Ali Majedi, Ambassador of Iran to Germany, provides insight into the current state of Iran’s international relations and the deal signed between Iran and the E3+3 group of nations, in which Iranian President Hassan Rouhani saw an opportunity to tear down the ‘wall of mistrust’ that has separated the country from the rest of the world over the last decade. On July 14 the Joint Comprehensive Plan of Action (JCPOA) established a set of commitments “that will ensure the exclusively peaceful nature of the Iranian nuclear program and the comprehensive lifting of all sanctions”, paving the way for a total normalization of relations with the West. A normalization that, as the agreement is implemented and sanctions lifted, is to span into other areas such as trade and investment.
Germany, once ranking amongst Iran’s top trade partners, sees a lot of potential in re-engaging with Iran. The July deal signed is a major breakthrough in Iran’s relations with the West. Yet, the process is still in its very early stages and there are still many hurdles to overcome. What are the implications of this deal for Iranian society and business, and for the region?
Thank you very much. First we should look at the background of Iran-Germany and Iran-Europe relations, in which business and trade between the two sides have been always of much importance.
For example, in 2005, Germany was Iran’s second [biggest] economic partner in the world, while among European countries was Iran’s first partner. Unfortunately, after the EU sanctions started and continued over the past few years, both sides faced many obstacles to their business and investment cooperation.
As an outcome of this downward process, in 2013, we witnessed the lowest volume of trade and economic relations between Iran and many European countries.
The portion of business and trade with the EU came down in Iran’s overall economic relations with foreign countries.
At the same time, Iran’s relations with its Asian friends, and more specifically China, reached a new high level. However, after Mr Rouhani took office, he promised to the Iranian people that boosting Iran’s economic situation as well as solving the nuclear issue between Iran and the international community would be one of the highest priorities of the government.
He explicitly declared: “This is the first priority of Iran’s diplomacy.” And he nominated Dr. Zarif, being a high-ranking Iranian career diplomat and very well known nationally and internationally.
If you look at Foreign Minister Zarif’s background, you can see that he has been working at the highest possible diplomatic position as an Iranian representative to the United Nations.
He knows the structure of the United Nations very well. He’s studied and graduated in the USA. Therefore, I believe he is the best person to resolve this issue. He then selected some of our experienced colleagues, and started his negotiation with the 3+3 (or the 5+1).
This is the basic structure. It is good to mention here that he had some experiences in 2002 to 2004, when he was working with President Rouhani, who was at the time Iran’s Chief Nuclear Negotiator and Secretary of Iran’s Supreme National Security Council.
I myself was also part of Iran’s negotiation team back then, of course as Deputy Foreign Minister for Economic Affairs. Anyway, FM Zarif initially started to resolve this issue with the EU3 (France, UK and Germany) back then. Unfortunately, for both sides and the international community, this issue was not solved then.
But this time, when President Rouhani was elected in 2013, he knew this issue very well. As an important sign, this time the USA was involved.
Iran, knowing the nature of the United Nations Security Council and already the established traditions with EU over the nuclear file, tried to address this unnecessary dispute over Iran’s peaceful nuclear activities in negotiation with five permanent members of the United Nations Security Council plus Germany in a restricted time frame.
This is the key issue. Therefore, this matter was correctly recognized by the P5+1. I believe the other side understood very well that imposed sanctions against Iran were not successful, though it harmed the Iranian people.
Anyway, this time this story started on the right path. This unnecessary and artificial crisis has been a chronic issue, not only for Iran and the US, but also for the international community.
Many experts believe if this issue is resolved, it will open a door for further cooperation at the international level to collectively address many international issues and questions worldwide.
Now, after 22 months of intense negotiation, on July 14, Iran and the 3+3 or 5+1 reached the final stage. I believe for both sides, it is a win-win situation.
FM Zarif, and all of other parties involved, relinquished some of their maximum objectives and requests, in order to get to a lasting agreement, but actually this is the meaning and nature of a negotiation.
Both sides and the international community wanted, and had the will, to resolve this issue. And this is very important.
