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[NEW YORK] For every investor who sees opportunity in a post-sanctions Iran, there are others who see the same old legal morass.
The Islamic Republic is banking on a nuclear accord with world powers to unleash a flood of foreign cash into an economy crippled by decades of sanctions. Companies including Royal Dutch Shell Plc, BP Plc and Total SA say they're willing to invest in the Opec member.
Major investments, however, may take years as companies weigh the risk of Iran violating the agreement, which would bring sanctions back, according to analysts and former officials. Decades of hostile relations with Western powers and tight scrutiny by the US Congress and Treasury could also make many investors reluctant to jump back right away.
"Businesses have become terrified about doing business with Iran, and it's not easy to un-terrify them," says Trita Parsi, president of the National Iranian American Council.
Iran and six world powers led by the US are holding talks in Vienna to reach a comprehensive accord to curb the Islamic Republic's nuclear program in return for removing sanctions that have crippled its economy. Diplomats expect the negotiations to go beyond the self-imposed June 30 deadline.
"Nobody will be rushing to invest as they assess the likelihood of cheating by the Iranians," says Richard Nephew, a former US nuclear negotiator.
Iranian officials paint a different picture, saying interest from foreign investors has soared since April after the country signed a framework deal with a group comprised of the US, Germany, France, the UK, Russia and China.
About 20 foreign investors, including Americans, visited Tehran in May to examine opportunities in sectors such as cement, mobile telecommunications and food. Shell executives have also travelled to the Iranian capital to discuss possible partnerships, the company said Wednesday.
"You've got every single energy company, including Americans ones, just itching to get into Iran," says Hans Hume, founder of the New York-based hedge fund Greylock Capital Management LLC.
A final accord would eventually help Iran initially access as much as US$60 billion in frozen assets in overseas accounts.
Unlocking that money won't be easy, analysts say. It also pales in comparison with how much is needed to revive the economy. Treasury Secretary Jacob J. Lew said in April that Iran's domestic investment needs are estimated at US$500 billion, which "far outstrips the benefit of sanctions relief."
No sanctions are likely to be lifted without a nod from the US Congress, which has 30 days to review terms of the agreement, if a deal is reached by July 8. Any deal after that date will be under review for 60 days.
A final deal would also have to be endorsed by the UN Security Council, with a new resolution which may create two mechanisms to implement the agreement, according to two European diplomats.
One of them would be a dispute-resolution panel, likely including the Islamic Republic, the US and five other nations, to address suspected breaches by Iran, they said.
A draft resolution put forward at negotiations in Vienna mentions a 10-year suspension of sanctions, during which the UN Security Council will meet every six to 12 months to decide whether to extend the suspension, the diplomats added.
The renewal will require verification of Iran's compliance by the UN's nuclear watchdog, the International Atomic Energy Agency, they said about the draft.
Negotiators have yet to agree on sanctions against Iran's ballistic missile program, human rights violations and support for international terrorist, they said, adding that these are unlikely to be disbanded.
"Sanctions will need to be fully lifted before you see this interest in Iran become actual investing," said Michael Daoud, director of equities sales for Africa and Middle East at New York-based brokerage firm Auerbach Grayson & Co. "The threat of sanctions undercuts positivity for the Iranian market."
A former US official, who also spoke on condition of anonymity, said the trick would be to avoid using the word "suspension," since Iranians want to speak of "lifting" sanctions.
"From the Iranian side, there is a risk that they will always complain that they are not getting enough relief," said Mark Dubowitz, executive director at Washington-based Foundation for Defense of Democracies, which has argued for tighter measures against Iran. "Sanction relief is in the eye of the beholder."
Oil companies returning to Iran are likely to insist on legal provisions that would let them walk away in the event sanctions were re-imposed, according to oil executives and lawyers.
While oil companies have operated in difficult places such as Russia or Nigeria, executives said they wanted protection to avoid earlier problems related to sanctions. For example, Eni SpA, Italy's largest oil company, is still trying to recoup payments from Tehran related from investments in four oil fields there between 1999 and 2001.
According to US officials, sanctions on the oil and banking industries cost Iran more than US$120 billion since 2012, causing the economy to shrink by 9 per cent in the two years ended March 2014. In the following 12 months, it turned the corner, expanding 3 percent.
A nuclear accord and clarity over sanctions could help usher a surge in investment.
"Businesses are not afraid of Iran," says Mr Parsi of the National Iranian American Council. "They are afraid of Congress and the Treasury."