Business is increasingly intermixed with politics in Iran’s relations with the world — to the potential detriment to both. For instance, recent developments in bilateral ties indicate that Iran’s longtime economic partner Germany is keen to take advantage of the opening provided by the nuclear deal. At a June 27 meeting with his Iranian counterpart in Berlin, German Foreign Minister Sigmar Gabriel said his country is eager to bring investment into Iran. However, Gabriel made the latter conditional on further efforts by Tehran to help end regional political crises. The strongest European economy is thus in effect offering the investment Iran needs to create jobs in exchange for the country's playing a “constructive” role in the Syria, Yemen and Lebanon crises.  

These types of demands for change in Iran’s regional policies have escalated in recent months. Some of them are considered in Tehran as violating the spirit of the nuclear deal. Nonetheless, the fact of the matter is that the Islamic Republic is not in a good bargaining position on the global political stage. This is particularly the case since the Iranian economy remains in bad shape. Although there is a fragile recovery, there is a need for major foreign investment to be able to create a million jobs per year through 2022, as projected in the country’s sixth five-year development plan.

Iranian officials say the country needs to attract $50 billion in foreign direct investment annually; this would be 11.7% of gross domestic product. In comparison, this figure was 1.9% in 2003, when no nuclear-related sanctions against Iran were in place. As such, it is clear that expectations dwarf the real investment Iran has so far attracted in the post-sanctions era. In the last Iranian year, which ended March 20, the administration of President Hassan Rouhani managed to approve $9.1 billion worth of foreign investment proposals. However, only $3.1 billion of the amount was actually transferred to the country in the same year, the official Islamic Republic News Agency reported May 15, citing Mohammad Khazaei, head of the Organization for Investment, Economic and Technical Assistance. This trend has been apparent since the implementation of the Joint Comprehensive Plan of Action. Between January 2016 and June 2017, the Iranian government approved over $13 billion in investment agreements with foreign partners. Although the majority of the amount has not yet been transferred into the country, incumbent moderates see it as an unprecedented achievement that can fund some of the 165 projects the government has put forward for foreign investment.

Iran’s mining industry is widely believed to be one of the key potential fields for investment. Most recently, the deputy minister of industries, mines and trade, Mehdi Karbasian, announced that the ministry plans to attract $30 billion in foreign investment — nearly $3.5 billion per year on average — for the development of the mining sector by 2025. The figure, however, is almost twice the average total annual foreign investment trickling into Iran — $2 billion — in the past two decades. To make the impossible possible, administration officials appear to have realized that they need to consider the political concerns of the West as a prerequisite for the expansion of economic ties with the world — although domestic hard-liners still remain a major obstacle to such a reconciliation. Karbasian acknowledged that “attracting foreign investment would be possible only after engagement with the world,” as quoted by the Iranian Students' News Agency on June 28.