No longer an isolated nation under embargo, a landmark nuclear agreement with world powers means Iran is opening up for business. Jenny Southan reports from the capital.
As the British Airways B777 began its descent into Tehran’s Imam Khomeini International airport, I looked out of the window to see Mount Tochal silhouetted on the horizon, a shark’s tooth set against the orange of the rising sun.
On September 1 – five months after Air France launched a thrice-weekly route to the Iranian capital from Paris Charles de Gaulle – BA became the first UK carrier to serve the country in four years, with six flights a week from Heathrow.
A few days after the first BA plane touched down, two 19-year-old British men, Charles Stevens and Will Hsu, completed a four-month charity bicycle ride along the Silk Road, from Beijing to Tehran (beijingtotehran.com). After pedalling 10,000km through nine countries, their trip’s end coincided with the appointment of the first UK ambassador to Iran since 2011, Nicholas Hopton. (The British embassy in Tehran reopened last summer, after student protests over sanctions had led to its closure four years earlier.)
Stevens and Hsu were subsequently invited to meet Hopton at the embassy for tea, to celebrate. Stevens says: “It’s an amazing place with green parrots in the trees – a hidden gem if you can get through the high security fence.” Driving past in our minibus, however, we were instructed not even to take photos.
Iran has been isolated from the rest of the world for about a decade, so there is a degree of paranoia to contend with. The US started imposing sanctions as far back as the 1979 Revolution, but the UN clamped down in 2006 after the country refused to cease its uranium enrichment programme. In 2012, Iranian banks were disconnected from the Swift network that enables overseas financial payments to take place electronically.
Sam Cordier, managing director of Tehran-based marketing and communications agency PGT, was educated in the UK but returned to his birth country to join the family business in 2009, “just before the worst sanctions Iran has ever faced”. He says: “A lot of our clients were international and the sanctions basically meant they couldn’t work over here. So we lost a lot of business that way. It also affected our rial, which devalued massively. It was a tough period.”
The good news is relations are now improving. Following a landmark nuclear deal on July 14 last year between Iran and the UK, US, France, Germany, Russia and China, economic sanctions were finally lifted on the country in January (certain restrictions related to the military, terrorism and human rights remain).
“Lifting the sanctions will unfreeze billions of dollars of assets and allow Iran’s oil to be sold internationally,” the BBC reported. In return, Iran has had to scale down its nuclear programme significantly, and will need to continue to submit to spot checks from world powers.
Following the lifting of sanctions, President Hassan Rouhani tweeted: “I thank God for this blessing and bow to the greatness of the patient nation of Iran.” Philip Hammond, the then UK foreign secretary, said: “I hope British businesses seize the opportunities available to them through the phased lifting of sanctions on Iran; the future is as important as the landmark we’ve reached today.”
New ties are promised with the global economy and, for the UK, the renewal of a long-standing trading relationship dating back 400 years. Masoud Abdollahi, an export/import specialist in spare auto parts, says: “After the revolution, many, many companies left Iran. And now those companies are coming back. I see all kinds of happiness and hope.”
OPEN FOR BUSINESS
According to UK Trade and Investment (UKTI), Iran has the second-largest economy in the Middle East, after Saudi Arabia, with a GDP of US$397 billion in 2015. It has a population of 80 million, 60 per cent of whom are under 30, and 14 million of whom live in Tehran.
Here, the roads are clogged with cars and the air is gritty with dust from the desert. Among the ochre blocks, though, are parks and gardens, lively bazaars, trendy juice bars and beautiful palaces. In the winter, people ski in the mountains beyond.
Oil and gas is the country’s biggest industry (car manufacturing is in second place), but an EU import ban took effect in 2012. Boasting the fourth-largest oil reserves in the world, sanctions have cost Iran more than US$160 billion in lost revenue over this period alone, according to the BBC. Last month, BP bought its first consignment in four years from the National Iranian Oil Co, and opened an office in Tehran.
