Courtesy of the Wall Street Journal, two interesting articles on Iran.  The first examines the potential and euphoria around Iran:

Tuesday’s deal with Iran paves the way for fresh foreign investment and the reopening of a big consumer market—in particular, for U.S. companies that have been all but barred from the country for decades.

Amid a diplomatic détente that started in earnest last year, American firms have already been exploring the market potential. Apple Inc. has been in touch with potential Iranian distributors, according to people familiar with the matter. Boeing Co. started selling aircraft manuals and charts to an Iranian airline last year, its first Iranian sales in more than three decades.

A Boeing spokesman said “we are reviewing the agreement and until the U.S. Government gives us further direction, it would be premature to comment.” An Apple spokeswoman declined to comment.

General Electric Co. already has limited exposure. Under the current sanctions’ humanitarian exemptions, the company distributes medical equipment like MRI machines and CT scanners in Iran. GE operates “in full compliance with governing sanctions laws,” a spokeswoman said in an email Tuesday. “We look forward to reviewing the details of the agreement reached and will watch the regulatory landscape that may unfold.”

Iran’s nearly 80 million residents—60% of whom are under 30—already have an affinity for Western brands, especially American ones. Internet penetration is 53% across the population, and that rises to 77% in Tehran, according to government data. About 11 million Iranians have mobile Internet access.

Despite sanctions, traders have kept some shops in affluent urban areas, particularly Tehran, stocked with everything from Western-made sunglasses and designer jeans to laptops. Many of the country’s senior businesspeople, or their parents, were educated in the U.S. and still prize American engineering. Many also remember the American automobiles their parents or grandparents drove before the revolution.

Western pharmaceuticals, medical devices and food imports continued to trickle in legally under sanctions, though U.S. banking controls have kept a lid on volumes. That could ease the re-entry for some brands, if the deal proves lasting.

Coca-Cola Co., for instance, already sells its products in Iran, operating for nearly two decades under a license from the U.S. government’s Office of Foreign Assets Control. It is allowed to sell concentrate to an independent bottler, but the Atlanta-based beverage giant doesn’t have any ownership interest in the Iranian bottler or tangible assets in the country.

“The license is very restrictive and provides only for the company to sell beverage base, and conduct quality monitoring and trademark protection,’’ Coke said in a written statement. A company spokeswoman declined to comment on how Tuesday’s deal could affect its business plans.

European businesses are much further along in their own re-engagement with former Iranian business partners and with the government in Tehran. Many only left in recent years amid tighter European sanctions. With that head start, European exporters are likely to be the first to benefit once a deal is implemented.

“In my experience, Iranians value loyalty,” saidNigel Kushner, chief executive of W Legal Ltd. and a specialist in international trade and sanctions. “Those Western companies who retained a close relationship during the sanctions regime will likely be the first to reap the benefits.”

German industry group BDI predicted German exports to Iran would rise to more than €10 billion ($11.3 billion) in the medium term, from €2.4 billion last year. Machinery and plant makers could sell equipment to Iran’s oil industry, said BDI President Ulrich Grillo.

“Car manufacturing, the chemical industry, health care and the expansion of renewable energy also offer the German industry many opportunities,” he said.

The doors don’t open right away. According to the agreement, American and European businesses can only move in after Iran implements the deal. That sets up an uncertain timeline for the actual lifting of sanctions, stretching out as long as early next year.

The agreement also calls for a “snap back” of sanctions if Iran doesn’t live up to its side of the bargain. That may hold back executives worried that any re-imposition of restrictions risks entangling them in legal limbo. George Booth, an oil and gas partner at law firm Pinsent Masons LLP, said foreign energy firms, in particular, should “temper enthusiasm until the complex web of sanctions [is] fully unwound over the coming months.”

Still, the deal could one day help turn Iran into a big new market for a number of industries. And it provides an extra veneer of official consent over initial contact between companies and Iranian counterparts.

Tuesday’s accord “allows for a significant advance in our ongoing discussions,” saidJean-Christophe Quémard, French car maker PSA Peugeot Citroën SA’s director for Africa and the Middle East region. The company is discussing plans with a joint-venture partner to resume car assembly in Iran. It was Peugeot’s second biggest market before it pulled out in 2012.

A spokesman for German drug maker Bayer AG said, “of course, the potential is there,” particularly “given the size of the Iranian population.” But he cautioned that, with the deal not yet implemented, it is “probably too early” to predict how the company could benefit from the Iranian market.

With the promise of the lifting of an oil-sales embargo, Tehran could eventually look for foreign help to get its aging fields pumping efficiently again. European energy producers such as Eni SpA, Statoil ASA and Total SA worked in Iran extensively before sanctions, and say they are eager to return. The country’s vast reserves have long been attractive forBP PLC and Royal Dutch Shell PLC.

Last month, Shell Chief Executive Ben van Beurden met with Iranian Oil Minister Bijan Zanganeh in Vienna before flying a team of officials to Tehran to discuss potential areas of business cooperation should sanctions be lifted, the company said.

“We are engaging with relevant governments to understand the immediate and long-term impact of the latest agreement on the sanction regime,” a Shell spokesperson said Tuesday. BP declined to comment Tuesday on the deal.

By allowing U.S. companies into Iran, the deal could heighten competition in the oil patch. Exxon Mobil Corp. hoped to move into Iran in the late 1990s before the U.S. government quashed the deal. Exxon declined to comment.

Mehdi Hosseini, a top adviser to the Iranian oil ministry, said that “European [oil] companies come and go to Tehran,” but “we are not in talks with any U.S. company.”

