As Delays Mount in Iran, Executives and Employers Face Tough Career Choices

In multinational companies, the prospect of promotion is largely tied to the ability to meet targets and hit milestones with speed. Working on Iran-related projects in the present environment makes this difficult to do. When asked to evaluate the pace of trade and investment as part of a recent Bourse & Bazaar survey, commissioned by International Crisis Group, 83 percent of senior managers at multinational companies indicate that companies “are moving slower than they could” to engage in the Iranian market. These delays are not minor: 39 percent of executives report being delayed by six to twelve months, 16 percent report being delayed by one to two years, and 33 percent report delays of more than two years.

Some multinational executives are facing delays equivalent to the total time they have spent in the Iran job role; the majority of executives surveyed have been working on Iran for less than three years. As sanctions-relief neared, new teams and offices were established to handle Iran business, with companies often relocated executives to Iran. For these executives, who arrived in their job roles full of promise, the mounting delays have a personal and career impact. For employers, longer project timeframes make management and staffing more difficult.

Iran can be an isolating assignment within large organizations. Companies are increasingly separating Iran from the management of the GCC in response to regional politics, sometimes placing the country among Turkey or Central Asian markets. But very often, Iran is treated as a kind of an island unto itself, meaning that country managers are even more dependent to demonstrate success within the business unit.

In the assessment of one aviation finance executive, who asked to remain anonymous due to the sensitivity of the issues discussed, delays in aircraft sales to Iran, like other commercial deals, see executives repeatedly hitting “roadblocks out of their control.” The frustrations inherent in working with Iran mean that many of these executives and advisors may opt “to move away from Iran for the benefit of their career path.” For example, business development executives may seek to shift focus to markets where they are more likely to hit their sales targets, “in order to get their bonuses.” Likewise, lawyers working on Iran projects are “often incentivized with success fees. If those fees seem unlikely to materialize, they will move on to other projects.”

When asked whether he is concerned about such attrition within his own team, the aircraft finance executive notes, “I have started thinking about it. If I lose a member of my legal team, or if there is a change in the sales team at one of our client companies, it makes the Iran project really complicated. For the replacements, a learning process starts all over again and in some cases expertise won’t be easy to replicate or replace.”

But in the view of Marc Mulder, who leads Wise&Miller, an executive search firm active in Iran, the importance of succession planning is already a central part of the recruitment strategies of both multinational and Iranian companies.

While nearly half of executives surveyed presently expect to work in Iran for less than five years, Mulder observes that this is “a perfectly normal level of churn for senior roles in such companies.” In fact, many companies are hiring with specific regard to managing employee turnover. For example, Mulder describes how “a company might hire an international CFO knowing that they will spend just three years in Iran. But in that period, they will be expected to train the local finance VP so that they can become the long-term CFO.”

Importantly, Iran remains an attractive destination for international managers. Mulder believes that for certain executives, Iran is appealing precisely because of the challenges it poses: “Candidates often move to Iran eagerly. They know it is a complex market, but they like the idea that they will be tested in the role. Working in an emerging market is exciting for them.”

In the current environment, the more difficult aspect of human resource management is not recruitment, but retention. The main risk in succession planning is low employee loyalty. Iranian executives are easily lured away by a salary bump and are even more concerned with career stagnation than their international peers. After all, Iranian employees are less at liberty to look for opportunities beyond the Iranian market. “Retention becomes a problem if the VP you just spent three years training moves away from the company after just one year as CFO. Then you really are starting from scratch,” notes Mulder.

To improve retention, companies are investing in human resources management. Mulder has observed strong interest among Iranian companies “for help in developing the soft management skills that keep people engaged within an organization, such as coaching and team-building. It is part of an effort to make people feel invested in the business.” If companies can develop these competencies, they will be able to better manage the delays, sufficiently encouraging and incentivizing their teams to push through roadblocks.

Overall, companies need to find ways to encourage and reward persistence. For the most experienced country managers, an opportunity to test these qualities of management is often what brought them to Iran in the first instance. These qualities are difficult to pass on, but it is clear that the employees they oversee will have no shortage of opportunities to test their persistence as they advance their careers in challenging Iran.

