Middle East Focus: Fuzzy Economics of Ahmadinejad, Seeking Iranian Expat Funds.........

Arabia Deserta

Fuzzy Economics of Ahmadinejad, Seeking Iranian Expat Funds.........

“Iran is targeting expats … for their investment capital. In a bid to lure foreign capital into the country, Iran has announced it was opening the country to investment by offering lucrative interest rates for Iranians living abroad. The plan requires a new bank to be set up by the Central Bank of Iran which will offer a whopping 16 percent interest rates on investments made by Iranians living abroad, the official Iranian news agency Press TV reported. The bank will reportedly be based on an $8 million fund that would be transformed into a bank where foreigners would be allowed to own shares. “I think that Iran is having serious foreign exchange problems and is trying to ease the constraints any way that it can,” Professor Hossein Askari, from the International Business Department at George Washington University, told The Media Line. “But as far as Iranian expats in the US are concerned, they need a license from the US Treasury to make any investment in Iran,” he added skeptically. “So I don't see how it can succeed”. An estimated five million former Iranians live across the globe, many who fled the revolution that installed the modern theocracy in place of the Shah in 1979. Last year, Iran moved to cut some of the bureaucratic red tape to make it easier for expatriates to get involved with Iranian economy and science. But the success of this program was considered very limited………..”

The timing is not right to try and get some of the Iranian expatriate wealth into Iran. The nuclear issue, the potential for a military conflict, the potential for tougher sanctions, possible trade boycotts, etc, etc, all mitigate against success at this time. Then there is the issue of economic policy which impacts return on investment. Then there is the exchange rate movement which can negate even a 16% interest if the currency declines sharply. Then there are the restrictions on repatriating their earnings under a Western financial blockade. And how do they go about paying 16% and making it worthwhile for their institutions?
Most Iranian émigrés are not fond of the current government, nor do they like its economic policies and the risks it exposes the country, and their potential investments to. Ahmadinejad particularly does not inspire confidence inn the economic management.
Cheers
mhg

Mon Email