The Forum for Partners in Iran's Marketplace

October 2018, No. 89

Economic Diplomacy

Economic Diplomacy

A common understanding between the Foreign Ministry and the private sector in the field of economic diplomacy should be created.

The Foreign Ministry officials’ commuter traffic to the Chamber of Commerce shows that the alarm has been sounded about the economic situation in Iran. Today, the economic conditions are more complex than expected. The president of the Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) who hosted Foreign Minister Mohammad Javad Zarif said the hurdles thrown in the way of Iran’s financial and banking communications with the world would not easily be removed. Nonetheless, they believe that under the current economic crisis in the country, strong and powerful diplomacy can facilitate the conditions for economic activists to cope with the sanctions. Thus, the foreign minister for the third time joined the meeting of private sector activists and was treated as the special guest of the first joint conference of ICCIMA and ambassadors and heads of missions of Iran. At the meeting, Gholam Hossein Shafei, ICCIMA President, noting that economic diplomacy is an effective instrument for presence in global markets, made three proposals: Establishment of joint committee between the ICCIMA experts and representatives of the Ministry of Foreign Affairs to train the top forces to advance international negotiations; preparation of the ground for concluding preferential trade and free trade agreements between Iran and target countries; and the focus of economic diplomacy on trade and investment.

Addressing the forum, Zarif said: “We at the Foreign Ministry and our overseas missions are obliged to help you private sector activists. In my opinion, we must help you export more and have more opportunities to advance your goals. Of course, in this field, we need innovation and creativity in order to use the opportunities that come about.”

The reality is that the hurdles thrown in the way of Iran’s financial and banking ties with the world cannot easily be resolved, so we should think about ways to offset US sanctions.

Zarif also argued that the United States was addicted to imposing sanctions, saying: “We can show the Americans that they have to quit their addiction.”

Subsequent to this meeting, private sector activists, in the form of 51 working groups, aimed at addressing trade issues with 51 target countries, including banking issues and money transfer, insurance, customs and transportation issues, activities of small and medium-sized enterprises, participation in trade fairs and conferences, resolving trade disputes between businessmen and existing potentials for concluding preferential trade and free trade agreements.

America Is Addicted to Sanctions

Emphasizing that the Americans are addicted to sanctions, the foreign minister said: “The world has come to the conclusion that the United States should quit its addiction to the sanctions. We can also show Americans that they ought to quit their addiction.”
Pointing to the gap between the United States and Europe in various areas, including economy, Zarif noted: “I am not naive to say that we can pit the US and Europe against one another. But there is a gap between them that we must use. So we do not need to act as a bridge for their division.”

The top diplomat emphasized: “We should not force the world to choose between us and economic pressure. Instead, there are some ways we can use the special features that are provided to us in this area.” According to Zarif, these special features may be a special opportunity to pay attention to. For example, interacting with small and medium-sized European companies is an opportunity that should be used because it can help the private sector’s dynamism.

Let’s Turn the Pressure to More Non-oil Exports!

Zarif added: “Given that the world is on our side, we can improve the situation every day. Therefore, all the forces of the country are united and coherent in order to be able to overcome the critical present-day situation. In this regard, private sector cooperation is needed more than ever. We can turn the pressure on us to increasing national production and raising non-oil exports, and show the Americans that they should quit their addiction.”

He said: “Despite US pressures we are a country enjoying security. But unfortunately the security and legitimacy of our neighboring countries depend on the outside; we are saddened to hear a newly empowered president, addressing our neighboring countries says if we do not support you for two weeks, you would not survive!”

Government Involvement Not Favored

“Our task and that of the government as a whole is not to get involved in the economy but to facilitate your activity in the field,” said Dr. Zarif, stressing that the joint seminar of ambassadors and private sector activists was a good idea. He hoped that during the conference, stronger cooperation will be forged between the Foreign Ministry and private sector activists.

He said a common understanding between the Foreign Ministry and the private sector in the field of economic diplomacy should be created. He added, “There will certainly be two-way communication between the private sector and the diplomatic apparatus. On the one hand, you need information from our missions abroad as well as their help to advance their businesses in the field of economy and commerce. On the other hand, we need you to let us know what can be done, what we need, and where it is possible to forge competition or have relative advantage for rivalry. These are the areas where we always need your cooperation.” 

They Have Targeted Our Market

The ICCIMA president also said the aim of holding the meeting is primarily to provide an opportunity for the private sector to interact with Iran’s ambassadors so that the problems can be directly expressed and this could lead to straightforward solutions in face to face talks.

He stated: “Only through collaborative efforts we can overcome the problems; corporatism will not have any consequences except collective losses at a time that our existence is under threats.”

Shafei pointed to the current state of the economy from the perspective of the private sector and said the withdrawal of the United States from the JCPOA has placed Iran in a new economic and political environment and Trump’s abrogation of the JCPOA has raised the question as to how close are we getting to the pre-JCPOA era.

He added: “In this regard, the European Union and other JCPOA partners play an important role in preventing Washington from imposing comprehensive sanctions on Iran and thus greatly affect the US withdrawal from the JCPOA.” 

Banking Complications Continue

Shafei noted: “The reality is that the hurdles thrown in the way of Iran’s financial and banking ties with the world cannot easily be resolved, so we should think about ways to offset US sanctions. To this end we should use bilateral monetary treaties and the financial space of friendly countries to the extent that we can trust them.” He added that the ban on the supply of steel, basic metals and petrochemicals seems to be difficult because of the dispersal of vendors and the presence of private sector activists. “The experience of previous sanctions shows that it is largely impossible to ban this group of industries.” He said that the
consequences of the sale of steel, basic metals and petrochemical products would emerge in the form of extra costs for exporters. It should be noted that most Iranian exporters who are currently deprived of banking facilities and had the same problem in post-JCPOA era have been able to do their business.
He added: Given the timing of the sanctions, it can be hoped that non-oil exports would not decline sharply, although judging the long-term effects of the sanctions requires time passage. 

We Need Strong Diplomacy

Shafei stated that one of the achievements of the Rouhani government was to enter the economic diplomacy, adding that this issue was for the first time included in the structure of the ministry and began to work under a deputy minister.

He said economic diplomacy was raised in the 90s, especially on the eve of the Uruguay Round negotiations, and particularly between the developing countries and emerging economies. This is a highly efficient tool which ensures the participation of developing countries in global markets and benefiting from global resources. “The important thing about economic diplomacy is that all the economic activities of the government should be organized in the service of the private sector activists,” Shafei said.
The ICCIMA president said: “Economic diplomacy combines the concept of government and the market, meaning that diplomacy is the responsibility of the state and the market is the main symbol of the economy that is managed by private sector activists. Thus, the government provides space through diplomacy tools for the private sector to exploit the world’s economic potentials.”


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  October 2018
No. 89