Diplomats from Iran, the United States, and five other world powers have convened in Vienna to work out an agreement on Iran's nuclear program. Though negotiators are still ironing out the details, a final deal hinges on the imposition of limitations on the country's nuclear activities for at least a decade in exchange for relief from economic sanctions.
In Iran, meanwhile, international investors and Iranian business elites have been holding their own parallel meetings in anticipation of a nuclear agreement. Since direct, high-level nuclear negotiations began two years ago, delegations from dozens of foreign investment firms have descended on the country's stock exchange in downtown Tehran to scout the market and meet Iranian brokers. They are preparing to pounce on opportunities if and when sanctions are relaxed and Iran's economy opens up.
"A few years ago, we used to get only two emails a month asking about investing in Iran," Sanam Mahoozi of Turquoise Partners, an Iranian investment firm that manages more than 90 percent of all foreign stakes in the Tehran Stock Exchange, told VICE News. "But these days, we've been getting over a dozen requests a week."
Turquoise has hosted over 100 foreign delegations since 2013. After it was announced in April that Iran's negotiations with the group of major powers known as the P5+1 — the US, China, France, Russia, the United Kingdom, and Germany — had produced a broad framework for a potential deal, American investors began showing up as well, though Mahoozi is protective of their identities.
The US first levied sanctions against Iran following the country's Islamic revolution in 1979, when students seized the US Embassy in Tehran and held the Americans inside hostage. The most severe sanctions began after the International Atomic Energy Agency determined in 2005 that Iran had concealed various nuclear activities and cited it for noncompliance with the International Non-Proliferation Treaty, pointing to an "absence of confidence that Iran's nuclear programme is exclusively for peaceful purposes." Punitive measures were tightened after Iranian President Mahmoud Ahmadinejad ramped up his country's uranium enrichment program and refused international inspections.
'It's going to be a minefield for investors.'
Iran is now subject to a complicated web of economic sanctions that include a series of US executive orders and acts of Congress that penalize doing business in the Islamic Republic, as well as restrictions enacted by the European Union and the UN Security Council. In 2011, the US Treasury Department implemented measures barring foreign banks that work with Iranian financial institutions from making deals in America or with the US dollar — "a death penalty for any international bank," in the words of one US official. Stricter sanctions on Iranian oil imposed in 2012 have slashed Iran's petroleum exports nearly in half.
Isolated from global finance, Iran's economy has contracted painfully and its population has suffered. The country's poverty rate almost doubled from 22 to 40 percent between 2005 and 2013, by which time nearly half of all Iranians could not afford adequate food or shelter. Sanctions have also had a devastating effect on the country's healthcare system.
"The poorest levels of society are the hardest hit," Trita Parsi, president of the National Iranian-American Congress, told VICE News. He isn't sure that the Iranian government will distribute proceeds from possible foreign investment in a way that will reach the country's neediest. "The higher elements of society will certainly benefit more than the lower."
In the meantime, capitalists are excited about any deal that reopens markets.
"With sanctions, doing business [in Iran] becomes a zero-sum game," Arya Bolurfrushan, chairman of the Bolurfrushan International Group, a privately-held holding company, told VICE News. "The economy just isn't growing."
The Bolurfrushan International Group, which invests widely in Middle East real estate, retail, and insurance, was first founded in Iran in the 1950s, but relocated to Dubai in 1980 following the first round of US sanctions. It stopped doing business in Iran over the past decade.
Since the election of the relatively moderate Iranian President Hassan Rouhani in 2013, Iran has exhibited a greater willingness to arrive at a deal that would address concerns over its nuclear program and open its economy to business.
Ahead of a possible agreement, the National Iranian Oil Company is wooing foreign energy companies to help develop its dormant oil fields. The country's energy industry requires at least $185 billion in investment over the next 6 years, according to senior deputy oil minister Amir Zamaninia. In early June, National Iranian Oil Company indicated that if a nuclear deal is reached, it plans to offer contracts of up to 30 years for foreign companies to facilitate oil projects. Iran is home to the fourth largest oil reserves in the world, as well as the world's largest deposits of natural gas.
'We could find the Iranian version of Apple. It's worth looking.'
These sorts of opportunities are attracting a lot of attention from foreign capital.
"There's nowhere else like Iran for investors right now," Charles Robertson, the chief economist for Renaissance Capital, told VICE News.
Renaissance specializes in frontier markets — it invested heavily in Russia in the 1990s and Africa in the early 2000s. Now Robertson is pegging Iran as one of the most exciting investment opportunities for daring investors with an appetite for risk.
"They produce as many cars as Turkey, but with the wages of Vietnam," he said. "It has an educated population, and also just happens to have 9 percent of the world's oil reserves."
Robertson first visited Tehran last year and has been pitching the country's potential to his clients ever since.
"We could find the Iranian version of Apple," he enthused. "It's worth looking."
But Robertson will likely have to wait. Unwinding sanctions against Iran is no easy task.
"It's going to be a minefield for investors," Elizabeth Rosenberg, a sanctions expert with the Center for a New American Security, told VICE News.
The details of the negotiations have so far remained secret, and investors cannot be sure how relief from the patchwork of sanctions will be scheduled. Some of the harshest banking restrictions, for example, can only be permanently repealed by an act of the US Congress. And various sanctions are not linked to doing business in Iran at all but rather to issues like human rights abuses or Iran's inclusion on the US list of state sponsors of terrorism.
For cautious investors, there may be a surer bet right next door: Iran's geopolitical rival Saudi Arabia. The two nations are battling for political influence across the region, from Yemen to Syria, and with Iran now angling for foreign investment, economic competition between the two regional powers could soon intensify.
On June 14, Saudi Arabia opened up its stock market to foreign investors for the first time. The roughly $585 billion market is more than five times the size of Iran's, and carries no risks related to sanctions.
But Saudi Arabia has imposed heavy controls on who can invest in its stock market. Only foreign institutions that control $5 billion of assets are allowed to participate, and no single foreign entity can own more than 5 percent of a company. Saudi companies must retain 51 percent Saudi ownership, and the kingdom has capped foreign investment to 10 percent of the overall market.
"There have been ways to invest in Saudi Arabia for a long time," Robertson noted. "It is in many ways old news."
Unlike Saudi Arabia, Iran has well-developed non-petroleum business sectors that have long been beyond the reach of outside investment. Robertson anticipates that Iran's fledgling tech industry, growing construction sector, and strong automobile manufacturing industry will prove especially attractive to foreign capital.
Still, Saudi is signaling to investors that it is open and eager for investment right away. Though no foreign institutions that meet the $5 billion threshold for direct stock investments have yet bought into the market, there has been a notable uptick in joint ventures over the last month. The kingdom's Public Investment Fund recently announced a $10 billion deal with the state-owned Russian Direct Investment Fund, and a French consortium of companies announced a $150 million deal with the Saudi Arabian investment firm Kingdom Holding.
Rosenberg thinks that it might not be long before we see such deals coming out of Iran.
"We may start to see sanctions relax by the end of 2015," she predicted.
But everything depends on an agreement in Vienna. In Tehran, Turquoise Partners has pinned its hopes on a deal being reached soon.
"Everyone is just waiting to see if it's going to happen or not," Mahoozi said. "If they say no deal, it's really, really bad for us."
Follow Avi Asher-Schapiro on Twitter: @AASchapiro