When the economy collapsed in China in the early 1970s, Premier Zhou En Lai urged Mao Zedong, founder of the People’s Republic of China, to pursue ties with the West, particularly the United States. At first, Mao refused. Later, as the economy worsened, Mao authorized Foreign Minister Chen Li to initiate a conversation with the Americans. In 1972, after two years of discreet conversations, President Nixon made his landmark visit to China and the official discussions began. However, formal diplomatic relations did not occur until 1978, during President Jimmy Carter’s administration.
The Iranian situation is very similar to China. President Hassan Rouhani has the role of Zhou En Lai and Supreme Leader Khamenei is Chairman Mao. Restoring economic ties to the United States and Western Europe is what Iran really desires and desperately needs, but it will not happen quickly. Certainly, the sooner the economic door is opened the sooner we will see positive impacts for both Iran and the United States. However, the UN Security Council must first pass a resolution lifting the sanctions that are subject to a report by IAEA. Then it has to be sold on Capitol Hill—a significant challenge in and of itself. Therefore, at this juncture the deal is only a nuclear deal until those sanctions are officially lifted.
{mosads}Tehran is so knee-deep in mud that, even if the sanctions are lifted, it will require a great deal of reengineering and modernization of the country’s infrastructure to pull them out. Their information technology systems alone require a major overhaul. Iranians lack basic banking and payment systems and, after thirty-eight years without diplomatic relations with the West, very few individuals on either side have the experience or expertise to negotiate and develop agreements. To put it mildly, education on both sides is sorely needed. Without a doubt, enormous opportunities for commerce, imports and exports, reconstruction and trade lie ahead. Higher education, in particular, can play a key role in providing Iranians with the education and training they so desperately need in the areas of modern management, banking, finance, commerce, trade and manufacturing skills.
UN Security Council approval essentially lifts the sanctions for China, Russia, Japan, India, France, Germany, the U.K. and other countries. China, Russia and India have made it clear that they would start trade immediately, with a high possibility that France, Germany and the U.K. would follow. With this scenario, Iran would enjoy desperately needed trade and economic growth. However, if President Obama would not be successful to secure Congressional support to have the deal finalized, the United States would not only lose export and trade opportunities with Iran, but actually facilitate completion of Iran’s nuclear missile program.
Most interestingly, it is the current regional economic context that offers the United States extraordinary opportunities. Russia’s economy is suffering and the economies of Saudi Arabia and the Gulf States are sluggish, due to their complete reliance on oil and gas, which Iran is not. While Iran does not have any foreign debt, the sanctions have had a major impact on its day-to-day operations. The loss of worldwide interactions also has transformed its business culture into something equivalent to the twilight zone. While many Americans and Iranians rush to pack their bags in order to move fast and cut deals, they will inevitably be disappointed by the long waiting lines that lie ahead.
It is important to understand that Iran, in many ways, is similar to Romania and former Yugoslavia. All three support a rather unique combination of socialism and capitalism. Socialism, in this context, is “Islamic Socialism.” It is important to remember that the Iranian Revolution started as a socialist movement, before being hijacked by religious groups. In Romania and the countries that emerged from former Yugoslavia, private property is respected and some aspects of government are privatized. Nevertheless, the management of those governments is totally centralized. Similarly, Iran has many large and complex privatized operations, including three major banks: Saderat, Mellat and Tejarat. In addition, the government still has less than fifty percent ownership of power stations and other private infrastructure and production systems. Many other aspects of the Iranian commercial and industrial landscape are not commonly known. For example, Iran is the sixth largest producer of iron ore in the world and the thirteenth largest producer of automobiles. Cars are either exported to or assembled in such countries as Egypt, Iraq, South Africa, Ukraine and Venezuela.
Iran is very different from any other country in the Middle East or, for that matter, the world. It is extremely complex in terms of its political, social, economic and cultural structures. Paradoxically, Iran is advanced in certain aspects, but ancient in others. It is powerful and at the same time desperate; modern and at the same time old-fashioned; a survivor and at the same time in need of new life. The rush to seize the opportunities and make deals is very tempting, but ill-advised. Let’s begin with education, modernization and development. Any sustained relationship requires time and patience and, above all, responsible leadership.
Shirvani is a senior fellow with the American Association of State Colleges and Universities. He served as chancellor of the North Dakota University System, as president of California State University Stanislaus and on the Board of Directors of the American Iranian Council.