After the war, business opportunities in Tehran
THE end of the eight-year Iran-Iraq war has prompted representatives of the international business community to rush to Tehran in search of lucrative reconstruction contracts. The Tehran International Trade Fair, in September, had such a heavy demand for display areas by companies from Asia and Eastern and Western Europe that temporary display booths and meeting rooms had to be arranged at the last minute to accommodate visiting businessmen and government trade officials. More than 30 nations and 500 Western companies participated. ``There are great opportunities here,'' a British civil engineer said. Other participants agreed, emphasizing their awareness of Iran's need to quickly repair the extensive war damage to its petrochemical facilities and industrial infrastructure.
West Germany was well represented, as is appropriate for Iran's largest supplier. The West Germans exported an estimated $1.6 billion worth of goods to Iran last year. The prospects of Italian companies were buoyed by Trade Minister Renato Ruggiero's visit to attend the first meeting of the Italian-Iranian Joint Trade Commission since the 1979 revolution.
Canada took advantage of the Tehran Fair to push its already prosperous commercial relations. Iran is Canada's second-largest trading partner in the Middle East, after Saudi Arabia. Last year, Canada exported $140 million worth of goods, mainly wheat, with total trade reaching $230 million.
Soviet and Eastern European attendance at the fair was heavy and at the highest government and business levels. The Soviet deputy minister for foreign economic relations, Veniamin Korolev, flew to Tehran to meet with Ali Majedi, his Iranian counterpart. They agreed that trade and technical cooperation ties would be expanded and announced that the Soviet-Iranian Joint Economic Commission would meet shortly in Moscow to discuss specific project proposals. Mr. Korolev stated: ``We are eager to upgrade mutual economic and technical ties with Iran.'' Their trade is expected to reach $350 million this year, up from $250 million in 1987.
East Germany's minister for heavy engineering and plant construction, Hans-Joachim Lauck, held talks at the fair with Iran's minister of industry, Gholamreza Safei, regarding collaboration on the construction of a steel rolling mill as well as a number of chemical and cement plants. Bulgarian officials signed an agreement during the fair with Iranian officials to provide assistance in technology transfer and joint industrial production. Romania agreed to assist Iran in agricultural, aviation, and aluminum sectors. Hungary's minister of industry, Frigyes Berecz, confirmed during his visit that his country will supply raw materials, equipment, and expertise to the Isfahan Polyacril Plant.
Japanese and South Korean companies worked in Iran throughout the war. Thus they are in a good position to win reconstruction contracts. The two countries are offering cut-rate financing for projects in the areas of their expertise, such as petroleum facilities, port reconstruction, transportation, and housing. Japan's foreign minister recently visited Tehran to emphasize interest in participating in Iran's reconstruction. South Korean contractors hope to win orders worth at least $10 billion over the next five years, according to the Korea Institute of Economics and Technology.
The Tehran Trade Fair provided foreign businessmen with a good opportunity to display their wares in Iran. But many of them would have come anyway, in response to pronouncements by high Iranian officials emphasizing the regime's intention to rush reconstruction.
Ayatollah Ruhollah Khomeini gave his personal backing to reconstruction plans in October, stressing the importance of funding agricultural as well as industrial reconstruction.
President Ali Khamenei has appointed a 28-member body of senior officials to draw up a comprehensive reconstruction plan. The priorities are expected to include rehabilitation and expansion of facilities in the oil, power, telecommunications, and transportation sectors. Since oil has traditionally accounted for more than 90 percent of foreign-currency earnings, most of the investment funds will have to be concentrated in that sector.
Iran's minister of oil, Gholam Reza Aqazadeh, has confirmed this emphasis, stating that top priority will be given to the reconstruction of oil and petrochemical facilities, such as the Abadan oil refinery, the main oil export terminal of Kharg Island, and the $1.5 billion Arak petrochemical complex. He said that the Iranian Cabinet is focusing on renewing basic industries ``to create a fundamental change in exports and to generate foreign reserves for the country.'' His ministry plans to invest up to $3 billion annually over the next five years to expand oil, gas, and petrochemical installations.
Given the present state of US-Iranian relations, American companies can only stand by and watch other foreign firms move into the promising Iranian market. In 1972 the United States exported $480 million of nonmilitary goods and services to Iran, and enjoyed a 17 percent market share. Last year, according to the US Commerce Department, American exports were only $54 million.
Clearly, a resolution of political differences with Iran would provide US businessmen with entree into the potentially largest market in the Middle East. Even though others are getting a head start, the fact that much of Iran's pre-revolution infrastructure was built by US companies may allow them eventually to regain the important market position they enjoyed in the 1970s.