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Old trading partners extend feelers to Iran

Iran and six world powers agreed to start implementing the terms of an interim nuclear deal on Jan. 20. Pictured: The heavy-water production plant in Arak.

AP/file 2006

Iran and six world powers agreed to start implementing the terms of an interim nuclear deal on Jan. 20. Pictured: The heavy-water production plant in Arak.

TEHRAN, Iran — For critics of the interim nuclear agreement with Iran, Hossein Sheikholeslami may seem to embody their worst fears.

Sheikholeslami has been busy in recent weeks, since the deal was agreed to in principle, shuttling back and forth between the capital and the airport to welcome all the guests: parliamentary missions from old European trading partners like Germany, Italy and Finland, which are eager to renew contacts.

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Excitement over the interim agreement, which will ease some provisions of the U.S.-led sanctions on Iran but essentially leave all of them in place, has not extended to U.S. companies. They remain extremely wary.

Nonetheless, critics of Iran in the U.S. Congress and elsewhere, who are pushing for even stiffer sanctions, have expressed dismay over the European trade missions. They see them as a signal that Iran is open for business, leading to an end of the Islamic republic’s international isolation, which they say is what brought the Iranians to the negotiating table in the first place.

“As we have warned, and I say this with regret, the sanctions regime has started to weaken and very quickly,” Israel’s prime minister, Benjamin Netanyahu, said Sunday in Italy. “If tangible steps are not taken soon, it is liable to collapse, and the efforts of years will vanish without anything in exchange.”

But that is not the way it looks to Iran’s business leaders, who say the deal has generated a great deal of interest but little else. Even when the easing begins, now set for Monday, it will continue to be nearly impossible to transfer money into and out of the country.

“Most companies want to scope out the landscape,” said Rouzbeh Pirouz, the chairman of a Tehran-based investment firm, Turquoise Partners. “But I don’t think many of them will actually sign contracts and start putting money into this place very quickly.”

That has not stopped a parade of people, mainly European politicians and business representatives, from visiting the Islamic republic, which, with 70 million people and a sizable middle class, is the world’s last major isolated market.

In the first two weeks of the year, Iran welcomed more delegations from Europe than in all of 2013.

“The Europeans are waiting in line to come here,” said Sheikholeslami, the international affairs adviser to the head of Iran’s Parliament, Ali Larijani, who has been receiving many of the high-profile visitors. “They are coming to seek benefits and to get ahead of their international rivals.”

Italy’s foreign minister, Emma Bonino, has been here, as has a former British foreign minister, Jack Straw, in his capacity as the head of the Iran-Britain Friendship Committee.

The prime ministers of Italy and Poland have also scheduled visits. Trade delegations from Ireland, Italy and France are expected in coming weeks.

U.S. companies have shown some interest, of course. In September the head of President Hassan Rouhani’s office, the former director of the Iranian Chamber of Commerce, Mohammad Nahavandian, held a closed-door meeting with leading chief executives in New York. In March, an Iranian investment company is organizing a $15,000-a-ticket seminar in New York on business opportunities in Iran.

Where Netanyahu sees risk, Sheikholeslami — who in 1979 was one of the students who held 52 U.S. diplomats hostage, touching off the crisis that ruptured the countries’ relations — sees opportunity. “The sanction regime imposed on us is falling apart,” he said. “The Americans wanted to impose their will on the world and isolate Iran, but big companies are seeking the potential of Iran.”

Critics of Iran in the United States have also expressed anger at Russia — which has always rejected the U.S.-led sanctions strategy as arrogant — over a reported Russian agreement under negotiation with Iran that could provide Iran with billions of dollars’ worth of food and equipment in exchange for oil, which Russia would then sell.

Foreign Minister Mohammad Javad Zarif, who was visiting Moscow on Thursday, was quoted by Russia’s Rossiya 24 broadcaster as saying such a deal was not on his agenda for discussion. And Obama administration officials have suggested that if such a deal was in the works, it would be a sanctions violation.

Still, those frustrated with the administration’s policy toward Iran say the reported Russia-Iran deal is a clear example of how the sanctions effort is about to collapse and relieve the pressures on Iran.

What is true, said Pirouz and his business partner, Ramin Rabii, is that the Iranian economy has picked up since Rouhani came to office. “But that is not happening solely in expectation of some sanctions being lifted,” Rabii said. “It is because of his appointments of competent managers who are undoing some of the damaging economic and monetary policies designed by the previous administration.”

Under Rouhani, who has been in office for nearly six months, Iran’s economy has made some small strides. Inflation has come down to 35 percent from 42 percent in December, the Statistical Organization of Iran reported. Unemployment continues to be very high, though there are no reliable measures of the rate. The national currency has stabilized, and Iran’s stock exchange has been setting records.

“What Iran’s government really should do is leave the economy to the private sector,” Pirouz said. “While an improvement over the previous situation, some of Mr. Rouhani’s men are still in favor of a planned economy, so in my view certain problems will persist, even if some sanctions are lifted.”

Many multinationals have long eyed what they view as the virgin Iranian market, where many highly educated consumers are thirsty for jobs and Western products. Iran’s infrastructure, including that of its oil industry, needs a complete overhaul.

“We need over $200 billion investment in our oil and gas sector alone,” said Saeed Laylaz, an economist close to Rouhani’s government. Iran needs multibillion-dollar injections in its heavy industries, its transportation sector and airlines, he said. “On top of that, we need to acquire new management skills and services. Basically, we need everything the other emerging nations needed a decade ago.”

A senior U.S. official, speaking on the condition of anonymity, said last week that sanctions would remain firmly in place, and that any company breaking them would be punished. “We tell everybody with interest in the Iranian market to be very careful not to break any sanctions, as they will face the consequences,” the official said.

For the most part, local Iranian producers cannot understand what all the hubbub is about.

“Many politicians and well-connected businessmen might be excited,” said Bahram Eshghi, the owner of a bus manufacturing company. In September he said he was basically doing nothing at work because even the Chinese were afraid to do business with Iran. The lifting of some sanctions or a more positive atmosphere has not changed that significantly, he said.

“Sure, we will be able to buy some spare parts, but I still can’t make an international money transfer,” he said. “Which big brand will be willing to come to Iran and work under such conditions? None.”

Eshghi, a burly man with thick hair turning white, said that only one thing mattered to the multinationals. “They will come only when the U.S. allows banks to make money transfers,” he said. “It is as simple as that.”

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