small and medium-sized businesses, this problem can be circumvented by creating a branch in Dubai. But this is too risky and inflexible a solution for bigger companies. In Paris, the Treasury and Foreign Ministry are working on the issue, which in fact amounts to interpreting U.S. law.

Another problem involves the disputes about international sanctions. Iranian authorities don't seem to resent France too much for Foreign Minister Laurent Fabius' tough stance in the nuclear negotiations, but the same can't be said for the companies that left abruptly in 2012. Peugeot is a perfect example. After the company left the country, Iran's Khodro continued to manufacture the 405 model, rebranding it Pars. Peugeot automobiles represent 30% of cars circulating in Iran, but the French company isn't making a cent from the country anymore. To remedy this type of situation, the Iranians have offered to create a joint economic commission. But Iranian officials have a sharp tongue and never miss an occasion to remind people of their disloyalty.

Finally, it isn't Iran's intention to be considered a big market where Westerners should come and help themselves. The Iranians prefer to play it like the Chinese and the Indians: Foreigners will have to invest in their country and accept the idea of transferring their technology.

Still, the crucial question for Iranians and for investors remains, what will happen to the mullah-run regime? A market economy and its consequences â€" consumption and individualism â€" are the world's most powerful weapons to destroy traditions, religion being first among them. The Ayatollahs might not survive it.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!

Running of the Bulls in Tafalla, northern Spain

Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

👋 Здравейте!*

Welcome to Monday, where an apparent coup is underway in Sudan, Colombia's most-wanted drug lord gets caught, and Michael Jordan's rookie sneakers score an auction record. We also focus on a report that the Thai government is abusing the country's centuries-old law to protect the monarchy from criticism (lèse-majesté) to target pro-democracy activists and protesters.

[*Zdraveite - Bulgarian]

🌎  7 THINGS TO KNOW RIGHT NOW

• Developing: Sudan leaders arrested amid military coup reports: Soldiers have arrested several members of Sudan's transitional government as well as civilian leaders, and Prime Minister Abdallah Hamdok has reportedly been put under house arrest, in what the information ministry called a military coup. Pro-democracy protesters have taken to the streets of the capital city Khartoum where there are reports of gunfire and clashes.

• Colombia's most wanted drug lord to be sent to U.S.: Colombia's most dangerous drug trafficker, known as Otoniel, was caught after a joint army, air force and police operation and faces extradition to the U.S. He led the country's largest criminal gang, and was on the U.S. most wanted list for years.

• Xi speech marks China's UN anniversary: China's President Xi Jinping marked the 50th anniversary of Beijing's entry into the United Nations with a speech calling for greater global cooperation, adding that issues like climate change, terrorism and cyber security needed multilateral solutions. Taiwan was not mentioned.

• German ISIS bride jailed for crimes against humanity: A German court has sentenced a German woman and former member of the Islamic State to 10 years in prison for letting a 5-year-old Yazidi enslaved girl die of thirst in Iraq. The case is one of the world's first trials to prosecute a war crime against the Yazidis.

• COVID update: The Beijing marathon scheduled next weekend has been postponed until further notice as China seeks to stamp out Delta variant outbreak and return to zero cases ahead of the Winter Olympics next February. Meanwhile, coronavirus cases in Eastern Europe have surpassed the 20 million mark as the region fights against its worst outbreak since the pandemic started and vaccination efforts lag.

Goodbye, Gunther: U.S. actor James Michael Tyler, best known for his role as the barista Gunther on the TV show Friends, has died at 59 of prostate cancer.

• Sneakers record: A pair of Michael Jordan's white-and-red Nike shoes, which he wore during his rookie season with the Chicago Bulls in 1984, sold for $1.47 million — a new record price for sneakers at auction.

🗞️  FRONT PAGE

"The end of a boss," titles Colombian daily El Espectador, reporting on the arrest of drug lord Dairo Antonio Usuga, known as Otoniel, who had led Colombia's largest criminal gang and had been on the U.S. Drug Enforcement Agency's most wanted list for years. He was captured in a raid and will be extradited to the U.S.


#️⃣  BY THE NUMBERS

$57,789

A Georgia man is being prosecuted for wire fraud after spending most of his business's COVID relief loan to buy one Pokémon trading card for $57,789.