Photo Credit: Bourse & Bazaar

How Entrepreneurship Can Help Address Unemployment in Iran

Unemployment is a major concern for both labor force participants and for policymakers, especially during periods of economic downturn. Unemployment has been shown to have long-term negative effects on an individual's happiness, even after he or she finds employment. Furthermore, the resultant decrease in tax revenue from unemployment affects many aspects of an economy. Not only is infrastructure investment reduced, but social welfare payments are increased, producing strains on any government. Iran has a considerable unemployment rate (12.2% in July, 2016) and an even higher rate of youth unemployment (26.1% in July, 2016). For decades, the Iranian government has tried unsuccessfully to reverse this trend.

In a number of countries (e.g. Germany, India), self-employment is considered to be an important labor market option for the unemployed. In such countries, governments have successfully developed policies to support unemployed individuals in establishing their own businesses. In both these countries, financial subsidies  are coupled with non-financial support, such as mentoring and training. In Germany, two programs (Start-up Subsidy and Bridging Allowance) have helped the unemployed to successfully reintegrate into the labor market. Participants who fulfill certain criteria enter one of these programs and are allotted a monthly salary for a specified period of time, all the while receiving mentorship and business advice. In India, several programs such as Rozgar Yojana (introduced in 2001), have incentivized candidates to start new ventures. Rozgar Yojana is exclusively designed for unemployed educated youth. Since its inception, the program has provided employment for over 3.8 million candidates.

The Iranian economy would need to achieve a sustained annual economic growth rate of 8% in order to successfully integrate all job-seekers into the labor market—a virtual impossibility even with the post-sanctions rebound. Thus, innovative solutions for unemployment, such as entrepreneurship training programs, are paramount. To date, Iranian policy-makers have neglected to explore this kind of "bottom-up" job creation, despite the fact that 16% of the labor force is already self-employed. 

From a cultural standpoint, significant research suggests that Iranians hold positive attitudes toward entrepreneurship. More importantly, young Iranians have both the ambition and the confidence needed to launch new ventures. What these youth lack is strong government-supported programs and incentives for them to pursue potential self-employment.

Factors that increase the expected benefits of entrepreneurship or decrease its opportunity costs can positively influence an individuals’ tendency to become an entrepreneur. The provision of subsidies and the creation of apprenticeships for the unemployed can encourage entrepreneurship. The most significant deterrent to setting up a business is the lack of start-up capital. The government can provide subsidies to alleviate this problem, particularly as private sources for so-called venture capital remain limited.

Implementing a successful entrepreneurship program for the unemployed must include three components. Firstly, it is important to define specific eligibility criteria for potential candidates. Secondly, the performance of participants must be evaluated throughout the mentorship process. Thirdly, the government must include successful start-ups and other ventures in the design and implementation of such programs. Iran's vital business ecosystem is rife with the elements needed to greatly improve its serious unemployment problem. The government must play a more vital role in remedying the issue.

Moreover, higher levels of human capital investment have been shown to engender entrepreneurship. It is important to note that for many who have recently lost their jobs, clear access to new opportunities is important to keep confidence high. A well-designed re-integration and training program that compensates participants would allow these individuals to consider shaping their own futures through an entrepreneurial project. My research suggests that education is one of the strongest drivers of entrepreneurial performance so courses and mentorship can help unemployed persons to create successful ventures. 

Even if most of these candidates eventually return to working for others, the skills and confidence they would garner would be instrumental for their future job security in a dynamic economy. As long as participants of such programs successfully re-integrate into the labor market, the entrepreneurship program will have reached its aim.

Photo Credit: Thomas Christofoletti

The Politics of Sanctions Relief in Iran: Three Roles for the Private Sector

As politicians and analysts consider the wisdom of offering Iran sanctions relief in exchange for restrictions on the country’s nuclear program, a key stakeholder group remains unaccounted for in the debate – the private sector.

Iran’s private sector stands to gain the most from sanctions relief, and they are uniquely positioned to advance the agenda of normalization through their interactions with both domestic and international business people. Corporate leaders are poised to play three vital roles— interlocutors, stewards, and creators—without which the long awaited nuclear deal will not successfully improve the economic situation in Iran in the way many Iranians anticipate. Policymakers must take account of the relationship between sanctions relief and private sector leadership for the deal to have its much-awaited impact.

