Up And Coming Emerging Market For North East Businesses

Issue 18

Iran is slowly re-emerging from its heavy economic sanctions placed by the international community while it was trying to develop a nuclear weapons capability. Currently, there is also mounting tension from Saudi Arabia as Iran still refuses to build positive relationships with the Gulf Sunni Monarchies and this is further fuelled by their active involvement in Syria and pro support for Russian and Assad forces.

The Iranian government has however announced they are actively looking to attract $500 Billion (US Dollars) over the next 5 years, which is highly attractive for future export business within the UK. Having the world’s 4th largest oil and 2nd largest gas reserves this will ensure Iran has a promising future beyond any enforced nuclear sanctions. The UK government is now actively encouraging UK business to start developing strong trade links, however the banking markets are still yet to support this potential economic manoeuvre.

Environmental Risk:

Iran sits astride some main tectonic fault lines, which means it regularly suffers from earthquakes. Although most cause minimal damage, fatalities are not uncommon and within the last 14 years an estimated 31,000 people have lost their life because of earthquakes. In Western regions of Iran flooding is a major concern and this further contributes to an already crippling national water supply system. Iran has 4 of its cities listed within the World Health Organisation (WHO 2011) as being in the top 10 world’s most air polluted cities

Business Risk:

Investment into Iran’s economy has clear levels of uncertainty for UK companies. If sanctions were to be re-imposed due to Iran not conforming, then this could severally hinder future business ventures. UK companies should also be mindful of the levels of corruption within the region, as they are currently ranked 130 out of 168 for corruption (Transparency International 2015). Corruption appears to be an everyday occurrence within the business markets in Iran and this creates complex businesses ownership agreements that can put UK companies in difficult positions with the UK Bribery act if not well thought out.


Due to the possibility of low levels of foreign nationals visiting Iran, crime reporting tends to be very low. In some reported cases, violent crime is minimal while petty theft is more often the case. There is a large issue with drug misuse and trafficking through Iran and these acts could be a safety concern if caught up within any ongoing incident. The largest risk concern for international visitors is espionage of critical data and business intellectual property. Iran is currently ranked within the top 10 for this criminal act.

If travelling near or towards the boarder of Afghanistan, Iraq and Pakistan as a foreign national your risk levels increase considerably. Your chances of becoming a victim of kidnaping is extremely high if unprotected. This will affect UK nationals more due to recent UK government perceived negative involvement in Iraq and Afghanistan as many believe they have contributed to the weak security situation in these areas.

Political Risk:

The new nuclear deal with the west has created conflict among Iran’s hardliners who feel that UN and US sanctions are an infringement of their liberties as a recognised nation. In terms of how this will impact key critical decisions in businesses and commodity markets for western investment, is still uncertain. It is therefore advised to keep a very keen eye on the political landscape and maintain this over the next 12 months. Parliamentary elections were held at the beginning of 2016 and there was no real concerns or repercussions during this time. The next Presidential elections are set for 2017 however, and this will be a time to view the political horizon with caution and establish how political changes will impact business.

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