Week in Brief 27.07.2018

Next week, the first round of US sanctions against Iran will take effect with Europe unable to present a clear solution yet. This issue may further increase the price of foreign currency.

The Head of the Iran and Swiss Chamber of Commerce, Sharif Nezam-Mafi, believes that foreign banks and especially Swiss banks will soon leave Iran.

Mr. Nezam-Mafi believes that if Iran is to continue importing food and medicine, it needs to use European branches of Iranian banks or smaller foreign banks which have no dealings with the US.

However, establishing branches in Europe is time consuming and considering that no one could foresee such an end for the Joint Comprehensive Plan of Action (JCPOA), so far no such arrangements have been made. Even if such banks were established, they could only be used to deposit cash and import goods to Iran only. In other words they would be unable to attract investors, open credit lines or offer financing.

According to the Head of Iran-Swiss Chamber of Commerce, even though foreign investors have severely lost interest in the Iranian market, but the de-valuation of the Iranian currency, Rial, may be an incentive in attracting small and medium sized companies to Iran.

“For foreign investors with no activity in the US, it is possible to establish companies in Iran. This will enable them to use cheap labor and Iran’s energy sources”, adds Mr. Nezam-Mafi.

The question remains as to why investors would prefer the Iranian market to for example, Brazil or Vietnam.