Even under a hypothetical scenario in which all external sanctions on Iran are lifted overnight and direct US or European restrictions on financial and trade transactions are removed, a rapid influx of major international firms remains unlikely.
Experience following the 2015 nuclear agreement demonstrated that partial sanctions relief did not automatically restore Iran’s access to the global financial system. Large international banks—many previously fined by the US Treasury for sanctions violations—remained wary of legal, compliance and reputational risks.
The key constraint, therefore, is not merely whether sanctions exist, but whether domestic institutional, banking and legal frameworks align with global standards.
A central bottleneck is Iran’s unresolved status with the Financial Action Task Force. Placement on the high-risk (black) list signals to global banks that dealings with Iranian institutions require enhanced due diligence and entail elevated compliance costs.
Even in the absence of primary and secondary sanctions, without full alignment of domestic laws and practices with FATF recommendations, reputable banks are unlikely to reopen correspondent relationships, finance projects or facilitate routine transfers. Large multinational corporations cannot execute multi-billion-dollar investments without reliable banking channels.
Additional Obstacles
Domestic banking conditions present additional obstacles. Iranian banks continue to grapple with high levels of non-performing loans, weak capital adequacy, opaque balance sheets and legacy toxic assets. Incomplete implementation of international financial reporting standards and Basel requirements compounds the problem.
For a European or Asian bank under strict supervision, establishing ties with a counterpart whose financial statements are not fully transparent represents a significant credit and compliance risk—even if sanctions risk were eliminated.
Technical reconnection to global messaging systems such as SWIFT would be necessary but insufficient without credible anti-money-laundering enforcement and transparent reporting.
Legal and judicial predictability is equally critical for foreign direct investment. Investors require enforceable property rights, predictable regulation, guaranteed profit repatriation and credible dispute-resolution mechanisms.
Iran’s business environment has long been challenged by complex licensing procedures, frequent regulatory shifts, overlapping authorities and policy volatility. In such an environment, even post-sanctions investors would demand strong assurances that contracts will be upheld in domestic courts or international arbitration—and that rulings will be enforceable.
US investment faces additional political and legal barriers beyond sanctions. Decades of mutual distrust, domestic legal constraints, congressional oversight and geopolitical sensitivities limit the likelihood of large-scale American participation in Iran’s energy, infrastructure or technology sectors absent a comprehensive political settlement.
Governance Risks
Moreover, Iran’s state-dominated economic structure—where major projects in oil, gas, petrochemicals and infrastructure are often controlled by public or quasi-public entities—raises concerns about ownership transparency and political risk. Multinationals typically prefer partnerships with competitive, transparent private firms.
Technology transfer also depends on robust intellectual property protections. If patent, trademark and trade-secret regimes remain misaligned with international norms or weakly enforced, firms will hesitate to introduce advanced technologies, limiting the quality of potential investment even under sanctions relief.
Energy constraints further complicate the narrative that abundant cheap energy will attract investors. Rapid growth in domestic electricity and gas consumption has outpaced capacity expansion, leading to periodic shortages and industrial supply constraints.
Aging power plants, transmission networks and upstream oil and gas infrastructure reduce efficiency and raise maintenance costs. Without large-scale investment in modernization, reliable energy supply cannot be guaranteed for energy-intensive industries.
Another Prerequisite
Macroeconomic stability is another prerequisite. Persistent exchange-rate volatility, high inflation and structural budget deficits elevate currency-conversion and profit-repatriation risks. Long-term investors require predictable monetary and fiscal frameworks and assured access to foreign exchange.
Economist Mohammad Mehdi Behkish underscores the structural nature of these barriers. “Investment in Iran, in my view, is not feasible,” he said in an interview with Donya-e-Eqtesad, adding that even potential deals such as aircraft purchases raise financing dilemmas: “Where would we obtain the funds to pay for them? … If guarantees are required, what can we realistically offer?”
The distinction between legal feasibility and structural readiness is therefore crucial. Sanctions relief may be a necessary condition for renewed international engagement, but it is far from sufficient.
Sustainable foreign investment requires deep reforms: transparent bank balance sheets, stronger capital adequacy, full alignment with FATF standards, credible rule of law, administrative simplification and macroeconomic stability.
Without such measures, expectations of a rapid surge of Western capital—American or European—remain an oversimplification of a complex economic reality.
