Business implications of the Joint Comprehensive Plan of Action between Iran and the P5+1 The Iran nuclear deal, officially known as the Joint Comprehensive Plan of Action, promises to lift many of the sanctions that have hindered the Iranian economy for years. In return, Iran has agreed to scale back its nuclear program. The opening of the Iranian economy presents significant economic opportunities, both for Iran and for multinational corporations. However, entering the Iranian market is replete with risk, especially for corporate reputation. To help mitigate risk, prospective investors should prepare thoughtful communications strategies to explain, and where appropriate, defend their position.

1. The Iran Nuclear Deal
BusinessImplicationsoftheJointComprehensive
PlanofActionbetweenIranandtheP5+1
October,2015

2. 2 | 2015 | BRUNSWICK ©
Overview
of the Deal
The Iran nuclear deal seeks
to ensure that Iran’s nuclear
program will be exclusively
peaceful by scaling back Iran’s
plutonium and highly enriched
uranium production. The P5+1
(China, France, Russia, the
United Kingdom, the United
States and Germany), in
return, have agreed to cease
the implementation of nuclear-
related sanctions against Iran.
The deal is to be implemented
in phases; as Iran fulfills
key steps to limit its nuclear
activities and build confidence,
additional sanctions will be
removed. Importantly, the deal
includes a so-called “snap-
back” provision, allowing the
P5+1 to re-assert sanctions if
Iran is deemed noncompliant.
Iran has stated that it too has a
snap-back provision. According
to its leaders, the country can
reverse the limits on its nuclear
program if it feels the P5+1 are
The hotel lobbies of Tehran are reportedly
filled with international business delegations.
The groups have come seeking investment
opportunities in a crippled economy that may
have a brighter future. The Iran nuclear deal,
officially known as the Joint Comprehensive Plan
of Action, promises to lift many of the sanctions
that have hindered the Iranian economy for
years. In return, Iran has agreed to scale back
its nuclear program. Iranian President Hassan
Rouhani has said the deal will open “a new page
with the world” and bring “progress, development
and stability.” International companies, whose
representatives are now touring the country, may
agree with the Iranian president.
The opening of the Iranian economy presents
significant economic opportunities, both for Iran
and for multinational corporations. However,
entering the Iranian market is replete with
risk, especially for corporate reputation. To
help mitigate risk, prospective investors should
prepare thoughtful communications strategies
to explain, and where appropriate, defend their
position.
Introduction

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not abiding by its promise to
lift sanctions.
Once the International Atomic
Energy Agency verifies that
Iran has completed its initial
obligations, most European
Union sanctions, including the
embargo on Iranian oil and
prohibitions on energy invest-
ment, will be lifted. The Unit-
ed Nations Security Council
measures, which served as a
platform for most of the ac-
tions undertaken by the rest
of the world against Iran, will
cease as well, with a few no-
table exceptions pertaining to
conventional arms and ballistic
missiles. The United States will
rescind restrictions against
third parties conducting trade
with Iran, which will allow
non-U.S. entities and foreign
subsidiaries of U.S. companies
to engage with the country.
More than 400 Iranian compa-
nies or individuals, 75 planes
and 200 ships will be removed
from the United States’ black-
list. Iran will also be able to
access $100 - $150 billion of
oil revenue currently frozen
abroad. Although not specifi-
cally included in the nuclear
deal, the P5+1 and Iran also
agreed to lift restrictions on
conventional arms after five
years and restrictions on ballis-
tic missiles after eight years.
American sanctions tied to
Iran’ssupportforterrorism,hu-
man rights and regional desta-
bilization will remain in place.
Prospective investors will have
to carefully research their Ira-
nian counterparts to avoid the
legal and reputational costs of
engaging with an American-
sanctioned entity. For Ameri-
can firms and individuals, the
remaining sanctions crimi-
nalize any involvement in the
Iranian economy outside the
specific sectors exempted un-
der the deal. Thus, most Ameri-
can firms will still be prohibited
from doing business in Iran.
The agreement involves an ex-
tensive procedure for gaining
approval from various legisla-
tive and legal bodies. The Unit-
ed States Congress, which had
60 days to review the deal, was
unable to block it despite the
best efforts of House Republi-
cans. The Obama Administra-
tion expects Republicans will
continue to undermine the deal
by calling for additional sanc-
tions against Iran. For some op-
ponents, the goal is not only to
limit the purview of the nuclear
deal but, more importantly, to
goad Iran to walk away from
it altogether. Iran’s legislative
body, the Majlis, is reviewing
the deal now, and Iran analysts
say Supreme Leader Ayatollah
Khamenei is using the politi-
cal cover of the Majlis to keep
his options open over whether
to support the agreement in
the future. Assuming the deal
survives domestic political
hurdles, its implementation
will still take several months.
Sanctions during this time will
remain in place, and businesses
will have to hold back on inking
deals. The Obama administra-
tionhasmadeclearitsresolveto
prosecute companies that jump
the gun.
Business
Opportunities
The business opportunities
associated with Iran’s reinte-
gration into the global econ-
omy are substantial. With
roughly 80 million people, the
Islamic Republic boasts an at-
tractive consumer base. Over-
all consumer expenditures are
projected to be about $176.4
billion this year, with annual
disposable income pegged
at about $287 billion, accord-
ing to researcher Euromoni-
tor. But more than trade, Iran
wants long-term partners who
are willing to invest in the
country and help develop its
industries. As its banking sec-
tor reconnects with the global
financial system, Iran will of-
fer investment opportunities in
manufacturing, infrastructure,
shipping, communications
and tourism. The country’s
renewed ability to transfer
funds through the Society for
Worldwide Interbank Financial