In the aftermath of a deal, Iran’s private sector business leaders will be the ideal actors to pick up where the diplomats leave off. These individuals, with global outlooks and ambitions, have already begun reaching out to their peers in the West. And while this outreach is primarily about securing new investment and business opportunities for themselves, it also offers an opportunity to present Iran in a new light, and undo the effects of political vilification and cultural misconception. 

The notion of “business diplomacy” has emerged in the last decade as a serious topic of strategic thought, suggesting that the business executive can serve as a special kind of “ambassador.” And in the transition from high-stakes diplomacy to the “business as usual” mentality expected from a détente between Iran and the West, business diplomacy is the essential intermediate step. 

But in order to take on this role, Iran’s private sector business leaders will need a place at the table.  They must be welcome to visit Western countries much the same way American and European trade delegations have begun visiting Iran. Sanctions, stigma, and arcane visa policies should not prevent an Iranian CEO from coming to London, Paris, or New York to discuss his country and his company in the hope of finding an investor or partner. On the contrary, this should be welcomed as a necessary and productive kind of engagement.  

If Iran’s private sector business leaders can consolidate their economic position on the back of foreign investment and trade, they will be able to take on a vital role as stewards of a nuclear deal.  

For the average Iranian, the nuclear deal has one fundamental promise: greater prosperity. The mechanism embraced by the United States and its allies of using sanctions as a coercive policy tool has had the effect of conditioning Iranians in an almost Pavlovian way— geopolitical strife begets economic pain. Consequently, the signal of political accord and the “relief” of sanctions seems to be triggering the expectation of the relief of this economic pain, and even that of economic reward. Indeed, as opinion polls suggest, President Rouhani’s legitimacy in the eyes of the Iranian public hinges on his rebuilding of the economy.  

But the rollback of sanctions will not bring about relief unless it translates directly into an increased flow of goods, services, and capital into Iran. Following the change in the Iran regulatory environment, only private sector companies will be able to establish the flows necessary for economic growth— whether to introduce vital pharmaceuticals, the latest fashions, or investment funds into the country.

Iran’s private sector is uniquely positioned to create value for Iran’s long-term development. Value creation, as a concept of management, entails the proper treatment of shareholders, employees, and customers as part of corporate social responsibility. When value creation is more than the policy of a single business, and instead reflects the ethos of a whole industry or economic sector, private enterprise can take on a true social significance.

In this sense, Iran’s private sector firms, if properly empowered, can serve as the anchor for Iranian civil society. Through a commitment to corporate citizenship, companies can become advocates for the citizenry within the context of Iranian political economy.

In the current situation, the Iranian state and private enterprise compete for access to limited resources and capital. Livelihoods are either tied to a state affiliate or to a private concern Knowing this, class and cultural divisions are exacerbated by economic antagonism. Issues of public health, environmental degradation, educational policy, and legal protection will not be effectively addressed.

The Islamic Republic’s support for privatization has been surprisingly persistent, if unfulfilled. The technocrats are well aware that state owned enterprises struggle to generate economic gains of real value.

The Rouhani administration is committed to privatization and to the success of the non-governmental sector in Iran. The aim is to give new actors a voice in the wider arena of public affairs.  

This commitment has been signaled since the early days of the administration's tenure, and in Rouhani's cabinet’s engagement of the current crop of Iran’s private sector business leaders. The logic is clear. The Iranian state ought to focus on security and governance, and rent seeking should be formalized through taxation. 

But in the history of modern Iran, and especially in the age of globalization, economic policy has never been a national prerogative.

The imposition of sanctions and their aftermath are testament to this fact. As key actors in Iran try to turn over a new leaf, it is up to the P5+1 to empower Iran’s private sector as interlocutors, stewards, and creators, and thereby ensure that policy treats such empowerment not as an afterthought, but as an intended effect of a nuclear deal. Sanctions relief ought not to be seen as merely the quid-pro-quo of any final nuclear agreement. It is truly the sine-qua-non of everything promised by the ongoing détente. 

