Market for Australian companies in Iran is wide open: experts

April 15, 2015

TEHRAN - Later this week Australian Foreign Minister Julie Bishop will visit Tehran. Ms. Bishop’s trip will be the first by an Australian foreign minister in 12 years.

Bishop’s trip comes after Iran reached a framework nuclear deal with world powers, including the United States, Britain, France, Germany, Russia and China.

Due to Australia’s support for economic sanctions against Iran, the two countries’ trade relationship declined and competitors replace Australia in Iran’s economy.

Since the historic nuclear framework agreement in Lausanne on April 2, the Australian business community has come to the conclusion that their government needs to reconsider its foreign policy towards Iran. One Australian businessman openly has said that he has no doubt that the time is right for the P5+1 and Iran reach a final agreement, which will result in the lifting of economic sanctions against Iran, allowing open and free trade.

I spoke with Mahmood Khaghani, a former director general at the Iranian Ministry of Petroleum, and Sam Barden, director of an international company involved in strategy and risk consultancy, about the future potential of Iran and Australia’s trade relations. Both Mr. Khaghani and Mr. Barden, an Australian citizen, recently spent time together in Iran, specifically assessing the potential for cooperation between Iran and Australia in a new environment.

Following is the text of the interview:

Tehran Times: I began by asking them what was their starting point in Iran when assessing the potential for trade?

Khaghani: Well the logical starting point was the Iran-Australia Chamber of Commerce. Whilst, trade has not been taking place on any significant level between Iran and Australia the chamber of commerce remains in place. So our first meeting was with Mr. Asadollah Asgaroladi, president of the Iran-Australia Chamber of Commerce.

Barden: Yes, that’s correct. Mr. Asgaroladi also happens to be the president of the Iran-China Chamber of Commerce, Iran-Russia Chamber of Commerce, and Iran-Canada Chamber of Commerce, so we were able to compare and speak openly about how Iran is cooperating with many countries, and how Australian companies could forge partnerships and understandings with Iranian counterparts. The key risk in the initial stage is to know whom you are dealing with and what are the frameworks of trust and dialogue under which dealings might take place in an environment before and after sanctions are lifted. Mr. Asgaroladi indicated that the chamber of commerce could provide the platform in the initial stage, and also assist with such mundane logistical issues such as visas and conferencing facilities.

Tehran Times: What are the main areas that Iranian and Australian businesses can cooperate?

Barden: Given that sanctions have been in place in one form or another for 35 years, the market for Australian companies in Iran is wide open. The obvious low hanging fruit would be cooperation in establishing joint ventures in hydrocarbons and mineral extraction in the region. Similarly, Australia is experienced in delivering large-scale administrative, health, educational and government service sector projects. Designing, implementing and delivering such things as an ERP (Enterprise Resource Program) as a cost effective management tool for universities, businesses, the government sector and the private sector would be a value add to the Iranian economy. Australian companies can effectively export their Intellectual Property (IP) and Information technologies (IP).

Khaghani: Iran also wants to develop her agriculture sector, and has particular interest in developing dairy output, so cow breeding programs are of particular interest. Iran is also a leader in nanotechnology, and has developed chemical free technologies, which can be applied to food crops, which would be very useful for Australian farmers. In fact one Iranian company already has some patents listed in Australia for just this purpose.

Tehran Times: Iran has the second biggest gas reserves in the world, and Australia is shaping up to becoming the biggest global exporter of LNG. Will this mean that Iran will compete for gas sales with Australia, particularly into the Asian markets?

Khaghani: One of our main areas of interest together, I mean Mr. Barden and myself, is the fact that how do we drive efficiency in energy usage. Rather than compete, Australia and Iran could cooperate in the global gas markets, starting with regional pricing benchmarks. For instance, Australia could pioneer a Pacific Rim Gas pricing hub, while at the same time Iran could drive the process along with its partners for a Caspian pricing hub. When you combine this, entirely new markets in gas swaps into Asia will emerge, based on transparency and best practice, and most importantly cooperation will drive energy savings in extraction and delivery. Essentially, the value of carbon fuel saved becomes a very valuable market for both countries. Only the de-politicization of energy markets will achieve this.

Barden: Yes, and the carbon fuel saved market will naturally drive renewable energy markets in both Iran and Australia. This is an area of truly untapped potential and value for both countries’ economies, as every time energy is generated via the sun, wind or waves, a barrel of oil or gas is saved, or at least not wasted, lowering carbon emissions and increasing a potential unit of export for each economy.

Tehran Times: High on the agenda of the Australian foreign minister is the issue of Iranian asylum seekers. Many Iranians are being held in immigration detention centers on the Pacific islands of Nauru and Papua New Guinea, having been refused refugee status in Australia. The Australian government wants the Iranian government to take them back, yet so far Iran refuses. Firstly to you Mr. Barden, what do Australians think of this situation, and do you think it will adversely affect future trade relations between our two countries?

Barden: The issue of asylum seekers in Australia is very divisive within the community, and is a difficult and complex issue for the current government to find a balanced and workable solution to, if there is such a thing. The previous government also struggled with this issue. Of course, as Australians we wish we could take everyone who seeks asylum, but the reality is we cannot. Finding a political solution to a humanitarian problem is never easy. Sanctions against Iran have adversely affected her economy and in no small part created the economic situation where some Iranians want to flee their country. So the removal of sanctions and the building of trust and trade between Iran and Australia should begin the process of reversing this situation. I believe that increased and transparent trade relations between our two countries will help solve the longer-term problem of Iranian asylum seekers to Australia.

Tehran Times: Mr. Khaghani, how do Iranians view Australia on the issue of asylum seekers, and do you think this issue could affect trade between Iran and Australia?

Khaghani: Well I agree with Mr. Barden that this is a complex and difficult problem for both our governments, and one, which we must find a transparent, and dignified solution to. On the issue of trade, Iran takes Australia very seriously as a trading partner in a new era of business as usual environment. In fact, Iran recently appointed His Excellency Mr. Abdolhossein Vahaji as the new Iranian ambassador to Australia. His Excellency Vahaji, was a commerce minister in the previous governments, and one would expect that he will be hoping to develop trade and commerce with Australia. And in fact, the upcoming of Australian official visit to Tehran may open the closed gates of cooperation between the two countries.

Tehran Times: Finally, do you both expect there will be a successful conclusion to the current nuclear framework and that sanctions against Iran will be lifted?

Barden: Well, in short, yes! There is a desire from business all over the world for normalization of relations with Iran. On top of this, Iran is now a founding member of the Asian Infrastructure Investment Bank (AIIB) along with 41 other countries. It is likely that Iran will join BRICS and they are already a part of the SCO. These are multilateral global organizations, based around economic development and trade. The process of forging trust and friendships with Iran is already well under way and I am sure that the social benefit will trump any political ideology that wants sanctions to remain. Australia and Iran have much to look forward to in bilateral trade.

Khaghani: I support Mr. Barden’s views in this regard and repeat the fact that whenever there is a conflict between politics and economy it has been proved that politics fails and economy prevails.