European executives in Iran ask: ‘Should I Stay or Should I Go?’

Bourse and Bazaar | Mohsen Tavakol: Many European companies (and a few American ones) are winding-down their business and pulling out of Iran for fear of being entangled by US sanctions. These departures obviously have a social impact on Iran and its people. These days, business leaders, politicians, and even concerned employees, discuss the European and American companies’ exit procedures and timelines, but almost none one discusses what might happen if these companies stay in Iran.

While the current economic and sociopolitical situations in Iran seems to be too complex or too hopeless and while there are many serious and uncomfortable aspects of the matter to address, I want to examine two issues in this article: (1) doing compliant business in Iran in face of sanctions and political pressure, and (2) businesses’ forgotten ethical and social responsibilities.

We all have those friends who come to us when they need our help to flourish, but are nowhere to be found when we need them. This is how I’ve observed many European businesses act towards Iran and Iranians, particularly during the past decade.

When private sector businesses and corporations decide to engage in a market their engagements come with responsibilities and accountability especially concerning employees, suppliers, and customers, as well as society as a whole. When and where “ordinary people” or “the masses” are directly or indirectly involved in or impacted by the business, the ethical behavior and conduct of the corporations becomes even more important. Once we initiate and drive a business, we—as accountable business leaders—pledge to do our utmost for the benefit of all stakeholders. Treating shareholders as the most important stakeholders in that process isn’t the right choice.

I firmly challenge those European business leaders, especially the heads of their operations in Iran, who claim that it’s practically impossible to do compliant business in Iran while sanctions are being forced and imposed by the US.

Under a severe embargo and sanctions during the past couple of decades, high-tech American companies such as Cisco, Hewlett-Packard, and Apple (to mention a few) had significant “indirect” business in Iran. Similarly, European companies such as Siemens, Nokia, and Ericsson along with Asian equivalents (e.g. Huawei and Samsung) maintained licenses from European and American regulators to engage in limited and controlled businesses in the country. This was just in my own sector of telecommunications.

Hence, it is very strange if European companies now claim that the new wave of sanctions being imposed to Iran as of August and November 2018 (which are not that different from the pre-JCPOA sanctions) will seriously impact their businesses. If there’s a will to conduct compliant business in Iran without impacting business ventures elsewhere, there is always a way. Whom are we fooling?

Compliance with special EU and US laws—including sanctions rules and regulations—regarding doing business in Iran is key for European and American companies. My experience working in Iran during the past four years proves to me that those concerns and assumptions, while being important, are not necessarily accurate in all cases. Many business leaders assume things too often, rather than knowing and working with facts. Let me share my experience.

In February 2015, I—as the CEO of Ericsson in Iran at the time—together with two executive colleagues from the company headquarters in Stockholm, had to attend a meeting in London to meet a number of human rights organizations questioning our operations in Iran.

The general criticism was why we had remained operating in Iran during the time of sanctions while Iran was under European and American pressure due to the Iranian government’s human rights violations, theocratic government, the nuclear program, as well as interfering in and influencing regional conflicts and tensions.

The concern was that Ericsson’s telecommunications infrastructure could be used by the government to suppress the citizens and thus violate human rights. While those concerns were genuine and valid ones, by digging into various pieces of that complex puzzle and shedding lights on unnoticed or less explored corners of the maze, it became more obvious to those less knowledgeable about the environment in Iran that choosing—as an European business entity—to stay and work in such challenging and complex environment could indeed help improve the sociopolitical environment little by little; i.e. by pursuing corporate social responsibilities from a human rights perspective.

Complying with strict sanctions regulations rules was very hard and time-consuming not only due to its detail-oriented nature, but also due to the entire focus on preventing dual-use of products and solutions as well as preventing human rights violations. During my tenure at Ericsson in Iran, not a single license request to the U.S. Treasury Office of Foreign Asset Control of EU regulators was denied. This is why we were able to grow the business several times over in compliant ways and within a short time period.

Why weren’t our requests denied? Because we could provide clear evidence that our products and solutions could hugely benefit the public. We placed the people and their well-being in the center of our business—in our heart. Regulators and lawmakers were not ignorant to this fact. During my almost 34 years of living and working experience in Western countries, I haven’t seen any sane nation or government—the United States included—that genuinely wants to cause suffering to “ordinary people” through embargo or sanctions.

My point, therefore, is that within an international working environment, collective intelligence, logic, and transparency always prevail—even in the most complicated and tense situations. Thereby, if you can obtain business compliance in Iran once, you most certainly and most likely can do it again. European corporations unnecessarily create complexities around matters that are not complex at all. In my opinion, financial transactions are the least of the problems.

Looking at the social part of the equation, it’s certainly improper—even unethical—that European companies gain lucrative profits in Iran by taking advantage of the “good times” there, while unilaterally decide to shut down or decrease their operations there when the country faces hard political times. Reasons such as “the economic problems stirring dissent within Iran” or “Iranian customers are in-housing the business and aren’t willing to give us enough business” cited by those foreign businesses deciding to wind down business in Iran are nothing but excuses.

If the companies act in open, transparent, and compliant ways, as well as perform their duties and obligations in professional manner as per their contractual obligations, like with any customer and in any country, there will always be enough business for them in Iran.

If a company loses business, it’s always due to its management’s incapability to drive the business as well as lack of commitment to the stakeholders (shareholders, employees, suppliers, customers, etc.)—whether in Iran or elsewhere. Western companies in Iran cannot hide behind the sanctions if their real reason to leave or restructure is lost business result from the management’s lack of business skills, capabilities, and commitment.

The consequence of the foreign businesses deciding to leave or restructure is that they fail local employees and suppliers by first and foremost causing unemployment and subsequently severe social and economic problems for those employees and their families. I mean no offense, but corporate social responsibility cannot be limited to donations to charity, or bringing sweet golden retrievers to retirement homes, or distributing colorful balloons among the children in an orphanage. Corporate social responsibility is to first take care of employees and suppliers and to do hard work to maintain and grow business in order to fulfill that obligation.

As a result of the aforementioned social impact, the future business endeavors of the European companies in Iran could become more cumbersome, and most important of all, the reputation of Europeans as trustworthy counterparts (as employers or suppliers) will be damaged.

Finally, when Western companies operate in Iran, their Iranian employees are further exposed to a world beyond Iran’s borders and certainly influenced by values that would promote increased understanding and tolerance in the Iranian society and human rights such as freedom of speech. Bearing in mind that the highly-urbanized and well-educated Iranians are already influenced by and imitating the popular Western culture, driving positive and democratic changes in Iran through the presence of Western companies is easier than many may think.

I imagine that many European business executives, engaged in business in Iran, are now humming to themselves the famous question asked by The Clash: “Should I stay or should I go?”

Well, I know what I would do.