TEHRAN, Iran - Like many businessmen in Tehran, Reza Dellavari struggles to give his customers what they want.
Crippling sanctions imposed by the West over Iran’s nuclear program have hit this crystal glass importer’s business, with the 38-year-old sometimes taking a loss on his goods amid fluctuating prices.
The prospect of a nuclear deal to lift those sanctions could be grounds for relief. But few people – Dellavari included – are holding their breath or preparing for a quick influx of foreign investment and trade if negotiations for a nuclear deal succeed.
“I have only seen small and cautious steps being taken,” he said. “Nobody is making big investments in the market yet because they are uncertain about the future."
As negotiators work to hammer out a permanent deal for Tehran to suspend its nuclear program in exchange for sanctions relief, Iran has been sounding an optimistic note that it is (almost) open for business.
Ready for biz
Officials have been making a concerted effort to seek out and draw businesses back in – especially in the energy sector. Trade delegations have streamed into the country, which had become a no-man’s land for Western businesses.
France alone sent more than 100 executives from the country's biggest firms in February, according to the French government. (Their visit was a point of contention with the White House during French President Francois Hollande's state visit in February). Iran's top aviation official said this week that Iran would be ready to buy 40 passenger planes a year in the next 10 years if Western sanctions are lifted, The Associated Press reported.
The next round of nuclear talks are due to start May 13 and there are hopes a deal will be struck by July.
While in theory this would pave the way for more foreign investment in Iran, experts say it will be a long time before any major deals are inked.
“Nobody has their checkbooks at the ready quite yet because of the expectation that this is going to be a drawn out –- and possibly down to the wire –- negotiation of the nuclear issue. And because of a great deal of trepidation surrounding the advantages of being a first mover into Iran,” said Suzanne Maloney, senior fellow at the Brookings Institute’s Saban Center for Middle East Policy. “You’re going to see a lot of interest but big deals won’t be happening the day after.”
Some companies will hang back to see how the regulatory environment in Washington shakes out and what the business environment will be like in Iran – particularly for European companies that previously had a presence in the country.
“There’s a memory that Iran is not the easiest place to do business,” Maloney said. “The Iranians are determined to try to change that perception, but there’s only so far they’re going to be able to go.”
Much of that determination comes from a critical need to revive Iran’s economy, which has been battered by crippling sanctions.
President Hassan Rouhani has made the economy a cornerstone of his agenda and is keen to show Iran is open for business. That, along with the negotiations, has helped put Iran back on the map.
European sanctions would likely be first lifted as part of any deal. Energy and automotive firms are keen to get involved, with civil aviation, pharmaceuticals and manufacturing sectors also in focus.
France's PSA Peugeot Citroën is cautiously optimistic.
“You always have to be hopeful,” said Pierre Olivier Salmon, a spokesman for the group. "It’s a huge market. There is a huge potential in this country.”
Meanwhile, French auto maker Renault resumed limited shipments to Iran in January thanks to the temporary easing of sanctions agreed to as part of an interim nuclear deal struck in January. The company said at the time that it expects car production in the country to pick up progressively throughout the first half of 2014, Gilles Normand, head of Renault’s Asia-Pacific operations, which includes the Middle East, told Reuters.
A comprehensive, final nuclear deal still faces hurdles, however. Rouhani has taken heat from hardliners in Iran for agreeing to the interim deal, which has also ruffled feathers in Washington.
And even if a permanent deal is reached and trade restrictions eased further, there is still the fear that companies might run afoul of lingering Congressional sanctions or concerns that any respite would be short-lived.
That's because sanctions relief will most likely be phased in and easily reversible in the early stages of a final deal, meaning that Iran would only be partially open, for a while at least, according to Iran expert Shashank Joshi.
“In a relationship fraught with mistrust, each side fears that if it gives away too much too early, then the other side will pocket the concessions and renege,” the research fellow at Royal United Services Institute think said in an email. “Smaller steps allow each side to build trust, but also ensure that cheating by the other side will have only limited consequences.”
Cassandra Vinograd reported from London