Iran: shutdown would push country over the edge

Dawood Nazirizadeh is a corporate consultant advising companies on trading with Iran. His company, Nazirizadeh Consulting, is based in Wiesbaden, Germany. Nazirizadeh also works for the Ministry of Economics in Mainz and is actively engaged in fostering dialogue, scientific exchange and cooperation between Germany and Iran. Nazirizadeh is the president of Wiesbaden Academy for Integration and a member of the Islamic brains trust of the Friedrich Ebert Foundation.

Mr Nazirizadeh, after arriving in Iran you went into quarantine. Where exactly are you now?
Nazirizadeh: I’m currently in Tehran. The public authorities are requesting people to avoid contact as far as possible. This is why I only go out shopping. At present, I work from home.

What quarantine measures have been imposed in Iran and what are your experiences?
Nazirizadeh: The public authorities in Iran are urging people to adhere to WHO guidelines and to stay at home. All shops that are not vital are currently closed. I can only buy stationery, flowers or electric devices online. Motorways have, in addition, been closed and travel within Iran is very much restricted.

In what way are social distancing measures implemented and monitored in Iran?
Nazirizadeh: The state does not prohibit anything, but rather appeals to reason. Business licences for retailers are, however, a different matter. Drastic restrictions apply here. Roads have also been blocked. Schools, universities and sports complexes, cultural sites and parks are closed. Business licences for hotels and other accommodations have been suspended on a temporary basis. In addition, the government has cut staff working hours, but retains full payment.

Are panic buying and supply squeezes an issue in Iran as in so many other countries?
Nazirizadeh: Panic buying is not a problem in Iran. All food is available without restrictions. There are, however, some supply squeezes for disinfectants, gloves and face masks for the population to wear. My contacts in the hospitals confirm that although the situation is very difficult, enough personal protective equipment is available by now.

Iran has been severely hit by Covid-19. How reliable are the official figures on infections and deaths in your opinion?
Nazirizadeh: I reckon that the number of infections is 5 to 10 times higher than the official figures. This is also how experts interpret the numbers presented by the Robert Koch Institute in Germany.

Although Iran is witnessing sharp rises in infections and in deaths every day, the state has declined foreign healthcare aid. How well is the health care system equipped to cope with the crisis in your eyes?
Nazirizadeh: Iran has officially passed the peak of the outbreak. The hospitals have enough beds mainly because the healthcare system in Iran has not been privatised to such an extent as in Germany and is far less efficiently organised. The advantage is that more flexibility and resources are available in crisis situations.
Provisions are, however, a different matter. Iran has asked for international help here and is actively calling for the US sanctions, which violate international law, to be suspended. France, Germany and the UK have already sent equipment for laboratory tests in March, along with other equipment such as protective clothing and gloves.

Which measures has Iran taken to limit the economic impact of the crisis?
Nazirizadeh: Far less measures are in place to help the economy in Iran as in other countries such as Germany. Due to the economic sanctions the country can only provide social benefits for the people who need it most and unemployment insurance. This is also why there was no shutdown. The economic impact would have pushed the country over the edge.

A lifting of the sanctions on Iran are being called for in the international media to help the population to better cope with the crisis. How are people responding to the crisis and what are the general sentiments?
Nazirizadeh: The sanctions violate international law and have already cost many lives before the pandemic started to spread. Just think of all the cancer patients, who require special medication. Since the US continues to uphold the sanctions in a time like this hardly anyone is taking any help the US offers serious. The population feels let down.

Based in Germany and in Iran, your expertise in consulting companies on conducting business in and with Iran is highly valued. What is your advice to companies in Europe, who have trading partners in Iran, especially in the current situation?
Nazirizadeh: Iran is one of the most interesting markets worldwide- that is if it wouldn’t be for the political problems. The country is a market of untapped potential. Some companies are advised to stop trading with Iran in the current situation, others should seek good advice on how to proceed. In any case, it is important to maintain personal contacts. One day, things will certainly get better and then it will pay to have a foot in the door. It’s fascinating to see that many have turned their back on Iran, although there are means to maintain business. Although there have been drastic declines, trading continues with Iran.

Which cultural divides frequently play a role for companies in Europe and in Iran?
Nazirizadeh: The Europeans are better organised and the Iranians more flexible. Traffic is a good example of this. Although just as many accidents happen in the cities in Iran as in Germany, you need much more courage to navigate the traffic in Iran.

The spread of COVID-19 has prompted a sharp decline in agricultural exports from Iran. Traders report that the situation at the land borders is subject to constant change and that exports by sea are also subject to practical problems. In how far is it possible for suppliers in Iran to ship products and which restrictions apply to imports?
Nazirizadeh: That’s right. Iran’s imports and exports have nearly come to a complete standstill. Due to the sanctions shipments by sea to Europe had, however, already stalled before the virus became an issue. Air traffic was also heavily restricted because of the accidental shooting of the Ukraine airlines flight and has now been reduced to the absolute minimum due to Covid-19.

The US sanctions and the FATF blacklist mean that any state having financial or commercial transactions with Iran will be penalised. Medical and agricultural products are excluded. How is it still possible for businesses to trade in Iran?
Nazirizadeh: The FATF decision only has a limited physical impact since Iran has never been a member. There are several ways of trading in Iran. The main problem are not so much financial transactions as such but rather the foreign currency shortage.

Traders in Iran report that financial transactions are a big problem. Which options remain for companies based in Europe and in Iran?
Nazirizadeh: If buyers in Iran can obtain foreign currencies it is possible to transact payments over Iranian banks with offices in Hamburg or Munich. Alternatively, payments can be transacted with NIMA, the Iranian foreign exchange platform, where foreign currencies can be bought from other Iranian companies that have sold goods to other countries. The European Instrument in Support of Trade Exchanges (INSTEX) has also become active recently. This instrument enables business transactions without physical payments being transacted with Iran.

What would be the best way forward for Iran in the current crisis in your view?
Nazirizadeh: As a neutral observer I’m not allowed to judge on the way in which the crisis is being managed. Every crisis, however, also holds chances. We’ve reached a dead end in the Iran-US conflict. Here the crisis may, however, be regarded as an opportunity. The absolute nightmare would be an act of war in the Middle East, that seizes on the weakness of the US prompted by Covid-19. I do, however, hope that the crisis will be used to resolve conflicts and forward negotiations. Trump is a dealmaker and the Iranians know how to negotiate strategically. There’s always a way out, which clever people now have to find. Regarding the current situation the following Chinese proverb comes to mind: “When the winds of change blow, some people build walls others build windmills.”