Lessons for the development of the regional presence of the Islamic Republic of Iran

Examining the dimensions of political risk factor in economic interaction with the countries of the region and the necessity of covering it

Report No: 110

     The countries of the West Asian region, including Iraq, Syria, Lebanon, Afghanistan and Yemen, have strategic importance in the economic, political and cultural-social fields for the Islamic Republic of Iran. But the existence of military and political-security crises in these countries makes the development of economic relations face political risks. One of the main prerequisites for the presence of the non-governmental sector to invest in the countries of the region is to ensure that political risks are covered. These political risks, which are related to the qualitative aspects of the economy, arise due to the instability of the factors related to the governance institution or the conflict between the two countries, and due to that, the return on investment in economic activities is disturbed and the level of investment confidence is reduced.

     In organizing their international economic relations, developed countries pursue things such as the development of political and security hegemony, the promotion of national security, the development of cultural and political influence, and influence in the sovereign relations of countries. These countries also consider covering political risks in economic interaction with the target countries. Put. All over the world, governments in order to cover the political risk from their national resources and reserves, create banks, funds, companies or provide resources that, through the issuance of various guarantees and insurance policies, cover the political risk of being in the market of other countries for their private sector. to cover In the countries of the world, there are two institutional designs for covering political risk:

     A) Some countries like the United States have established an independent institution to carry out this mission. In America, the Export and Import Bank (EX-IM Bank) and the American International Development Financing Corporation (DFC) are responsible for political risk coverage. Export and Import Bank of America is considered as the export credit agency of this country and follows the development of exports of this country. But DFC is an institution that seeks to strengthen the economic presence in order to secure the strategic interests of the United States. Therefore, it prioritizes projects that are in line with the goals of the American foreign policy.
     b) In some countries, such as Germany, France, Canada, Italy, Australia, Indonesia and India, the government has entrusted its executive operations to existing institutions such as export credit agencies and banks by creating a national interest account and allocating government resources to this account.

     Iran Export Guarantee Fund also tries to cover political risk; However, the connection of the evaluations of this fund to the international validation institutions will limit the access to the available information regarding countries like Syria on the one hand and overestimate the risk of interaction with them on the other hand. Also, the limitations of this institution as a government company that is required to recognize profit and loss have caused it to not be able to properly provide the services needed by the economic actors of the non-governmental sector to participate in the economic market of the countries of the region.

     The method of determining the coverage ceiling of Iran's export guarantee fund is in accordance with the usual economic activities and conventional commercial flows in the uniform context and the normal routine of political and governance issues; Therefore, the countries of the region, which are mainly involved in military-security tensions and economic crises, are known to lack priority compared to other countries. In addition, the limitation of financial resources of the fund also makes this fund unable to use the opportunities available in the market of the countries of the region.

     Therefore, in order to take advantage of the economic opportunities created in the region, restore and redefine Iran's position in the global economy, strengthen and stabilize Iran's position in regional relations, and empower Iran's non-governmental sector in overseas activities, create a national interest account with the Iran Export Guarantee Fund. and a credit from the National Development Fund should be allocated to it. Based on the credit of this account, the Export Guarantee Fund should issue a political risk cover guarantee to cover political risks for the economic activity of the non-governmental sector in the region and neighboring countries. The income from this account belongs to the National Development Fund, and if the expenses are more than the income, these expenses are considered as the government's debt to the National Development Fund. This work provides support for the non-governmental sector to carry out business activities and cross-border investment in less developed countries with political problems. The features that need to be considered in issuing a guarantee from this account are:

     Performance evaluation should be based on cost-effectiveness.
     · To complement the guarantees of the Iran Export Guarantee Fund.
     · Have a native evaluation model for countries and companies.
     The strategic goals of the Islamic Republic should be defined endogenously in the system of prioritizing countries for activity.
     The provision of its financial resources should be sovereign.
     · Provide guarantees only to activities that other institutions have not undertaken to cover the risk of.
     Using the resources of the National Development Fund to carry out such a mission, in addition to using the resources blocked in the fund in an effective place, also resolves the functional contradiction of this fund in creating the internal development of the country based on foreign exchange resources.

Executive summary

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