The first step has been taken. As the second step the UNSC has adopted a resolution approving the Joint Comprehensive Plan of Action (JCPOA) between Iran and the Eu3+3. The third step will be implementation.
All interested parties have this very [same] intuition, that although there are tough debates both in Iran’s Parliament and the US Congress, the main issue is over.
Actually, this is perhaps very difficult for the US Congress to object, because they are not only facing the international community, but they are also facing the Obama administration.
Therefore, this could be very difficult for them.
What would you say to those who want to see this plan derail?
It’s up to the US Congress to see this plan succeed. I am not in a position to say anything to the Congress of the USA. It is their decision.
But if you look at the reality, both sides have been talking about one of the most difficult and important issues for more than 10 years, and all of the people have accepted it.
Therefore, it would be disrespectful not only to the Iranian government, but also to the other countries involved like Russia, China, and even US allies (UK, France, Germany).
This is the first step on how Iran wants to move forward. It was all programmed for the future. Some matters are being raised by few countries in opposition to the Iran deal.
They have some reservations. I am sure these kinds of reservations are not about the nuclear issue, but are based on political intentions for themselves.
From a more positive perspective, what opportunities does it bring for Iran in a general sense?
In a general sense, there are a lot of messages for the international community on regional issues. The most important message for the involved parties is that if they want to resolve matters, the political will exists; if the involved countries believe in negotiations and compromise, then diplomacy works.
It is necessary to create trust, but through the verification processes. Time is needed in order to generate trust. There has not been trust between Iran and the USA for a long time, more than three decades.
So neither USA has made this deal based on trust nor Iran. They have both considered verification.
One of the difficult issues for the relevant countries involved was sitting down together and seeking international co-operation, and also compromise on a number of desired objectives.
This is an important lesson for the international community, for all governments and authorities. Now, for example, ISIS is a critical issue for all countries.
This is a danger not only for the Middle East, but also for Europe, the USA, and the rest of the world. Regarding this crisis, it has been kind of impossible for all parties involved to sit and to consider addressing it in an inclusive way, to talk together and to resolve these matters.
This is the message. It is possible to resolve all of the international difficulties. Maybe, it is necessary to be more tolerant, patient, and to talk more, to have more open dialogue.
Let’s move on to a more economic perspective. Iran has the second largest economy after Saudi Arabia, and it has every element to potentially become MENA’s top engine of growth. Iran has a highly educated workforce, a huge consumer market that is eager for new goods and services, a powerful industrial base, and has one of the largest reserves of natural resources. What are Iran’s strengths to re-integrate into this international value chain? Which industries do you think are going to benefit the most out of this new chapter for Iran through the signing of this deal?
I think it is necessary for the government to think about more strategies. Iran must engage with the international community, and the international economy.
I do believe that this is the right time for the Iranian economy to be more integrated with the international economy – not just one country or one region, but instead globally.
This is good for both sides; Iran has the potential. We have highly educated young people, oil and gas reserves, huge resources, and the market.
This is the most secure and stable country in the region. Iran is a stabilizing factor and force in the region and will do all it can for more security and more stability in the region. That is my opinion.
Iran must be integrated into and intertwined with the international economy. Iran has the potential to be more involved in the international economy in many industries, such as oil and gas and petrochemical projects.
We have the third largest reservoir of oil, and the first of gas. The automotive industry has huge potential for us.
Iran has to be more involved in international production, and this is one of the top priorities in my agenda as the Iranian Ambassador to Germany.
This is my key point to follow for more integration between Iran and Germany, not only for receiving some equipment, but also on how to engage as a partner in many industrial aspects.
As an economist, I understand Iran must, or should, move towards the [World] Trade Organization. Iran will contribute to the EU as one of its partners towards securing energy in the world.
We want Iran to be more involved internationally. Iran is interested in becoming involved in some of the components in the automotive industry, power plant industry, and general manufacturing.
