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WSJ Bureau Chief: Arrest of American Highlights Risks of Doing Business with Iran

The recent arrest of an Iranian-American businessman in Tehran suggests that increased economic engagement with the Islamic Republic, made possible by the easing of international sanctions, poses significant risks for foreign investors, Gerald Seib, the Washington bureau chief of The Wall Street Journal, reported (Google link) on Monday.

Hard-liners have a double incentive to undermine the new deal and its promised economic opening to the West: They dislike any deal that curbs Iran’s nuclear program, and the arrival of foreign investors threatens the Revolutionary Guard’s own hold over key sectors of the economy, which was strengthened amid the stresses of tough economic sanctions. …

For the business community, the questions are equally difficult. Countries as disparate as Britain, Finland, New Zealand and Taiwan have rushed trade delegations to Iran in the wake of the nuclear deal. But Western companies are heading into a dicey environment for their employees and partners.

Firms and individuals with American ties seem likely to be particular targets for the hard-liners. But even beyond that, the business environment is a tough one in more mundane ways. The government controls huge chunks of the economy and isn’t likely to let go. The rights of investors in the judicial system are suspect. The World Bank ranks Iran 118th in the world on its “ease of doing business” scale, which ranks nations on how conducive they are to the starting and operation of a local firm.

Seib concluded that “the Revolutionary Guards are eager to have access to oil revenues frozen under economic sanctions, and not at all eager for the rest of the deal.”

While reporting on the arrest of Iranian-American executive Siamak Namazi on Thursday, the Journal observed that Iranian businessmen with ties to foreign companies have been warned to stay away from monopolies controlled by the Revolutionary Guards.

Namazi’s arrest has prompted bipartisan criticism from members of Congress. On Friday, Rep. Dan Kildee (D – Mich.) released a statement saying, “Iran has repeatedly said it seeks to rejoin the global community, yet I simply cannot fathom how this is possible if it continues to hold American political prisoners,” while Sen. Mark Kirk (R – Ill.) called on the administration to target Iranians involved in kidnapping Americans. “Rather than moderating the world’s foremost state sponsor of terrorism, the flawed nuclear deal is emboldening Iran,” Kirk argued, adding that “Iran’s threatening behavior will worsen if the Administration does not work with Congress to enact stronger measures to push back, including renewal of the expiring Iran Sanctions Act of 1996 and targeted sanctions against Iran’s Revolutionary Guard and against any Iranian official found to have participated in the unjust detainment of American citizens.”

In an editorial published this past May, The Washington Post warned that the continued imprisonment of its reporter Jason Rezaian by the regime showed that Iran is a “country where well-meaning foreign visitors, including potential Western investors, are vulnerable to being seized as hostages or used as pawns in power struggles they have nothing to do with.”

Seib was arrested by Iran in 1987 and held in custody for several days after being invited by the regime to visit areas that had been affected by the then-ongoing Iran-Iraq war.

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