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Telecommunication, or SWIFT,
is expected to have a particu-
larly significant impact on for-
eign inflows.
A core focus for the country
will be natural resources as it
has the fourth biggest proven
crude oil reserves and the larg-
est natural gas reserves in the
world, according to the latest
BP Annual Review of World En-
ergy. Current production levels
are well below what the coun-
try produced prior the revolu-
tion of 1979. Over the next five
years, the country needs an
estimated $230 billion to $260
billion of new capital toward
its oil and gas industry, ac-
cording to analysts. Foreign oil
companies see an opportunity
in Iran’s under-capacity. Iran’s
energy production costs are
among the lowest in the world
at $5 to $10 per barrel for oil,
and the country is optimally
located between the major de-
mand centers of Europe and
Asia. Moreover, the National Oil
Company of Iran, which is plan-
ning to introduce 40 projects
for competitive bidding after
the removal of sanctions, has
announced revisions to energy
sector regulations and a new
contract model that may allow
for more profit sharing with
foreign partners. The new con-
tract, called the Iran Petroleum
Contract, is akin to a production
sharing agreement in which,
aside from profit sharing, the
foreign partner might also be
allowed to own equity. This is
a major new development for
prospective investors. Asian
and European energy compa-
nies, such as Total and Eni, have
indicated interest, experts say.
American energy companies
like ExxonMobil, Chevron and
ConocoPhillips are more cau-
tious, given the remaining U.S.
restrictions after the deal.
Mining is another promising
Iranian industry attracting for-
eign investors. Iran has 2.7 bil-
lion pounds of iron ore, which
is used to make steal, and the
country plans to double steel
production by 2025. German,
French and Dutch delegations
have visited Iran recently to
discuss mining investments.
European countries see op-
portunities in Iran beyond the
extractive sectors as well. Ger-
many, France, and the United
Kingdom have already collabo-
rated to form the European-
Iranian Business Alliance in an
effort to facilitate commerce
between the EU and Iran. Ap-
proximately 100 German com-
panies currently have branches
in Iran and another 1,000 Ger-
man companies operate there
through sales agents. The Ger-
man-Iranian Chamber of Com-
merce predicts that German
exports will reach €10 billion
annually once the sanctions are
officially lifted. Companies like
Siemens, Volkswagen, Daimler-
Benz, Bayer and E.On are ex-
pected to lead the trend. French
auto manufacturer Peugeot re-
cently signed a contract to start
making cars in Iran, joining
rival Renault, which has been
producing cars there for years.
Debenhams, a British chain of
department stores, also has
a presence in Iran. The arms
trade is expected to increase
after sanctions are lifted, and
Russia is assembling S-300 anti-
aircraft defense systems to start
shipments to Iran by next year.
The rising economies of Asia,
whose growth is propelled by
exporting manufactured goods,
will be attracted to Iran’s grow-
ing consumer base. The elimi-
nation of American and Euro-
pean extraterritorial sanctions
will allow China, Iran’s largest
trading partner, to conduct
business in Iran with fewer
repercussions. Iran is in par-
ticular need of infrastructure
investment, suffering from an-
tiquated roads, bridges and
buildings. An Iranian deputy
minister claimed last year that
China has already pledged to
double its infrastructure in-
vestment in Iran to $52 billion.
Iran also lacks modern hotels
and office space, a further op-
portunity for Asian investors,
especially the big hotel groups,
who are likely to rush into the