As you are mentioning Iran’s relationship with Germany and the EU, it is important to note that Iran also has very strong relationships with other MENA countries. What is the next step in order for this relationship to truly flourish and be able to have not only European companies being able to go back into Iran through the opening of its economy but also for Iranian companies to be able to benefit from coming in to Europe?
Look for example at the automotive industry. It consists of more than 5,000 components. When I was the Iranian Ambassador in Japan, I understood that many of the components for the Japanese automotive industry are manufactured in countries like Malaysia and the Philippines.
In some of them, there is no production in the automotive industry. However, many of the companies there are involved in the automotive industry as manufacturers of components.
The labor force is cheaper than in Japan. Therefore, they started to manufacture in those countries as producers of components and they supervised the main manufacturing process.
There are enough highly educated people in my country, a cheap labor force and cheap energy. That is why Iran has the potential to manufacture some of the components for the automotive industry.
Some portion of the production process of the Middle East market is done in our country.
It is about going there and finding a path. It would undoubtedly be profitable for both sides. The given producer manufactures the same things with the same quality, but with the lower cost in Iran.
There is access to the market and it is possible to get the same quality.
Another important sector to look at is agro-business. Iran is a large country with a lot of potential for highly valuable agricultural products. Shall we expect a large flow of Iranian delicacies into the European market now? Are there any possibilities for international investors and businesses to tap into that market in Iran?
In this regard, Iran has faced one of the biggest difficulties: the shortage of water. We are trying to attract some experts so that Iran can receive some technical assistance and investment to better manage water resources for agro-business.
The variety of Iranian land means it is able to produce a lot of different fruits. Nevertheless, nowadays we are facing some difficulties regarding water management and water recycling.
Not only does Iran face these difficulties, but also many of the countries in the Middle East face the same matters regarding the shortage of rain, and water reservoirs.
This is one of the biggest difficulties that the Middle East faces as a whole.
Iran is a potential producer in the agro-industry for some of our neighboring countries. We may be able to manage the shortage of water, which would be key. It is a matter of the know-how, management and technical assistance.
Another field with high potential will be finance. Obviously, the financial sector is currently still dealing with sanctions. However, the lifting of these sanctions will ease some business transactions and the influx of investments in the country. How do you think the financial sector is being strengthened by the deal? What does it need to do in order to be able to really maximize the benefits from this deal?
One of the issues Iran has suffered from is money transactions. The sanction of the banking system is one of the elements that influences Iranian business.
We expect that they will resolve this issue as soon as possible for the transaction of money. The first step for Iran to be able to step back into the international banking system is the transfer of money between Iran and many other countries.
The second step is the financing of some of Iranian projects. There are a lot of projects in Iran. For example, Iran needs investment of €180 billion in the upcoming five or six years.
The priority is the transactions. Iran needs foreign investment. And for foreign investors, there are some special criteria. There is security, stability, low risk, high benefits, etc.
There is a lot of recognition for investors.
We believe that Iran is one of the countries with good opportunities for foreign investors. The output of the investment may supply the international market.
For example, the petrochemical industry is a good opportunity for foreign investors because the output of petrochemical projects is more than 80% of the output that could supply the international community for oil and gas.
Oil and gas is also a sector for competition. The proportion of renewable energy is increasing. Nowadays, it is at least 5%.
After the US lifted sanctions on Cuba, and re-opened its doors towards open dialogue, the world saw an influx of tourism into the country. Do you think Iran is prepared in terms of the local workforce to start experiencing this influx of people going to Iran to benefit from everything it has to offer in terms of tourism?
If you look at the International Tourism Organization, Iran is the 10th country that has the best locations and historical sites for attracting tourists. Therefore, Iran is one of the potential countries to receive them.
But we do know it is necessary to make some investments in our tourism industry in order to attract tourists, particularly for building hotels and infrastructure (roads). Civil aviation will then improve in our country.
There are a lot of historical monuments in different cities for tourism. However, we need some investment.
Earlier, we mentioned the problem of extremists in the region, such as ISIS. This is an issue not only for Iran and the region, but also for the global community. How can a stronger Iran and EU relationship really be able to tackle these issues? What do you think is the next step needed to really find a solution to this problem?