Photo Credit: AP Photo/Michael Euler

9 Must-Read Books For Doing Business in Iran

Getting ready for business in Iran won’t be as simple as picking up the latest business bestseller at an airport bookstore. There are essentially no quality English-language books specifically about doing business in Iran (perhaps a reflection of the country’s relative commercial isolation).

Emerging markets best practice suggests that to truly understand Iran’s market, a businesss leader will require fluency in matters of economy, politics, society, and culture. In these areas, the business journalism in the pages of Bloomberg Businessweek or The Economist lacks depth, and the off-the-shelf market research reports of firms like BMI and Euromonitor lack context.

Fortunately, economists, political scientists and other academics have studied Iran with great diligence. Although their books and writings are not specific to commercial considerations, they nonetheless contain important lessons and insights for any business leader devising an Iran strategy.  

Below is a list of nine books that every businessperson should read before pursuing business in Iran.

1. A History of Modern Iran, Ervand Abrahamian, Cambridge University Press, 2008

Abrahamian’s relatively short and accessible text is a staple of undergraduate courses that deal with Iranian history or political science. His book gives a well-researched and balanced introduction to the last century of Iranian history. Anyone seeking to invest or work in Iran ought to consider a basic grasp of the country’s history as a prerequisite. Most analysis on Iran tends to fixate on the 1979 Islamic Revolution as the key historical event that explains Iran’s current position. But as Abrahamian’s astute history shows, 1979 was merely the culmination of several political, economic, and social trends. And by the same token, the present situation in Iran has to be understood within the bounds of decades-long trajectories which are helpfully introduced in this book.

2. Iran and the Global Economy: Petro Populism, Islam and Economic Sanctions, Eds. Parvin Alizadeh and Hassan Hakimian, Routledge, 2014

An understanding of Iran’s economy will be vital for all businesspeople seeking to engage opportunities in the country. Economists tend to publish findings in papers, making it difficult for non-academics to identify the key articles with the most valuable insights. Thankfully, UK-based economists Alizadeh and Hakimian edited this volume of essays covering various aspects of Iran’s economy. Published in 2014, the collected essays include a nod to future international engagement for Iran’s economy.  Subsequent work by these economists and their peers will have expanded on these issues in light of recent developments, but this collection offers a compelling primer into some key matters such as banking regulation, privatization, oil revenues, and industrial capacity.

3.  Iran's Struggle for Economic Independence: Reform and Counter-Reform in the Post-Revolutionary Era, Evaleila Pesaran, Routledge, 2013

Though it predates the election of President Hassan Rouhani, whom many see as a strong advocate for further liberalization of the economy, Pesaran’s book is a compelling introduction into the high-stakes debate that has developed in Iran about economic reforms. Her analysis explores how, in Iran, the simple idea of foreign direct investment (FDI) is tied to all sorts of historical and political contingencies. For business leaders seeking to pursue FDI in Iran, this book will help put their intentions in context.

4.  Business Politics in the Middle East, Eds. Steffan Hertog, Giacomo Luciani, and Marc Valeri, Hurst, 2013

It will be important for business leaders devising strategy for Iran to understand broader regional trends. The economic relationships between Iran and its neighbors are complex, and understanding trends across the region should influence how companies handle risk as it pertains to Iran. This would be one reason to read Business Politics in the Middle East. But in particular, the book includes an essay by Kevan Harris, who is perhaps the most exciting thinker on Iranian political economy today. Though he has yet to write a book on the topic, Harris’ many articles explore the role of the state in Iranian economy, and the capacity for Iran’s current economic and political systems to accommodate the kind of capitalistic activities that multinational corporations and foreign investors are mulling. His use of data from the Tehran Stock Exchange to more accurately define the governance and ownership of Iran’s largest corporations reveals the complexity of determining what constitutes a state owned enterprise (SOE) in Iran. This kind of data will be fundamental to properly accounting for legal, political, and economic risk when it comes to investment and partnership targeting in Iran.