Bloomberg reports: “Iran has vowed to recover its lost market share by restoring its crude oil output to pre-sanctions levels of slightly over four million barrels a day.” Royal Dutch Shell and France’s Total SA have started to buy crude this year. In the future, Iran hopes for oil output to hit one billion barrels a day.
Travel to Tehran today and you will not be able to use your debit or credit cards for payments or withdraw money from ATMs – you need to have sufficient cash for your entire trip, which is far from convenient or secure. Travellers cheques will not be accepted either. Some banks were plugged back into Swift in February, but commentators are reluctant to speculate how long it might take for the whole system to be rewired.
An anonymous source told Business Traveller: “The single-biggest challenge to trade will be the banking industry. Although it is not illegal to do business with Iran, big banks are very cautious about trading with it.” This is because a number have been slapped with huge fines for breaching US sanctions – BNP Paribas SA was forced to pay a record US$9 billion for dealings with Iran (as well as Sudan and Cuba). HSBC was fined US$1.9 billion, Credit Agricole US$787 million and Barclays US$300 million.
UKTI states: “We want to help British businesses take advantage of the opportunities that economic re-engagement with Iran will bring.” But it warns that “UK companies will want to consider whether their proposed activity is subject to US sanctions” and undertake “due diligence measures before engaging in any activity”. It says Iran remains “a difficult place to do business”. That said, EU trade with Iran, which stands at about US$8 billion, is expected to quadruple in the next two years.
KNOW BEFORE YOU GO
Before travelling to Iran, we were informed of the strict dress code for women – hair needs to be covered with a scarf, and clothing must be loose and modest. In reality, younger Iranian women bend the rules, wearing scarves over just the back of their head, skinny jeans, heels and tops pulled up to their forearms. Still, if you overstep the mark, you can expect a reprimand. Men and women don’t tend to shake hands, although people of the opposite sex can be seen walking hand-in-hand without a problem (kissing would not be permissible in public).
Alcohol is completely forbidden, even in hotels, and you must make sure any “sensitive” data that you would not want the authorities to see is deleted from your phone and computer. To be on the safe side, I removed a number of apps such as Facebook and Twitter, which are banned. Instagram is allowed.
Photography in places that aren’t obvious tourist sites, such as outside embassies, or using a laptop in the wrong place could get you arrested for espionage. It sounds extreme, but it’s important to remember that despite the local people being charming and welcoming, and the destination itself being low on crime, Iran is ruled by an oppressive regime that can arbitrarily detain and punish people.
Other challenges include limited internet access (my 3G didn’t work and I couldn’t receive any emails, even via hotel wifi). Make a call from the UK to Iran and you may find the line crackles or goes down. UKTI highlights the risk of bribery, corruption and bureaucratic delays in conducting business there.
For visitors, one of the biggest cultural hurdles will probably be the Persian concept of ta’arof. Essentially, it is the act of turning down an offer, gift or payment a certain number of times before accepting it. Cordier says: “If you’re in a taxi and the guy has got you to your destination, and you say how much, there is a good chance he will say don’t worry, the ride is free.” The etiquette requires you insist.
“Iranian businessmen and women are some of the most accomplished in the world. They can be very talented and tough negotiators but it is rare for an Iranian to say no outright,” Cordier says. “There are numerous culturally unique ways to say ‘no’ without ever saying the word. That can sometimes lead to confusion. You can expect to run around the subject for a long time. Deals can be preceded by a lot of chitchat. Only about half an hour into the conversation can you gently start to begin talking about business.”
THE NEXT CHAPTER
Iran has taken quite a journey from the 20th to the 21st century. When Reza Shah Pahlavi came to power in the 1920s, he replaced Islamic laws with Western ones – banning the veil and forcing men to shave off their beards. His son, Mohammaed Reza Pahlavi – the last Shah of Iran – took the helm in the early 1940s, crowning himself king in 1967. The oil industry was nationalised in the fifties, women were given the right to vote in 1963 and good relations were fostered with the US and Europe.
