Risky Business: Companies Worldwide Continue An Iran Exodus

Contrary to Warnings From So-called Experts, Businesses Worldwide Choose To Comply With U.S. Sanctions Despite Pressure From Political Leaders

The business community continues to make clear that it views business with Iran as not worth the risk, despite efforts by politicians to force companies to engage in Iran business activities and prognostications from analysts that countries and entities would not comply with re-imposed U.S. sanctions. Oddly, political leaders are behaving as if their assurances are adequate to convince the business community to take a chance on Iran. This just isn’t the case. Across Europe and Asia, business leaders are siding with U.S. policy.

Predictions by analysts that re-imposed U.S. sanctions post-JCPOA would not be complied with have proven to be exaggerated, if not absurd. For example, former Carnegie Endowment For International Peace President Jessica T. Mathews predicted that once the U.S. pulled out of the JCPOA, ”… you have certainly lost most of the countries that cooperated with us in imposing sanctions before the deal because then the Iranians were the bad guys, now the U.S. is the bad guy.” Wrong.

This summer, in the weeks and months after President Donald Trump announced the U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA), dozens of businesses in the U.S. and Europe that had been involved in the Iranian market announced, despite protestations from EU officials in Brussels, that they would be shuttering their operations in the country. Many have already left and those who remain are on their way out.

Interestingly, in recent weeks, the European business community has been joined by leaders in central and south Asia and Taiwan in determining that despite the diplomatic and economic ties between their countries and Iran, their companies would no longer engage themselves in the Iranian market.

United Against Nuclear Iran (UANI) has heard from Caspian Marine Services Limited (CMS), a privately-owned ship management company based in Azerbaijan. Baku and Tehran enjoy friendly ties thanks in part to the ethnic composition of both countries – one in four Iranians are Azeri – shared energy interests in Shah Deniz and their shared border. President Ilham Aliyev feted his counterpart, Hassan Rouhani, in Baku as recently as March and both nations participate in multilateral forums such as the Caspian Sea summits. Azerbaijan is also home to powerful state-owned companies that act in accordance with the country’s strategic interests in mind. There’s also significant societal deference to the political leadership. But despite these obstacles, CMS has ceased all activities that would directly or indirectly link CMS or any ship under their operation with any Iranian ports or related entities. The company wants no part of what’s happening in Iran.

Even businesses in countries that are heavily invested in and dependent upon the regime in Tehran for its oil are speaking truth to power about their interests diverging from their governments. Last year, India was the second largest purchaser of Iranian oil, importing 27 million tons. And the Modi government has committed itself to $2.5 billion in infrastructure improvements in Iran – from seaports to rail lines. But this doesn’t faze the leadership of Aza Shipping Pvt. Ltd. The company is refraining from signing fresh charter agreements with Iranian companies and will “observe extreme caution in completing existing contracts.” Writing on behalf of the company’s owners, Vice President Capt. Rajesh Kumar says that they “always support the U.S. stand to force Iran to abandon its drive for nuclear [weapons], support for terrorism and human rights violation (sic).”

In the Far East, global freight and shipping corporation Wan Hai Lines Ltd. has decided that it will “not accept any cargo destined for or originations from Iran” and has committed itself to “work diligently with UANI” to address its concerns. Wan Hai was the first foreign shipping line to arrive to the Port of Shahid Rajayee in Bandar Abbas when the JCPOA was signed. The company is based in Taiwan, which conducted more than $1.1 billion in non-oil trade with Iran last year and has vessels chartered in Hong Kong, Singapore and Taiwan. Since writing to UANI, they’ve posted a public notice on their website that they’re finished with providing service to and from Iran.

“It is a credit to their good judgment and risk assessment capacity that these companies are voluntarily deciding to avoid the stain of supporting a regime like Iran’s with cash and legitimacy,” said UANI President David Ibsen. “The volume of letters from companies large and small from countries like Vietnam, Malaysia, Sri Lanka and others which have trade ties to Iran is growing every day. These companies are leaving Iran or resolving to forego the risk until the regime in Tehran changes its behavior. These are all positive developments.”

But perhaps the most exciting development in recent weeks came in a letter from a company in Latvia, a European Union (EU) member state. airBaltic Corporation, based in Riga, operates a regional airline that is controlled by the state. And yet officials with the company confirm that the airline does not fly to Iran and that it “[does] not have such intention.” In response to UANI’s request, they have stopped offering connecting flight information to Tehran on their website.

“It is a slight crack, but a crack nonetheless, in EU solidarity to maintaining business ties with the regime. It’s an encouraging signal that our efforts are working to press EU officials and the leaders of all responsible nations to end the reckless encouragement of businesses to plant their flags in Iran,” said Ibsen.