CEG Industry Blog

Iran Agreement Sparks Deals —at What Cost to Rest of Us?

In such tough economic conditions, a new market the size of Iran’s is like a big shiny apple in Eden.

📅   Mon September 07, 2015 - Edition
Giles Lambertson


In such conditions, a new market the size of Iran’s is like a big shiny apple in Eden. If the deal goes through and U.S. companies bite, they may enrich themselves… but at what cost?
In such conditions, a new market the size of Iran’s is like a big shiny apple in Eden. If the deal goes through and U.S. companies bite, they may enrich themselves… but at what cost?

Sometimes dollar signs float in front of the eyes of businesspeople and impair their broader view of a transaction. That is happening now as U.S. and Western equipment manufacturers think about the money to be made in Iran.

The Obama administration’s executive agreement with the Iranian leadership does away with economic sanctions on Iran and gives the country’s nuclear industry lots of wiggle room to develop a nuclear arms capacity. The deal is, in a word, scary. Yet it has corporate leaders in western Europe and the U.S. calculating odds and postulating deals. Their rationale is the usual: If Iran needs, say, construction machinery, we might as well be the ones providing it.

The federal government determines America’s enemies of state, and defends U.S. soil against them through foreign policies. One weapon is trade policy that injures an enemy’s economy. Punitive sanctions are another weapon. The idea is to make it tough for a regime to retain the loyalty of citizenry who are economically suffering. This type of diplomatic and economic hardball is the preferred way to wage war.

But the Obama administration has decided the way to win the hearts and minds of Iran’s hard-line rulers is by giving them virtually all they want. Thus, Iran will get tens of billions of dollars in heretofore frozen accounts so they can continue to fund terrorist operations. Economic sanctions will disappear. Tehran will be able to self-inspect its nuclear programs and report back—honest injun!

U.S. heavy equipment manufacturers are mostly struggling during this country’s mini-recovery; in the last quarter, John Deere’s construction and forestry division recorded double-digit declines in revenue and profits, for example. In such conditions, a new market the size of Iran’s is like a big shiny apple in Eden. If the deal goes through and U.S. companies bite, they may enrich themselves… but at what cost?