US-Iran relations – doing business in the political crossfire

By Chandran Nair

 

This column by Chandran Nair appears in the November 2007 issue of the Ethical Corporation magazine.

US xenophobia is creating dilemmas for global companies operating in Iran, argues Chandran Nair.

The shocking treatment of Iranian president Mahmoud Ahmadinejad at the hands of Columbia University during his much publicised talk in September shows how many leading Americans, even academics, have become habituated to vilifying countries based on misunderstanding geo-political realities.

Most appalling was the behaviour of Lee Bollinger, president of the university, to use the platform to insult and humiliate a head of state; behaviour that must surely reflect poorly on the lack of leadership – and common courtesy – that should have been displayed as a representative of one of the US’s leading institutions.

While Bollinger would have had the right to make a strong argument for Iran to engage with the US on key issues and then invite the president to explain his views, he did not do so and resorted to asserting subjective opinions as if they were facts. He described the president as a “cruel dictator”, said he was “actually uneducated” and implied he was a ridiculous figure. Ironically, the academic with no strong intellectual arguments sounded more like a politician and the politician in his response to being insulted, more like an academic.

The Columbia episode offers many timely lessons of the importance of inter-cultural behaviour. It also shows how the tide of US public opinion is rising against Iran, which in turn will affect companies making investment decisions in the Middle East.

Lesson one: while free speech and in particular the right to criticise are values to be upheld, there is a fine line between speaking one’s mind and abusing that freedom. In speaking out against Ahmadinejad while he was a guest, Columbia’s president overstepped that line.

Lesson two: acknowledge your guests and their circumstances. Bollinger made no attempt to find out why Iran had taken certain positions, which surely must have been the reason for inviting the president to speak. On the contrary, he read out a long list of charges against Iran as if there were facts and made it very clear that he considered Iran guilty as charged.

Lesson three: leadership begins with humility and respect for others. Bollinger missed a great opportunity to show a degree of largesse and humanity to allow the Iranian president to share his views, which at least on this occasion were moderate. Unfortunately, Bollinger gave neutral observers the impression that he had succumbed to populist demands from politicians and the media in the US for more Middle East bashing.

Where do companies stand?

The question though is where is all of this leading for corporate America, given the climate of fear and xenophobia in the US. The world is watching as American companies line up to take advantage of access to Iraqi oil – access gained through what is now widely viewed as an illegal act of war. Alan Greenspan, former chairman of the Federal Reserve, in his recent memoir finally admitted that the invasion was all about oil.

US government policy, media and public pressure are so driven by fury and determined to hurt Iran with sanctions, it would appear that US corporations with interests in Iran are stuck between a rock and a hard place. But for any truly global American company with independent boards, the question must be: how is it acceptable for us to invest in Iraq but not in Iran?

In addition, as US public authorities and pension funds begin screening investments for links to Iran, it raises the question whether this misplaced and contradictory morality has any place in the business world. How far will the bullying go and are non-US companies such as Shell and Total with investments in Iran going to be punished? And, importantly, are they going to speak out?

At the same time as activist investors are becoming more radical, one can envisage a situation where some who do not share the views of the US government, especially non-US investors, buy into US companies and begin to challenge boards for making investment decisions against the backdrop of domestic political pressure. Current concerns in the US about sovereign wealth funds from China and the Middle East using their stakes in companies for political means are ironic: US investor portfolios are becoming the most politicised in the world.

Who decides which country is off-limits to investors in a world where so many have blood on their hands and cannot afford to be holier-than-thou? The answer is, ultimately, companies’ boards, but it would appear that even mighty US corporations are worried about offending Uncle Sam.