📰  STORY OF THE DAY

How Thailand's "Lèse-Majesté" law is used to stifle all protest

Once meant to protect the royal family, the century-old law has become a tool for the military-led government in Bangkok to stamp out all dissent. A new report outlines the abuses.

👑 Thailand's Criminal Code "Lèse-Majesté" Article 112 imposes jail terms for defaming, insulting, or threatening the monarchy, with sentences of three to 15 years. This law has been present in Thai politics since 1908, though applied sparingly, only when direct verbal or written attacks against members of the royal family. But after the May 2014 military coup d'état, Thailand experienced the first wave of lèse-majesté arrests, prosecutions, and detentions of at least 127 individuals arrested in a much wider interpretation of the law.

🚨 The recent report "Second Wave: The Return of Lèse-Majesté in Thailand," documents how the Thai government has "used and abused Article 112 of the Criminal Code to target pro-democracy activists and protesters in relation to their online political expression and participation in peaceful pro-democracy demonstrations." The investigation shows 124 individuals, including at least eight minors, have been charged with lèse-majesté between November 2020 and August 2021. The new wave of charges is cited as a response to the rising pro-democracy protests across Thailand over the past year.

💻 The more than a century-old law is now largely playing out online, where much of today's protest takes place in Thailand. Thai student activist Juthatip Sirikan says people are willing to go further on social media to expose information such as how the king intervenes in politics and the monarchy's accumulation of wealth, information the mainstream media rarely reports on them. Not surprisingly, however, social media is heavily monitored and the military is involved in Intelligence operations and cyber attacks against human rights defenders and critics of any kind.


➡️ Read more on Worldcrunch.com


📣 VERBATIM

"Children are going to die. People are going to starve."


— The United Nations warns that Afghanistan verges on a "total breakdown" as millions of Afghans, including children, could die of starvation unless urgent action is taken by the international community. The agency calls for the release of frozen assets to avoid economic and social collapse, despite concerns over the Taliban government. A recent report said that about 97% of Afghanistan's population may sink below the poverty line, and World Food Programme (WFP) Executive Director David Beasley warned that more than half of Afghanistan's population of 39 million were facing acute food insecurity and "marching to starvation" in comparison to 14 million two months ago.

🕌 🔍 IN OTHER NEWS

Dutch cities have been secretly probing mosques since 2013

At least ten Dutch towns and cities have secretly used a private agency to probe mosques and other local religious organizations, Amsterdam-based daily het NRC reports in an exclusive investigation.

The clandestine operation — funded by NCTV, the National Security Services, the Netherlands' leading counter-terrorism agency — was prompted by the social unrest and uncertainty following multiple terror attacks in 2013, and a rise in Islamic radicalization.

The NCTV, which advises and financially supports municipalities in countering radicalization, put the municipalities in touch with Nuance by Training and Advice (Nuance door Trainingen en Advies, NTA), a private research agency based in Deventer, Netherlands. Among the institutions targeted by the investigations, which came at a cost of circa 500,000 euros, were the Al Mouahidin mosque in the central Dutch town of Ede, and the Nasser mosque east of the city of Utrecht, according to NRC.

Unlike public officials, the private agency can enter the mosques to clandestinely research the situation. In this case, the agents observed activity, talked to visitors, administrators, and religious leaders, and investigated what they do and say on social media.

All findings then wound up in a secret report which includes personal details about what the administrators and teachers studied, who their relatives are, with whom they argued, and how often they had contact with authorities in foreign countries, like Morocco.

It is unclear whether the practice is legal, which is why several members of the Dutch Parliament are now demanding clarification from the outgoing Minister of Justice and Security, Ferd Grapperhaus, who is said to be involved.

"The ease with which the government violates (fundamental) rights when it comes to Islam or Muslims is shocking," Stephan van Baarle, member of the leftist party DENK, told De Volkskrant, another Dutch newspaper.

Leaders of the Muslim organizations that were secretly probed say they feel betrayed. Hassan Saidi, director of one of the mosques investigated, said that the relationship with the local municipality had been good. "This puts a huge dent in the trust I'd had in the municipality," he told the Dutch public broadcaster NOS.

✍️ Newsletter by Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

Are you more Chicago Bulls or running of the bulls? Let us know what the news looks like from your corner of the world! info@worldcrunch.com info@worldcrunch.com!

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
THE LATEST
FOCUS
TRENDING TOPICS
MOST READ