However, by the 1970s, despite great wealth and freedoms for some, 50 per cent of the population lived below the poverty line and countless outliers (in their various perceived guises) were being persecuted.
In 1971, to celebrate 2,500 years of the Persian Empire, the Shah decided to throw the “greatest party on Earth”, in the desert outside the ancient ruins of Persepolis. It was one of the biggest gatherings of world leaders ever to be seen. The 60 kings, queens, presidents, emirs, princes, princesses, dukes and duchesses were treated to three days of festivities. Maxim’s in Paris did the catering, with more than 160 tonnes of food flown in – including quail’s eggs stuffed with caviar and 50 roast peacocks – along with 25,000 bottles of wine, 12,000 bottles of whisky and 180 waiters. In the end, the inequity was too much for the general populous to bear, and demonstrations culminated with the 1979 Iranian Revolution, which forced the Shah into exile.
The US embassy was stormed and staff were held hostage for 444 days. Ayatollah Ruhollah Khomeini, a Shia cleric living in exile in Paris who had been vehemently opposed to the Shah’s reign – as well as the “Great Satan” of America – returned and became Supreme Leader. His strict religious views demanded a return to the “old ways” – and the founding of the Islamic Republic of Iran. The love affair with secular Western culture was over.
Although views towards the US have softened only slightly, the lifting of sanctions from other parts of the world shows that the country is willing to make some concessions in the name of progress. For citizens, it’s still a far cry from the liberal lifestyles of the middle and upper classes in the 1970s (and not everyone would want a return to that). Back then, men and women could go to the beach in skimpy swimwear, frequent nightclubs and drive Cadillacs.
In spite of sanctions, a Western mindset has persisted across some sections of society. Talking to local people, I was told that house parties take place every night across the city: “We drink alcohol, we eat pork. There are cool guys here – people do what they like behind closed doors.” Of course, it’s illegal, but there seems to be a certain amount of civil disobedience that goes on. There are also clampdowns – in February, the government banned Valentine’s Day.
Some cinemas show films from Hollywood; plastic surgery is wildly popular (Tehran is the nose-job capital of the world); you can buy Coca-Cola and Nike trainers. McDonalds hasn’t quite made it yet but you can see copycat fast-food joints like Pizza Hat and ZFC. Check out @therichkidsoftehran on Instagram and you will see how Generation Z are living – they are brand hungry and pool-party loving, just like young people everywhere. Versace and Roberto Cavalli have opened stores in Tehran this year. Debenhams, Benetton and Mango have been around for a while, but Sephora, H&M and Zara are tipped to join them.
By 2025, Iran is hoping to attract 20 million overseas visitors a year, up from 5.2 million last year. With the average person spending US$1,700, tourism generated US$8 billion for the economy in 2015. The problem in Tehran is that there is an undersupply of hotels, which means rooms are booked up fast, and standards are lower than in other parts of the world.
One of the best properties is the Parsian Azadi, along with Irani boutique hotel Aramis and the opulent Espinas Palace, which have both opened in the capital in the past 12 months or so. International brands are starting to move in, too. There is an Ibis and a Novotel at Imam Khomeini International airport, and a couple of Rotanas. Spain’s Melia Hotels International is opening the Gran Melia Ghoo in the city of Salman Shahr next year, and Jumeirah is also looking to invest.
In total, 125 hotels are to be constructed across the country over the coming years. One of the biggest and most luxurious projects in Tehran will be the mixed-use Didar Complex. Built on top of an underground car park with 1,700 spaces (a rarity in the city), the tower will have 21,000 sqm of retail space, a hotel with 270 rooms and 56 serviced apartments. It will open in 2019, off Africa Avenue, in the affluent Shemiran part of the city to the north. One of the developers told Business Traveller: “There is some good vibes coming from the government – they are putting on a lot of conferences and inviting different hotel groups.”
In January, Airbus struck a deal to sell 118 aircraft to national carrier Iran Air. In our April issue, Business Traveller consumer editor Alex McWhirter suggested in his feature “Persian potential” that Iran Air could become the fourth major Gulf airline, alongside Emirates, Etihad Airways and Qatar Airways: “Iran has a large population and a good number will wish to travel.”