5. Bazaar and State in Iran, Arang Keshavaziran, Cambridge University Press, 2009

Keshavarzian is a sociologist by training and his book is very much academic in purpose and tone. It is a rare example of a book on modern Iran with a singular focus—in this case the seemingly timeless institution of the bazaar. As Keshavarzian’s book explains, the bazaar is no longer as powerful as it once was. But at its height Iran’s merchant class, the bazaaris, epitomized the constructive role that commercial enterprise can play in Iranian society. Business leaders today could learn from the example of collaboration, network-building, and civil society engagement that the bazaar offers. Indeed, the financial might of the bazaar was bolstered by its particular commitment to its stakeholders—owners, employees, and customers. Iranian industries, and their international partners, will find the greatest success if they take a similar approach, one devoted to value creation over profit hunting.

6. Iran's Natural Gas Industry in the Post-Revolutionary Period: Optimism, Skepticism, and Potential, Elham Hassanzadeh, Oxford University Press, 2014

The natural gas industry will no doubt be a major target for investment and development in a post-sanctions environment. But that is not the reason that Hassanzadeh’s book is worth mentioning. Her book is a model example of a deep, interdisciplinary study of a major industry in Iran. The way she weaves political and economic history into the technical discussion of the gas industry and its development prospects should be emulated. For a businessperson trying to develop an understanding of what good market intelligence and contextual knowledge looks like, Hassazadeh provides one of the best examples. Indeed, her “unique methodological approach, presenting a multidisciplinary study of the various historical, political, and economic variables” was a deliberate innovation in the work.

7. Negotiating With Iran, John Limbert, United States Institute of Peace Press, 2009

John Limbert is famous for being one of the hostages taken in the storming of the American Embassy in Tehran in 1979. Despite that unfortunate experience—or perhaps because of it—he has followed his long diplomatic career with a turn as an academic focusing on Iran. These days, the best advice holds that emerging market strategy must take into account cultural awareness to complement market intelligence. Knowing how to operate in a market necessarily requires knowledge about how to deal with local actors. Limbert makes the argument for cultural awareness with a particular focus on the progress of US-Iran political relations, but many of his insights also have a relevance to the realization of commercial relations between Iranian and Western firms. In particular, Limbert outlines “Fourteen Steps to Success” for negotiating with Iranians, many of which are superb advice for business negotiations. Steps such as “talking to the right people” and “choosing intermediaries with care” should not be taken lightly. One might worry that Limbert, as an American, would be poorly positioned to comment on Iranian culture. But having lived and taught in Iran for many years prior to the 1979 revolution, leaving him with excellent Persian language skills, Limbert is an excellent guide to these questions for a foreign audience.

8. Going to Tehran: Why America Must Accept the Islamic Republic, Hillary Mann Leverett and Flynt Leverett, Picador, 2014

The Leveretts, a husband and wife team with experience as national security analysts in the Bush and Clinton administrations, offer suggestions for moving beyond the thirty years of distrust between the United States and Iran. They argue that negotiation between the West and Iran is the only way to address longstanding political and security concerns. In exploring this topic, the book becomes particularly useful for understanding many of the contemporary dynamics within Iran’s political arena today, and by extension wider society itself. Although not directly concerned with business, the book aims to make the reader understand the society of contemporary Iran through an analytical-political lens. Similarly to Limbert’s book, Going to Tehran also aims to give the reader a glimpse of how the “Iranian”—in this case the political actor— sees himself in the wider global and regional context. Many of the issues afflicting Iran’s relationships with an array of countries can be neatly summed up in the writings of the Leverett duo. 

9. The Strangling of Persia, Morgan Shuster, Mage, 2006

Morgan Shuster was an American banker who was invited to Iran in 1911 to serve as Treasurer-General and to put the finances of the newly formed Persian constitutional monarchy in order. His efforts were stymied, however, by the competition between the British and Russian Empires, which had split Iran into two spheres of influence in a 1907 convention, only to continue meddling in domestic politics as they competed for power. Shuster’s sympathy was with the Iranian people, who were trying to establish democratic institutions with little success. Ousted from Tehran by the Russians, Shuster wrote his book to expose how the British and Russians continually denied the Iranian right to self-determination.  From Shuster’s time until today, Iranians have remained sensitive to the notion that true national independence has been denied by great power politics. The recent experience of sanctions has only heightened this sentiment. As foreign firms seek to enter Iran, it would behoove business leaders to develop an awareness of this perception as many of Shuster’s observations continue to ring true today.

