Foreign Investment and Iran's Future

Campus Report ^ | December 11, 2007 | Bethany Stotts

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Foreign Investment and Iran’s Future

by: Bethany Stotts, December 11, 2007

....Since the NIE report was designed to assess “Iran’s current and projected ability to develop nuclear weapons,” among other variables, it is also useful to consider the influence that international investment practices will have on Iran’s foreign-policy decisions and future capabilities. “In Iran, there are some projections that by 2015 Iran will have so little oil that it will stop exporting, not because they’re running out of oil underground, but because their policies are not allowing for foreign investment,” said Dr. Ariel Cohen, Senior Research Fellow at the Heritage Foundation. Dr. Gal Luft, the Executive Director for the Institute for the Analysis of Global Security also explained at the November Heritage event that Iran’s oil production is heavily dependent on foreign investment and Iran’s increasing foreign belligerence and pursuit of nuclear technology has made the business climate nervous. “Companies don’t like to go to places where there is high risk, particularly energy companies where you need skilled labor that could be kidnapped and killed or maimed, when it involves extremely expensive equipment that could go to other places—like Libya, for example, where the risk is lower,” Luft said.....

Jim Phillips, a Research Fellow in Middle Eastern Studies at the Heritage Foundation also said that the audience needs to remember that “oil is a double-edged weapon, because the world ultimately can get on better without Iranian oil than the Iranian government can get on without its own oil exports.” Because 80% of Iran’s export revenue is derived from oil exports, Phillips argues that geographic restrictions on Iranian exports in time of war would hinder the Iranian economy, and “the government would quickly be unable to sustain its present spending habits in the event of a war.”....