But the figures showed Iran was falling 95 percent short of the foreign investment Iran says it needs just for oil and gas development.
Behruz Alishiri, head of the Organization for Investment and Economic and Technical Assistance, told a conference that Iran attracted foreign investment totaling $4.15 billion in 2011. He boasted that was an increase of 14 percent.
And, for a change, that was the figure published just days earlier by the United Nations Conference on Trade and Development (UNCTAD) in its annual World Investment Report.
Most importantly, however, the announcement that Iran drew $4.15 billion in foreign investment last year comes just five weeks after Alishiri said Iran needs to attract $80 billion in foreign investment each year over the next five years to fulfill its oil and gas development plans.
That means Iran has fallen 95 percent below its goal. And the $4.15 billion figure is the total of all foreign investment, while the $80 billion figure is the requirement just for oil and gas development.
Alishiri avoided saying that this $4.15 billion in investment was a mere 27/100ths of 1 percent of foreign investment around the world, and thus did not show Iran to be a very popular locale for investment.
When it comes to foreign investment as a percentage of gross domestic product, the Islamic Republic stood 10th from the bottom, with Nepal, Cuba and Burundi at the absolute bottom.
One year ago, Alishiri reported on his organization’s website: “In 2010, the country broke the record for attracting foreign direct investment (FDI).” That was true. But Alishiri avoided citing any numbers!
He said he couldn’t produce actual numbers because it takes a month for the exact statistics on foreign investment to be collected. But the year 2010 ended more than five months before Alishiri issued his statement.
Several months before that, another official made a claim of astounding success in attracting foreign investment in 2009.
Foreign Ministry official Vaqef Behruzi said UNCTAD statistics showed that Iran drew more foreign investment in 2009 than all but five other countries in the entire world. UNCTAD’s tabulation, however, showed Iran ranked an unimpressive 53rd in the world that year, not sixth as Behruzi proclaimed.
But UNCTAD’s figures show that Iran attracted more foreign investment last year than in any other year and ended a drought that began after President Ahmadi-nejad took office in 2005.
By UNCTAD’s figures, before 2011’s $4.15 billion, Iran attracted the most foreign investment in 2002, a total of $3.7 billion. In 2005, when Ahmadi-nejad took office, the total was $3.1 billion. But it then halved to $1.6 billion in each of the next three years before almost doubling to $3.0 billion in 2009 and $3.6 billion in 2010. Iranian officials, in the meantime, were claiming foreign investment exceeding $10 billion in each of those years.
The Iranian government telegraphed its concerns about flagging foreign investment in June 2010 when the Central Bank said it would give all foreign investors a guaranteed return of 10 percent on their investments.
The offer appeared to be an especially desperate attempt to attract foreign capital. In fact, statistics from the European Union show that its 27 member states have recorded a net disinvestment from Iran, that is, selling off existing investments and leaving the country in excess of the volume of new investment entering the country.
American residents—citizen and non-citizen alike—have been barred by US law from investing in Iran since 1995. What investment is entering Iran appears to be coming largely from Asia.
In June 2010, Central Bank Governor Mahmud Bahmani said, “Iran will pay a guaranteed 10 percent interest on foreign investment.Ö The Central Bank and Ministry of the Economy will guarantee the return of the principal and a capital profit.” Nothing further has been heard about this plan in the two years since then. It appears to have been nothing more than hot air.
As described by Bahmani, that was an offer no investor could resist. It would be risk-free. If the principal is guaranteed, no investor could lose his capital, although that violates the basic principal of capitalism—that one has the possibility of a great profit, but also the risk of a great loss.
The report on Bahmani’s statement did not make clear if the guaranteed return of 10 percent was to be calculated on the rial value of the investment or on a foreign currency. If the rial was the basis, a 10 percent guarantee would not assure any real profit since the rate of inflation has only rarely dipped below 10 percent in the last three decades and is currently above 20 percent.
