Iranian official: ‘Economic mafia’ draining resources, discouraging investment

According to Sirous Talari, board member of the Iranian & Foreign Joint Venture Investments Association (IFJIA), Iran’s domestic economic problems, characterized by fragmented growth and the dominance of powerful “mafias”, pose a barrier to investment.

“The economic mafia in this country is absorbing all resources and infiltrating every industry,” Talari told state news agency ILNA, stressing that these internal challenges, along with international sanctions, pose significant barriers to private sector investment.

Talari also pointed out that while some Afghan nationals make relatively small investments of between $200,000 and $15 million, “they do so primarily to secure residency permits in Iran.” He added: “Apart from these cases, we have not seen significant demand for larger or more substantial foreign investments in Iran.”

Up to 80 percent of the Iranian economy is controlled by the state, in alliance with the religious elite. This has fostered nepotism, inefficiencies and corruption at all levels. At the same time, US economic sanctions have hampered oil exports and international banking relationships, drastically reducing the government’s foreign trade revenues.

The Financial Action Task Force (FATF), an international financial watchdog, has blacklisted Iran in recent years for failing to meet transparency standards and prevent money laundering and terrorist financing.

However, in May, Mohammad Khazaei, Secretary General of the Iranian Committee of the International Chamber of Commerce (ICC), acknowledged that while issues like FATF are important, they not the only obstacles to foreign investment in Iran.

According to the United Nations Conference on Trade and Development (UNCTAD), Iran has only $1.5 billion in foreign direct investment until 2022.

During the presidential debates in Iran in June, President Masoud Pezeshkian argued that Iran’s international isolation must end and that foreign investment is essential for economic improvement.

Pezeshkian stressed that Iran needs $200 billion in foreign investment to lift its battered economy out of a crisis that has only worsened over the past six years.

However, Talari said Pezeshkian’s administration could face major challenges in achieving these goals, which he said “cannot be achieved in the short term.”