Lifting Iran Sanctions Won’t Be Enough to Attract Investments

The Islamic Republic’s leadership claims the country is heading in the right direction, telling the beleaguered Iranian business community that a new agreement with world powers on its nuclear program is on the horizon.

According to Iranian officials, reviving the deal would lift crippling economic sanctions, which would in turn attract foreign investments.

However, the collaborative initiative Iran Open Data said in a recent article that Iran’s problems are structural and deeply rooted in poor governance, lack of social responsibility and a serious environmental situation.

As a result, the country performs poorly in the Economist Intelligence Unit’s ranking offering scores on 150 countries based on 90 sustainability indicators across nine different categories, from environmental stewardship to civil rights and corporate governance.

The London-based information provider assesses the environmental, social and governance (ESG) risks in Iran as being “very high,” along with 14 other countries across the world, including Iraq, Yemen and Venezuela.

Investors, financial institutions and banks are increasingly using ESG scores to assess countries before foreign direct investments are approved, Iran Open Data said.

It also pointed out that investors use other indicators too, such as the Global Peace Index (GPI) which measures the peacefulness in a society. Iran ranks 141 out of 163 countries in the GPI, lower than Lebanon, Nicaragua and Eritrea.

Iran’s Minister of Oil Javad Owji recently said the Iranian oil and gas sector needs around $250 billion of investment to stop the production decline in aging oilfields, boost much-needed gas production and maintain Iran’s downstream industries, such as oil refining and petrochemicals.

Meanwhile, the mining sector is in desperate need of around $75 billion to maintain its existing activities and to exploit new mines.

These large investments can only be provided by foreign investors and international bank loans.

However, the shareholders of international companies such as Total, BP, Shell and Rio Tinto “demand close adherence to ESG policies and prefer to invest in countries with decent ESG records,” Iran Open Data said.

“Therefore, such large inward investments are unlikely to occur if Iran has a low ESG ranking, even if the sanctions are removed,” it concluded.

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Iran Open Data's article in English is available here.  The original article in Persian is available here. 

Founded in 2016, Iran Open Data (IOD) strives to make Iran’s official data accessible, available and re-usable. Not only does IOD collect and process raw datasets for researchers and experts, it also publishes exclusive data-driven articles and digital stories for the general public. Additionally, IOD conducts public data calls and surveys on often neglected or taboo issues that are rarely addressed by the government. Follow IOD for all the data-stories concerning Iran.