Photo Credit: iStock

The Business of Political Economy: Moving from Bazaar to Bourse

Originally published on Lobelog.com

Anticipation has been building among international investors and business leaders as Iran and the P5+1 edge closer to a nuclear deal. Each week another trade delegation— whether American, or Swiss, or German—makes its way to Tehran to scope out opportunities.

I have argued before that Iran’s private sector business leaders need to play a bigger role in the country’s reengagement of the international community. Indeed, a prospective détente is dependent not only on the normalization of political ties between Iran and the West, but also on the realignment of economic ties. In this sense, détente is a question of both politics and economics. It is a matter of political economy.

In order to envision the future role of Iran’s private sector, it helps to look to the past and the historical role of the bazaar, once the center of Iranian political economy.

The Centrality of the Bazaar

We commonly think of the bazaar as a pre-modern marketplace of dark and winding corridors, full of carpets and other exotica. But the bazaar was in fact the economic heart of Iran until the end of the 20th century. It was even more important perhaps than the country’s oil refineries. In the 1970s, the economic might of the bazaar was so significant that the marketplace controlled “as much as half of the country’s handicraft production, two-thirds of its retail trade, and three-quarters of its wholesale trade.” Beyond trade, the bazaar was also a vitally important creditor. As late as the 1960s, “the bazaars in Iran were estimated to loan as much as all the commercial banks put together.” And even after a decade of expansion of modern banks, “in 1975 the bazaar was estimated to control 20 percent of the official market volume, or 3 billion in foreign exchange and 2.1 billion in loans outstanding.”

In this way, the merchants of the bazaar, known as bazaaris, constituted a powerful network of economic actors. Acting as a social class unto themselves, the bazaaris anchored Iranian civil society, granting immense political power to the Iranian people by supporting mass mobilizations such as the 1905 Constitutional Revolution and the 1953 movement to nationalize the Iranian oil industry. 

In 1979, decades of political turmoil culminated in the Islamic Revolution, in which a broad coalition of Islamic and leftist political movements collaborated to oust the Shah. In the years leading up to the revolution, the bazaaris had played a critical role.

The Shah, with his drive for modernization, despised the bazaaris, whom he considered remnants of Iran’s backwards past, ridiculing them for their “worm-ridden shops.” Annoyed by the domination of the bazaar in the retail and banking sectors, the Shah sought to render them obsolete, writing in his memoirs: “’I could not stop building supermarkets. I wanted a modern country.”

The bazaaris felt threatened by the trajectory of economic planning and saw its shortcomings. Sitting within an institution visited by both the lower and upper classes, the bazaaris understood the consequences of growing inequality all too well.

The bazaars’ broad support of the Islamic Revolution, and Ayatollah Ruhollah Khomeini in particular, made all the difference for the durability of the revolutionary movement. In numerous instances, bazaaris across the country mobilized funds and people to ensure that different groups could sustain their protests. In 1977, for instance, bazaaris stepped in to cover professor salaries at Aryamehr University so that protestors could endure a suspension of pay.

Ultimately, the revolution succeeded in establishing the Islamic Republic, with Khomeini as its Supreme Leader. When Khomeini began consolidating power, he quickly sought to neutralize the bazaar, worried that a deteriorating economy would pit the bazaaris against his nascent rule. The new regime rewarded the members of the Islamic Coalition Association (ICA), a small segment of bazaaris, who had “financed and organized many political rallies and events” by making them “part of the new ruling elite.”

By cleverly creating ties of allegiance between the bazaar and the new government, Khomeini sought to eliminate the bazaar as a site for independent political contention. It was no longer an institution of the private sector. Indeed, even today, those bazaaris with ties to the political establishment are referred to as dawlati, meaning “of the government.”

Decline of the Bazaar

Since 1979, weakened by the policies of the Islamic Republic, the bazaar has ceased to be the locus of power in Iran’s political economy. Consider that in the 2009 so-called Green Movement, the bazaar played hardly any role, despite dissatisfaction with the government among many merchants. This was the first time in over a century that the bazaar was not active in a mass mobilization.  