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underdeveloped real-estate
market.
India, too, has been stead-
ily improving its relationship
with Iran, hosting several
high-level meetings in recent
months. An expansion of Ira-
nian oil output will help India
diversify its supplier base and
gain more leverage over other
sellers like Saudi Arabia. This
might, in turn, facilitate Prime
Minister Narendra Modi’s as-
piration to scale back energy
subsidies. In the private sec-
tor, Indian energy companies
such as Reliance Industries
might consider upstream pro-
jects and the possibility of re-
suming exports of petroleum
products. At its peak in 2008
and 2009, India was exporting
over $1 billion worth of petro-
leum products to Iran.
While many of Iran’s neigh-
bors remain strongly opposed
to the nuclear deal, some will
gain from it economically. An
increase in trade with Iran
is likely, at least in the short-
term, to boost the economy
of the UAE, which serves as
a main gateway to Iran. The
UAE is Iran’s second-largest
trading partner and is particu-
larly strong in the areas where
Iran has struggled in recent
years, including air transport,
energy infrastructure and fi-
nance. By one estimate, the
UAE currently hosts nearly
10,000 Iranian businesses and
trading companies, which are
optimally positioned to ben-
efit from the ease of sanctions.
Dubai, in particular, will likely
see increased demand for its
shipping and logistics servic-
es. Turkey is also one of Iran’s
primary trading partners; bi-
lateral trade between Turkey
and Iran reached $21 billion
in 2012. Turkey’s Ministry of
Economy has identified op-
portunities after sanctions
are lifted in tourism, energy,
banking, petrochemicals, tele-
communications, automotive,
transportation and infrastruc-
ture. According to the minis-
try, about a hundred Turkish
companies are already active
in Tehran.
The United States, which
spearheaded the nuclear ne-
gotiations, may ironically have
the least to gain economically
from the resulting agreement.
American firms will face far
more stringent restrictions
than their competitors. Many
American firms will remem-
ber the lessons of Iraq, where
American sanctions were
lifted too slowly and rather
reluctantly by Congress after
Saddam Hussein’s defeat, leav-
ing the field open to America’s
competitors. A similar dy-
namic could well transpire
in post-sanctions Iran. For
American businesses, secur-
ing an exemption from certain
sanctions may often be the
safest way to do business in
Iran. Such will be the case for
Boeing, which, due to an ex-
emption, will be allowed to
supply commercial passenger
aircraft and related parts to
Iran after the deal is imple-
mented. Other American com-
panies like General Electric
Co., Bausch & Lomb and Bos-
ton Scientific have also been
granted waivers in recent
years.
Business Risks
The possibility of a sanctions
snap-back may be the great-
est cause for concern. If Iran
is caught cheating, Europe and
the United States will re-apply
sanctions. While the re-appli-
cation would not affect busi-
ness contracts completed up
to that point, foreign compa-
nies that continue to operate
in Iran may face international
condemnation. American and
European leaders would like-
ly push foreign companies to
leave. Some Iranian leaders
might encourage anti-foreign-
er sentiment and openly chal-
lenge international companies
operating in Iran. In general,
the re-imposition of sanctions
would destabilize the country
and bring added risk to the
foreign business community.
Even without a snap-back,
foreign companies will need

