As Tehran and world powers clinch a nuclear deal in exchange for lifting sanctions against Iran, AMEinfo, sister magazine of TRENDS, interviews international sanctions lawyer Sarosh Zaiwalla, who has a number of high-profile Iranian clients including Bank Mellat, Bank Tejarat and Petropars.
Q. How do you view the deal?
Any kind of settlement agreement is always welcome news for the world peace and, therefore, it is welcomed on the Iranian side as well as in international circles. The foreign minister of the UK went to reopen his country’s embassy in Tehran. It is very unusual for a foreign minister to go personally there to open the embassy. It indicates that it was welcome news in London.
It will bring peace in the Middle East as Iran has greater economic prosperity with the lifting of sanctions. It will also open up the country and make it more acceptable as far as human rights are concerned. The most important thing for any country is jobs for its younger generations and the welfare of the people. As more businesses come to the country, these issues will be addressed.
Q. It comes as a relief for Iranians?
Yes, it is a relief for everybody, because it is expected to boost the international trade. It will increase opportunities for business, especially for small firms to do business in Iran. Iran has a population of 77 million. Therefore, it is a relief for them, because they were really scared to do business after they feared being arrested for the violation of sanctions.
Q. Iran has been under sanctions for several years, first from the United States and, since 2006, the ones imposed by the UN. How have these years of sanctions and isolation been for country and its business firms?
It has been a difficult period. Despite all the sanctions, the country learned to manage itself by bringing its own indigenous expertise. For example, the gas and oil producer Petropas, for whom I acted, had a tough time to get the necessary machinery and engineering expertise, but they managed to get some of them from China and they manufactured some internally. I have been to Iran and life was going on normally there.
Q. Finally, the deal is signed. Some countries have announced their plans to lift sanctions on Iran. So, are things going to be different now?
First of all, nothing is going to change overnight. Switzerland has already lifted sanctions, but the significant trade goes to the United States, because all the banks have their offices in New York and all dollar transactions go there. Therefore, unless the US government lifts sanctions, it is not going to have a substantial effect. If the US and the Council of the European Union want to lift sanctions in a week, they can. If they do not want [to], they may take six months or even a year. As far as India and China [are concerned], they have been trading with Iran irrespective of sanctions.
Q. Oil prices came down the day the deal was signed and it has been trading low for various reasons. Iran has said it will supply oil in its full capacity to a market that has already been hit by oversupply. Do Iran’s neighbors in the Middle East have reasons to worry?
The answer is quite straight, because it is going to benefit the consumers. So, why should we worry about it? International trade goes by supply and demand, and oil is used by consumers. If I am an ordinary person on the street, I will welcome it because, when the oil prices go down, I get cheaper petrol to fill my car. Oil prices [have] increased in the last 20 years, but, before that, it was some four dollars per barrel.
Q. Iran is going to make money when it floods the market with its oil, but many countries, like Saudi Arabia, the UAE and Qatar, which are heavily reliant on hydrocarbon resources, are going to make losses. Is it going to be a smooth process?
Qatar is not going to like [the situation], as it supplies most of the gas after Russia, while Iran has a huge untouched reserve of gas which will come into the market and push the gas prices down. It is merely economics, as the price is based on the supply and demand. It is not limited to oil and gas, because Iran has a good production of wheat and its supply will take the price of wheat down.
Q. Do you see a steep increase in capital inflows and outflows?
I think [there are] going to be a lot of investments into the country. Iran is ready for infrastructure development. The country is hungry for investments and needs to build refineries, roads, hospitals, etc. It requires modern equipment. In the form of joint venture investments, Iran is going to receive more inflow than capital going out of the country.
Q. Is Iran ready for the big investments coming into it?
Iran will have to prepare for it. The first thing the country needs is to have a proper legal and arbitration system, because any investor who brings money to a new country wants to make sure his investment is safe. Therefore, it is imperative to have an international arbitration system, with an independent tribunal. Iran will have to change its laws to make sure that an arbitration awarded against a party in Iran is enforced by courts in the country.
What do you think about the deal in terms of UAE-Iran trade?
Iran and UAE have good trade relations. They have always maintained trade through Bandar Abbas and Bandar Lengeh ports. But, for the last two years, the UAE has decided to strictly comply with the sanctions requirements. So, the first country to benefit will be the UAE, because of the territorial [proximity]. The deal will help open up the trade routes and will make the trade between the neighbors better.