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Is Iran really ready for foreign investment?

Despite President Hassan Rouhani’s touting of foreign investment as the savior of the Iranian economy amid low crude prices, the country might not be able to handle the necessary capital inflow.
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TEHRAN, Iran — Since the oil boom of the 1970s, successive Iranian governments have spent billions of petrodollars on consumer goods and covering up structural problems in the economy, Tehran-based economist Davoud Souri charged in a recent article for leading economic magazine Tejarat-e Farda. The recent fall in oil prices to 10-year lows, however, appears to have prompted Iranian authorities to steer away from previous economic policies. Indeed, the Islamic Republic is now trying to shift away from an oil-reliant economy to one that depends on taxation, agriculture, manufacturing and tourism, among other sources of revenue. To prepare the necessary infrastructure for this endeavor, the government is banking on domestic and foreign investment.

Before the sanctions relief announced in connection with the Jan. 16 implementation day of the Joint Comprehensive Plan of Action, embargos had barred potential multinational investors from engaging in business with Iran. Now that the sanctions have been lifted, the Iranian government hopes that its new approach toward foreign financing could address the lack of capital in the economy and help boost economic growth.

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