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Politics on Collision Course At Shuttered Iranian Airport

Theocratic, Business Interests Clash Over Role of Trade

By Karl Vick
Washington Post Foreign Service
Tuesday, August 10, 2004; Page A14

ISTANBUL -- Exactly halfway between the vibrant metropolis of Tehran and the cloistered holy city of Qom, the new Imam Khomeini International Airport appears a fitting marker for the ambivalence the nation shows a world steadily knitting itself together beyond Iran's borders.

For most of the last quarter-century, while globalization went from buzz word to status quo, the world's only theocracy cultivated an isolation imposed both from within and without. While U.S. sanctions outlawed investment by the world's largest economy, the Islamic Republic of Iran showed few signs of wanting outside money from anywhere. Until two years ago, it lacked a law even allowing foreign investment in an economy 80 percent controlled by a government that still issues five-year plans.

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The new airport was intended to change that. The $475 million complex was concrete, steel and glass proof that Iran was opening to the world, a strategic priority recently articulated by Ayatollah Ali Khamenei, who succeeded the late Ayatollah Ruhollah Khomeini as Iran's supreme leader.

What's more, the airport was to be run by a company with roots both in Turkey and Austria, a foreign partnership that promised to invest almost $200 million in an additional terminal.

But on opening day this May, what rolled onto the runways were tanks. The Iranian Revolutionary Guard Corps seized control of the airport after the first flight landed. It remains shuttered today, one more manifestation of contradictions within a government still deciding how it feels about the world.

"The government says one thing, and the next moment the Revolutionary Guard are doing exactly the opposite," said Ben Faulks, an analyst for the London-based Economist Intelligence Unit, which specializes in country analysis. "That makes for a very bad message to investors, frankly."

The closure had implications for a bigger deal between Iran and a Turkish mobile phone company and made business affairs a central point of discussion when Turkey's prime minister paid a rare visit late in July. In three days of talks that centered on Iraq and ethnic Kurdish separatists, Prime Minister Recep Tayyip Erdogan also delivered a bit of economic advice.

"Countries building higher walls on their borders, viewing change with suspicion and not supporting the entrepreneurs will remain bystanders in the ongoing globalization process," Erdogan said in a speech to the Turkish-Iranian Business Forum.

Iranians who advocate an opening to the outside world call the trend unstoppable. Iranian officials for years equated foreign investment with imperialism, but senior officials acknowledge the need for change in the face of a demographic juggernaut. As a baby boom comes of age, Iran must generate 800,000 new jobs a year. The nation's heavy reliance on its huge oil and gas reserves generates cash but not growth.

"Certain things are clear," said Siamak Namazi, managing director of Atieh Bahar Consulting, a Tehran firm that advises foreigners who want to do business in Iran. "Iran knows that it must have increased foreign investment for it to achieve the goals that it has. It needs to create jobs, and it can't do it by itself. There really is a consensus."

But in Iran, consensus can be an elusive thing. The same pressures working to pry open its closed economy also pushed the ruling clerics to strike a deal opening the country's long-secret nuclear program to international inspection. That bargain, struck last October with three European powers, was driven by Iran's appetite for international trade and technology transfers.

But the deal crumbled in months. Today the nuclear issue -- and the possibility of U.N. sanctions, which the Bush administration strongly favors -- ranks as the top political risk that analysts flag to potential investors.

Inconstancy is another: This summer, the newly elected conservative members of parliament threw out the five-year economic plan approved by their predecessors, including a provision to allow foreign banks to operate in Iran.

The airport takeover was another murky case.

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