There are many risks involved with any kind of investment in Iran. From red tape to political risks, Iran needs to address these problems so as to instill confidence and grow foreign investments. Here are some of the sources of these risks:
- Political situation of Iran is not stable: the ruling system in Iran is still in a stage of choosing between being a responsible state and a kind of revolutionary movement. The ideas related to “constant revolution” and “export of revolution” are still alive and they prevent the country from getting “normalized”. The idea of revolutionary” in fact means that things are not in the normal business course.
- The government of Iran is a religion-oriented government which puts everything, including the economy, in the service of the ideological objectives.
- The issue of political legitimacy and the source of authority of the regime is still unsolved in Iran. The religious leaders that rule the country believe in divine sources and despite holding various elections elections and having institutions such as parliament, they do not respect the views of the people, especially in selecting the real leaders and real sources of power in the country. Public participation in political affairs is very low.
- Most of the people are dissatisfied: people of Iran are by and large silent due to fear of repercussions if outspoken. This is only in the surface and the result of military-security pressures. In reality, it is not a secret in and out of Iran (the ruling regime in Iran is very well aware of this) that the majority of people in Iran do not like the regime, its leaders, its ideology and especially the way it views the role of religion. In addition to that, the ethnic and religious minorities all around the country are very dissatisfied.
- Regime is inefficient: the ruling system in Iran is practically paralyzed by its own tactics and ideology. The scientific methods of management are ignored in Iran and the traditional methods of management based on a mixed and vague collection of Bazar practices and religious-business traditions are not working.
- The Economy is more styled as the communist countries (planned and government centered) and private sector is artificial (it is an extension of the public sector). The economic and financial institutions in Iran are not ready for international business.
- The sanctions against Iran are still creating problems. The unilateral sanctions are still imposed. These and multilateral sanctions may return in future due to the military and regional policies of Iran.
- Corruption is high. Corruption is widespread and it has lost the ugly side of it, meaning that corruption is accepted as a normal way of business. Transparency is very low.
- Judicial system is subject to substandard norms and practices. There are two parallel judicial systems in Iran, the revolutionary courts do not observe the laws and consider it as part of “being revolutionary”. They have no respect for international norms and practices in any field. Sometimes they issue verdicts on the basis of religious rulings of the religious sources.
- Iranian government is actively involved in regional interference, exacerbating already tense relations with regional and other powers. The Iranian government supports using terrorism as a tool to meet its political objectives. These problems are keeping the possibility of conflict and escalation of tensions at an alarmingly high level.