6. 6 | 2015 | BRUNSWICK ©
to be constantly vigilant not
to violate remaining sanctions
against Iran. Most of the eco-
nomic sectors are controlled
and owned by the Iranian
state, meaning foreign compa-
nies must navigate the govern-
ment’s legal trade frameworks
and limited labor laws. The
Iranian bureaucracy, however,
is frequently intertwined with
the Revolutionary Guards, the
radical element of the coun-
try’s armed forces, which re-
mains blacklisted by the U.S. In
recent years, such hard-liners
have come to play a key role
in some of the country’s big-
gest industries, like energy and
telecommunications. Foreign
companies that engage with
the Revolutionary Guards and
other blacklisted entities, even
unknowingly, will hurt their
credibility in the West and al-
ienate regional countries which
despise Iran’s hardliners.
Iran also presents systemic
challenges to foreign invest-
ment. Iran ranked 136 out or
175 in Transparency Interna-
tional’s 2014 Corruption Per-
ception Index. The country is
not a member of the Interna-
tional Center for Settlement of
Investment Disputes, the World
Bank Group’s arbitration ser-
vice. International banks are
concerned about becoming
enmeshed in Iranian corrup-
tion and money-laundering ac-
tivities, and past fines levied at
banks for violating sanctions
serve as a strong deterrent to
future investment. While the
vast majority of Iranians, who
have for years suffered under
sanctions, are likely to welcome
greater commercial interaction
with the outside world, Iran’s
government hardliners may not
be as welcoming.
Even Iran’s energy industry has
a long history of frustrating
Western companies. The Na-
tional Iranian Oil Company has
not clarified significant details
about its new contract model,
such as whether international
investors will be able to book
reserves or enter into produc-
tion-sharing contract arrange-
ments. Investors will look for
clarification at an international
conference on the new Iran Pe-
troleum Contract to be held in
London towards the end of this
year or early 2016.
Finally, investing in Iran poses
a reputational risk because
key stakeholders at home
might object to it on principle
and therefore politicize the is-
sue. Especially in the United
States, but also in Europe, some
elected officials and private
investors may criticize interna-
tional companies for engaging
with a country that many see as
antagonistic.
Reputation
Management
Foreign companies and inves-
tors considering business in
Iran should be prepared to
address reputational risk.
Brunswick sees there being
a number of communications
principles for doing business in
Iran. These are as follows:
• At the most basic level,
the investment should
be incorporated into a
larger business narrative
that provides context and
rationale. The company
must convey the ways in
which the opportunity in
Iran furthers its overall
business goals. Framing the
decision in these terms will
shift the conversation away
from political controversy
and toward the aspirations
of the business.
• Foreign companies in Iran
must identify trustworthy
partners on the ground.
These partners will
be critical in order to
operate in a country that
has had limited foreign
investment for decades.
Foreign companies will
need to hire third parties
to complete due diligence
on prospective partners.
Moreover, the U.S. Treasury
Department maintains a

7. © BRUNSWICK | 2015 | 7
list of Specially Designated
Nationals with whom
business engagements are
prohibited. This will be a
constantly changing list,
and companies must have
outside advisors monitoring
it on their behalf.
• Navigating Iran’s
complex media
landscape will require
sophisticated knowledge
of the country’s culture,
politics and business
norms. Communicating
to stakeholders inside
Iran, where the media
is state-controlled and
almost entirely in Farsi,
will present a challenge.
Companies should also
assume that disparaging
remarks made abroad could
make their way back into
the country and erode any
relationships that have been
established between the
government and foreign
businesses.
• Understanding Iranian
political agendas is
important. Seemingly
contradictory government
statements can be quickly
clarified by looking at
who has said them. The
Iranian presidency and
the cabinet, the Supreme
Leader and Guardian
Council, the parliament, the
Revolutionary Guards and
the Assembly of Experts,
to name but a few of the
major political players, all
have different agendas and
address various overlapping
constituencies. Companies
will have to traverse
this complicated field to
determine where to exert
their limited influence and
where to hold their cards.
• Government relations at
home will be critical as
well. Foreign governments,
especially the U.S. and the
EU, will be keeping a very
close eye on those who
engage with Iran early on.
Proactive communication
with these governments
will be imperative to
sustain their tepid support.
Home governments will also
play a key role in developing
public sentiment towards
engagement with Iran,
making communication
with them even more
important.
Finding the right partners,
preparing prudent communi-
cations and proactively engag-
ing key stakeholders will help
to mitigate the reputational
risks associated with investing
in Iran. Perhaps this should be
the topic of conversation in the
hotel lobbies of Tehran.