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Iran’s fraught relationship with American goods is about to get a little more complicated

By Bobby Ghosh
Published Last updated This article is more than 2 years old.

Isfahan, Iran

Ali Reza is in the middle of a long explanation as to why Iran doesn’t need American products when he stops to take a sip of Coca-Cola.

A Revolutionary Guards veteran turned businessman, who has brought his family on vacation to historic Isfahan, Reza tells me he travels frequently to Asia, where he is building relationships that, he hopes, will turn into lucrative joint ventures one day. When I ask if he wished he could be making similar deals in the West, and specifically in the US, he brushes off the question. Reza (who spoke on condition his real name be concealed) says the Islamic Republic’s long enmity with the US means there can never be normal economic ties between the two countries.

“We will never trust Americans enough to do business with them,” he says.

I wonder if Reza feels, even under the guarantee of anonymity, that he has to toe the official line. A few days before my arrival in Tehran, Mohammed Reza Nematzadeh, Iran’s minister for trade, mines. and industry, announced a “blockade of imports of American goods.” This, he said, was in keeping with instructions from the country’s Supreme Leader, Ayatollah Ali Khamenei, to its president, Hassan Rouhani.

Indeed, in a letter to Rouhani, Khamenei warned against any deeper engagement with the old enemy after the removal of economic sanctions, part of the nuclear deal Iraq struck with world powers earlier this year.  “Under all circumstances, [Iran] must avoid the importation of any basic consumer goods from America,” Khamenei wrote.

I ask Reza if that’s a practical position. Sure, says the businessman. Iran can get most of what it needs from other places, especially from China, Korea, and Japan—countries, it just so happens, he visited on a recent trip abroad.

“With our unfrozen $100 billion, we can go shopping anywhere,” he says, as we stroll away from his family, which is picnicking on the banks of the river Zayanderud, near the stunning Khaju bridge. “The Koreans will sell us ships, the Japanese will sell us cars, the Chinese will build high-speed train systems for us. What do we need from the Americans? Nothing!”

As he chugs down more of his Coke, I joke that a man of his attitude toward the US should really be drinking Zamzam cola, the Iranian equivalent. Reza smiles at the incongruity, and takes another sip. He pulls his cellphone out of his pocket: it’s an iPhone. “Look, just because we don’t need American products,” he says, “doesn’t mean we don’t want them.”

“We can’t do without Halliburton”

With the lifting of sanctions potentially just weeks away, many Iranian economists and business leaders are hoping Iran’s leaders will see that a ban on doing business with the US will likely hurt their country—that Iran both wants and needs American investment, goods, technology, and services.

The need, they argue, is greatest in the investment and knowhow required to better exploit Iran’s vast oil and natural-gas reserves. Iranian firms also crave American expertise in services like medical and information technology, as well as banking, insurance, and finance.

Many ordinary Iranians, meanwhile, clearly want American consumer products, like iPhones and iPads. “There’s a reason Iran is the biggest market for Apple products in the Middle East, despite the sanctions,” says Rocky Ansari, an economist who consults to several multinational corporations interested in the Iranian market. “When people want American things, they find ways to get them.”

Like Reza the businessman, many conservative politicians would prefer most of Iran’s imports and foreign investments came from the east, from Russia and China, among others. “These countries stood with us during the sanctions period, and we should not forget them when the sanctions are lifted,” says Hamid-Reza Taraghi, a leader of the conservative Islamic Coalition Party.

But even conservatives concede that a blanket ban on all things American would be a folly. “There are areas, like oil and gas, where we simply can’t do without the Americans,” says Hossein Sheikholeslam, a foreign-affairs adviser to the speaker of Iran’s parliament. Moussa Ghaninejad, a prominent economist, is more specific, still: “In oil and gas, we can’t do without Halliburton. They have the most advanced technology, and we have to get it.”

For American businesses eyeing Iran, however, the hurdles are not limited to the Supreme Leader’s hostility to the “Great Satan.” Many restrictions are imposed in Washington: For instance, the US will not be lifting human-rights and terrorism-related sanctions on Iran. The US Treasury Department regards the National Iranian Oil Company as “an agent or affiliate” of the Revolutionary Guards, which greatly limits the business American companies can do with the NIOC. European oil and gas companies, unhindered by such considerations, are already taking advantage.

The existing sanctions have been good for smugglers; by some estimates, $25 billion in contraband entered the country last year, compared with Iran’s $60 billion in legitimate imports.

In the US Congress, meanwhile, Iran hawks continue to seek innovative ways to keep (and add to) sanctions on Tehran. The latest tack is to support sanctions imposed by individual American states.

Such tactics are lost on most Iranians, who are confident that American companies will find ways to enter the Iranian market, whatever the restrictions. After all, the Coke Reza is drinking is legal, thanks to a workaround allowed by the US Treasury.

That confidence is reflected in the answer of a shopkeeper who sells jeans in Tehran’s massive Grand Bazaar, when I ask if his Levi’s 501 denim is genuine. “No, it’s fake,” he says, with a smile. “But come back in February, and I will have the real jeans… 100% genuine American.”

Bobby Ghosh

📬 Kick off each morning with coffee and the Daily Brief (BYO coffee).

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