Iran is open for business and Switzerland leads the way

Iran is open for business and Switzerland leads the way

As Switzerland lifts its economic sanctions against Iran, Swiss companies lead the way in exploiting new opportunities. But the waters between Iran’s new openness and the West’s suspicions are tricky to navigate.

Iran is trying its best to get western energy companies to re-enter its oil and gas sector. President Hassan Rouhani declared in January at the World Economic Forum in Davos that the country is now open for business.

Perhaps it was fitting that Rouhani made this statement on Swiss soil, as Switzerland has long been a life-line for Iran into European markets. Intermediate companies established in the hospitable corporate conditions of the Alps have helped Iran’s trading ambitions. So even before the recent sanction-lift, the Swiss and the Iranians were in business.

In 2012, the US expressed its disappointment with Swiss breaches of the EU oil embargo on Iran. Swiss companies took advantage of loopholes in Swiss corporate law to evade the sanctions regime against the isolated nation.

According to the Iranian state-broadcaster Press TV, Switzerland has also been the top European exporter to Iran over the last year. In the ten month period leading up to January 31st of this year, Switzerland exported goods worth nearly $2 billion to the inflation-ridden country.

From 2007 to 2010, Switzerland and Iran even cooperated on the massive Persian Pipeline project. An attempt to ease European dependence on Russian gas, the pipeline was supposed to provide Switzerland with 5 billion cubic meters of gas per year. Iranian officials stated that they were ready to start gas exports in 2010. However, they suspended the deal later that same year as sanctions against Iran came into effect.

This relationship between Iran and Switzerland is only based upon mutual benefits, however, and not on any deeper connections. In other areas of politics, Switzerland stands further apart from Iran than many other countries. In 2009, when the Swiss voted to ban the construction of minarets, Iran’s reaction was hostile, to say the least. The then Foreign Minister, Manouchehr Mottaki, warned Switzerland that the ban would have “consequences.”

But as the Iranian Ministry of Economy now humbly declares that foreign investors are competing to enter Iranian markets, the Swiss have their edge. Iran is a country abundant with resources and opportunities, given a more stable political situation, and the profits are there for the taking.

Of course, long-term investments are still very risky, as the Swiss have only lifted the sanctions for a six month period. Whether the nuclear negotiations will lead to anything more permanent is still unclear at this point in time. The Syrian theatre will play a major role in determining this, as Ayatollah Khamenei is one of the few supporters of Bashar al-Assad.

The opportunity is there for foreign companies to get ahead in the business rush to Tehran, but in a few months time the window may no longer be open. Swiss businesses can seize the chance because of connections already established. Others could follow their lead to great rewards, but will have to be wary of the risks.

About Author

Hallvard Barbogen

Hallvard currently works as a communications advisor for companies in the financial and environmental sectors. He has previously worked for the Norwegian Ministry of Foreign Affairs, development NGOs and in local media. He holds an MA with distinction from the Department of War Studies at King's College London and a BA from the University of Oslo.