In the short term, it is important that all countries have the real will and intention to resolve this. Some states lack a full government, so it makes it impossible.
First, the situation in Syria must be solved. Iraq has a stronger government. And we must solve the situation in Libya and Yemen.
Each government should be responsible for its own security, but not at the expense of others’ security. Therefore, governments should be committed to regional and international security as well.
However, the first step is for governments to have the authority to take care of themselves and then assist in the greater good of regional and international security.
If they lack security at home, it is too difficult to solve this problem in the region.
The second step is for the international community to understand the volatility of the situation, and force a stop to the few regional and trans-regional players creating difficulties through terrorist groups such as ISIS or Jabhat al-Nusra.
Everybody should reach this understanding; this has to come to an end. The security of a single place or country in the region affects the security of the whole region and other countries, so it is necessary to get to a consensus and understanding.
I do hope the government authorities of our neighboring countries understand the meaning of this. The international community needs to be more secure and stable.
Each country must consider the importance of these matters. However, this is not sufficient for solving these issues. The Middle East region needs to be developed in order for its people to understand the situation, and in order to improve their quality of life.
Poor people must have a better life. There are many people starving. There is no shelter. The Middle East needs to develop in the following one or two decades to improve the living standards of its people.
You mentioned that in 2005, the relationship between Germany and Iran was a lot stronger than it is now. What sectors could drive this re-engagement between both countries?
There is a very traditional relationship between Iran and Germany. The Iranian business sector knows the capacities of the Germans, and many German companies have been engaging with Iran in the hope of reaching greater cooperation.
However, during the past few years, Iran and Germany have gradually missed these opportunities. They faced some difficulties because other countries replaced them.
Now, there is competition: competition for the price, quality, and the market. Maybe, nowadays, it is up to them.
Fortunately, German companies’ knowledge is more or less sufficient from my point of view. They understand how to enter into the Iranian market.
But this time, there have been some difficulties because there are other competitors, particularly Chinese companies or other companies that are now there.
And the price is not comparable in general. China has entered the Iranian market, so they are competition now. We consider the price on conditions and quality.
The groundwork has been paved towards greater cooperation. German companies know the Iranian market; they have worked with some partners in the past, even through the sanctions, and it is much easier for them.
My job is to open up new aspects of cooperation, in oil and gas, the automotive industry, renewal energies, etc.
Since I was appointed as Ambassador, I have been trying to enhance economic cooperation between the two countries, as well as the politics, and culture.
This is a good change for some companies which have been working with Iran. The other companies must understand how to enter the oil and gas market.
I am sure that if some German companies want to enter into the oil and gas market, there will be some French and Italian companies. This also happens in the petrochemical market, for example.
Companies and countries must understand the Iranian market, and Iran has the right to select who they want to work with. Some doors will be opened for some companies to be engaged in economic relationships, not only sell some of their equipment.
This is the meaning of engagement for Iranians, the intertwining of industries and economies. Some criteria that make Iran stand out for the world include: labor force, energy, and access to the Middle East market.
In all of your years of working and providing service to the Iranian government and the people, what has been your proudest moment?
Some of my colleagues said to me ‘You are a reborn,’ because I was retired. The same day President Rouhani was elected, I had a second chance to go back to the government.
I had previously served as Ambassador to Brazil and Japan. Maybe this is the last round of my government position, so this time is very important. I am very proud of this new Iranian team.
I have the honor of being an Ambassador here. I want to prove that I am deserving of this job so that my people can have a better life, more dignity. I think that if I can improve the relationship between Iran and Germany, we will create employment for the young generation in Iran.
This is dignity for myself, and for my people. The people and the Iranian nation are the most important things for me. And if I can work for young generations, it would be good.
My job position belongs to them, not to me. The young generations should listen and act accordingly, they are very capable. Now, the new government is trying to create the environment for young generations to get better jobs for themselves and the improvement for the nation.