Can international trade beat isolationist politics?
Published August 11th, 2016
It is almost a truism to say that countries that are new to the global market don’t have money. Economic isolation takes its toll. It means that while we can get excited about the potential size of the Iranian market, that excitement has always got to be tempered with the knowledge that it is not a land flowing with dollars just itching to get into the pockets of international water businesses.
What Iran does have, however, is a government which is serious about addressing its water problems, and an open-mindedness when it comes to financing models which puts it a few notches above most other established markets. I met with the water minister earlier this year in preparation for our Iranian Water Summit on 27 September. He is an impressive guy with a difficult job (Iran has a population of 77 million, and water and wastewater infrastructure to meet the needs of perhaps half that number). He is also part of a government that needs to show that the nuclear agreement can deliver real improvements to people’s lives quickly.
I certainly don’t detect any of the shenanigans that surrounded Myanmar’s return to the international fold. In that country, the enthusiasm of officials to court foreign business had a wholly different motivation. Foreign developers were perplexed to discover that they were not only expected to finance projects out of their own pockets, but that they were also expected to pay bribes in order to secure the right to give away their money (see Charles Bodhi’s column).
The money for Iran will come from a combination of concessionary bilateral finance from agencies such as the Japan Bank for International Cooperation, private developers with access to political risk insurance, and in the longer term multilateral agencies, all of whom see that the advantages of supporting Iran’s return to the international fold far outweigh the risk that the nuclear deal is a feint to buy time for Iran’s hardliners.
Iran’s sources of finance may guarantee a higher degree of transparency in the award of projects than might otherwise be the case, but they also mean that intricate international alliances involving local contractors, international technology suppliers, and various sources of finance and guarantees are going to be necessary in order to get the job done. That is the purpose of the Iranian Water Summit: to bring all these groups together.
The venue for the event has limited space, and to make it easy for companies that currently find it difficult to deal directly in Iranian Rials, we are offering a complete package with hotel accommodation and airport transfers included.
For me it is something of a test case. Around the world today so many governments (including my own) are becoming increasingly isolationist, speaking out against international trade as if it is part of the cause of their problems, rather than part of the solution. Making this global water market work is our contribution to a happier planet.