Because of the bazaar’s decline in the years following the revolution, and because of the simplistic portrait of Iranian political economy as that of a rentier state defined by oil, scholars and analysts alike have largely ignored the critical role of the bazaar. Only a few works, such as Arang Keshavarzian’s excellent Bazaar and State in Iran and recent scholarship by Kevan Harris, give the institution its due attention.

With the help of this scholarship, it is possible to identify a few key qualities of the bazaar and its merchants. First of all, the bazaaris were private actors, but with strong communal ties and a sense of civic  and religious responsibility. Their political leanings were moderated because their fortunes were tied to the economic wellbeing of the wider Iranian public. And they were willing to mobilize resources to support political actors whom they felt represented the interests of the common man.

The emergence of institutional actors with these three qualities could have a profound impact on Iran in a post-sanctions environment and on the road to political reform. Unfortunately, since the weakening of the bazaar, such qualities have been largely absent in any institution of Iranian civil or commercial life. In the current environment, those commercial entities with the means to mobilize resources in politics are neither private, nor sufficiently moderate, nor beholden to a sense of civic duty. They are usually part of the country’s military-industrial complex, serving first-and-foremost their dawlati members.

Therefore, if Iranian political economy is going to once again find its fundamental institution, one that can empower civil society and bolster the middle class, new stakeholders need to step up. 

Iran’s Future Political Economy

The most likely candidates are the firms of Iranian private enterprise, especially those that are publically traded and are therefore committed to a wide range of shareholders in addition to their employees and customers. Every member of civil society takes on economic roles as a customer, employee, or shareholder. If these stakeholders can be economically engaged, then Iranian civil society can once again find its capacity to mobilize and make political claims bolstered by economic clout.

In this sense, the future of Iranian political economy requires that the companies of the bourse, Iran’s stock exchange, serve the role once played by the merchants of the bazaar. We might call this the bazaar-to-bourse theory.

This is not to say that business leaders should get involved in politics directly. But when companies seek to provide goods, services, and employment within an economy, they begin to constitute what Keshavarzian calls “socially embedded networks,” which give economic systems political meaning through the everyday transactions of people. If these transactions can occur outside state-controlled channels, the Iranian people will have a better chance of holding their government accountable to promises of reform. Encouragingly, the current Iranian President Hassan Rouhani supports such a rebalancing of Iran’s political economy.

But private businesses have a long way to go. Misguided sanctions have significantly weakened their position in the economy. Shayerah Illias, a researcher at the Congressional Research Service, has noted how sanctions have only contributed to the marginalization of private enterprise begun under Khomeini, awarding more control to state-owned companies and their affiliates. Squeezed by inflation, unemployment, and without an economic anchor in the form of private businesses, Iranian civil society has suffered the most under sanctions.  

It follows that, if the United States and the rest of the P5+1 are really committed to a durable political agreement, they ought to properly plan for a realignment of political economy in a post-sanctions environment. Pragmatically speaking, foreign investment cannot be an afterthought of a nuclear deal. Clear and consistent sanctions relief needs to be guaranteed early so that Iran’s private sector can get to work fast. Securing investment and boosting trade will help put businesses in a position to empower their customers, employees, and shareholders. We would expect a reduction in unemployment, lower inflation, greater purchasing power, and altogether more influence for the average Iranian in the composition of the country’s political economy.   

On this basis, Iran’s private sector business leaders must aspire not only to the power and influence of the historical bazaar, but also to its sense of community and common purpose. In the bazaar, the “steady accretion of interactions blurred the divide between potentially distinct spheres of life—kinship, friendship, partnership, and commerce.”

When we think about business leaders, it is easy to dismiss them as out-of-touch “fat cats” and to expect little from a capitalist institution like a stock market. But Iran’s business leaders, like the bazaari merchants before them, have the ability to facilitate constructive social change. And Iran is one of the few countries where ideologies of politics and economics find truly syncretic forms.

So far, the signs are encouraging that the men and women of Iran’s private sector are the kind of global leaders we would want to see empowered. To leave them out of the picture of détente would be a mistake. It would also expose an all-too-typical lack of historical awareness on the part of Western policymakers.

“Corporate citizenship” can be more than a buzzword if it is woven it into the fabric of Iranian business culture. The bazaar provides the model to emulate.

Photo Credit: NPR Media