By September, the US government had given permission for Boeing to sell up to 100 planes of its own. Valued at US$25 billion, if all goes well, it will be the biggest deal for a US company since the Revolution. Iran has its challenges, and a poor human rights record, but isolation from the world is never going to fix this.
GETTING A VISA
To get a visa for travel to Iran, you first apply by post for a pre-approval number. Once granted, you need to start queuing at the consulate at 12pm Monday to Friday – you will be fingerprinted so have to appear in person. Doors open at 2pm, at which point everyone gathers in a basement room to continue waiting.
Visas must be paid for in cash (same-day single tourist/business visas cost £250) and you will be told when to return later that afternoon or evening to pick it up. Note that prices, procedures and required documentation (such as a letter of invitation) can change and visa authorisations may not arrive until a day before travel. You may also be turned down with no explanation.
TEN TOP EXPERIENCES
This beautiful Qajar-era (1785-1925) royal palace is decorated with hand-painted tiles on the outside, and stunning faceted mirror-work inside. Dozens of crystal chandeliers and 19th-century treasures from around the world furnish the many ornate, high-ceilinged rooms.
Around the corner from the palace is a 10km network of shopping arcades, where you can buy everything from sour cherries and fresh pistachios to carpets and copper pans. The vaulted roofs and pointed archways are an evocative example of traditional Persian architecture. It’s crowded but you won’t get the hassle of Marrakech or Cairo.
Daf Traditional restaurant
This subterranean venue is an atmospheric place to try dizi (also known as abgoosht), a stew of lamb, white beans, potatoes, tomatoes and chickpeas. The broth is strained and consumed first with flatbread, while the rest is mashed in a stone pot.
Treasury of National Jewels
Housed in the Central Bank of the Islamic Republic of Iran, this mind-blowing collection of crown jewels is the most valuable in the world. There’s the 242-carat Darya-ye-Nur pink diamond – the largest on the planet; the Nadir Throne, which is encrusted in more than 26,000 precious stones; and the Globe of Jewels, which is made from 34kg of gold and more than 50,000 emeralds, sapphires and rubies.
Niavaran Palace Complex
Set in 11 hectares of gardens to the north of the city, the site has various museums and former royal residences, including the Ahmad Shahi Pavilion, which was the home of Shah Reza Pahlavi. You can still see his childhood bedroom, where there is a polar bear rug and a piece of moon rock gifted to him by US president Richard Nixon.
A 180-hectare oasis of forests and lawns, Saadabad has 17 museums (once royal households) connected by winding paths. The Shah took up residence in the White Palace in the 1970s – perfectly preserved behind bulletproof glass windows, you can peer into the bedrooms, living rooms, banqueting halls and private cinema he used to entertain in.
Built in 1971 to commemorate the 2,500th anniversary of the Persian Empire, this awe-inspiring 45-metre-tall, white marble edifice is one of the most recognisable structures in Iran. There is a museum below and a lift that takes you to the top for panoramic views.
Opened in 2009, the 435-metre-tall tower can be seen on the cover of this issue. Part of the International Trade and Convention Centre of Tehran, it has a shopping centre at its base, a wrap-around viewing platform near the summit and a rotating fine-dining restaurant.
Set into the base of the Alborz mountain range in northern Tehran is the village of Darband. Narrow paved paths take you past dozens of colourful restaurants and stalls selling pickled walnuts and sticky dried fruit rolls (lavashak), while waterfalls and streams rush down either side. Continue onwards and a hiking trail will take you to Mount Tochal.
Farahzad Abshar restaurant
Eat traditional Irani barbecue and smoke shisha at this garden restaurant in the Farahzad neighbourhood. People recline against cushions under the trees on wooden beds draped in rugs, while platters of grilled meat, saffron rice and crisp salads are delivered. Alcohol-free beer is available.