Tuesday’s deal sets up Boeing to benefit from Iran’s aging commercial aviation fleet. That establishes a fresh market in which to compete with Airbus Group SE, which also has been stymied in selling into Iran. Last month in Paris, Iran’s transport minister said the country’s aviation industry was in the market to replace as many as 400 jets over the next 10 years, at a cost of at least $20 billion.

An Airbus representative said after the agreement is implemented, the company would “evaluate what commercial implications it has in strict compliance with the accord.”

The second highlights the cultural and legal hurdles that will still exist, even after the sanctions are lifted:

Despite the euphoria inside Iran over an end to sanctions, the country remains a place where Apple Inc. won’t sell the iPhone, oil giant Eni SpA is quarreling over past outlays, and Boeing Co. hasn’t sold spare parts because of pricing disagreements.

The Islamic Republic has a lingering reputation as a difficult place for outsiders to do business. Even with Tuesday’s Vienna accord, foreign businesses looking for new markets would find Iran a country that ranks a lowly 130th on the World Bank’s ease-of-doing business list, and a place where bureaucracy, episodic corruption and political interference have long been encountered.

“This is a market where you are going to need to do a lot of homework,” said Peter Harrell, a former deputy assistant secretary for counter threat finance and sanctions at the U.S. State Department.

Iranian officials say they are trying to address those issues in hopes that foreign companies see it as a huge potential market and not a legal and regulatory morass. Oil contract terms that would allow for greater profit are being drawn up, officials said, and efforts at transparency and corruption-busting are being unveiled.

“We want less bureaucracy,” Mehdi Hosseini, a top adviser to Iran’s oil ministry, said in an interview.

On paper, the country’s allure is undeniable. Its nearly 80 million residents—60% of whom are under 30 years old—already have an affinity for Western brands, especially American ones like Coca-Cola and Chevrolet. Some shops in affluent urban areas, particularly the nation’s capital, are stocked with everything from Western-made sunglasses and designer jeans to laptops.

Its population is tech-savvy. Internet penetration is 53% across the population and 77% in Tehran, according to government data. About 11 million Iranians have mobile Internet access. Many of the country’s senior businesspeople—or their parents—were educated in the U.S. and still prize American engineering.

Iran’s market for technology products and services is roughly $4 billion a year, estimatesForrester Research. If sanctions are lifted, said analyst Andrew Bartels, the market could grow to $16 billion annually, roughly comparable to Saudi Arabia.

Overall consumer expenditures are projected to be about $176.4 billion this year, with annual disposable income pegged at about $287 billion, according to researcher Euromonitor.

Some of the world’s largest companies—from oil giant Chevron Corp. to networking specialist Cisco Systems Inc. to industrial conglomerate General Electric Co.—are examining how the agreement affects their ability to do business in Iran.

“Chevron is reviewing the agreement to fully understand its implications for the energy industry and the company,” the company said in an email.

GE already distributes medical equipment like MRI machines and CT scanners in Iran under humanitarian exemptions. The company operates “in full compliance with governing sanctions laws,” a spokeswoman said in an email on Tuesday. “We look forward to reviewing the details of the agreement reached and will watch the regulatory landscape that may unfold.”

The restrictions don’t end right away. American and European businesses can move in only after Iran implements the deal. That sets up an uncertain timeline for the actual lifting of sanctions, stretching out perhaps until the end of the year, or beyond, say analysts.

For oil companies like Chevron, it isn’t clear when they could return even after Tuesday’s deal. In 1996, they were banned from investing in Iran’s oil industry by a U.S. law separate from the nuclear sanctions.

The agreement also calls for a “snap back” of sanctions if Iran doesn’t live up to its side of the bargain. George Booth, an oil and gas partner at law firm Pinsent Masons LLP, said foreign energy firms in particular should “temper enthusiasm until the complex web of sanctions [is] fully unwound over the coming months.”

Beyond sanctions, challenges faced by new entries range from cultural to legal and bureaucratic.

Apple last year took a hard look at selling iPhones and other products in Iran, people familiar with the matter said then. Those plans have been put on hold for now, though, largely because the company felt Iran’s commercial laws governing user agreements are too restrictive, the people said.

 

Apple declined to comment.

Boeing also ran into difficulties last year. The aircraft giant had been allowed to sell aircraft spare parts to Iranian airlines, including state-owned Iran Air, since early 2014. But business talks stalled, largely over prices Tehran deemed too high, according to people familiar with the matter.

Iran’s energy industry has a long history of frustrating Western oil companies. Eni has unresolved contractual issues that illustrate the hurdles oil companies may face when entering the country.

Oil ministry adviser Mr. Hosseini said Eni claims Iran owes the company money for overruns at oil-and-gas projects it was operating before sanctions were imposed. The disputed sum, which he declined to specify, stems from old deals that, unlike most oil-company contracts around the world, wouldn’t pay for cost overruns.

Eni declined to comment. Chief Executive Claudio Descalzi said last month his company wouldn’t return if contract terms remained largely the same.

Mr. Hosseini said Iran is changing the old contracts to be more flexible and allow for longer-term deals. He also wants to cut the number of steps foreign companies take to get approved by the National Iranian Oil Co.

“An organization’s death or survival depends on anticorruption [efforts,]” said Mansour Moazami, Iran’s deputy oil minister for planning. “In Iran’s petroleum industry, that’s our rule.”

It could be a slow process to modernize Iran’s business environment. Though it has had business and political relations with Europe, the Islamic ideology of Iran’s leadership has always kept Western countries at arm’s length.

In recent years, hard-liners have come to play a key role in some of the country’s biggest industries, like energy and telecommunications. The Revolutionary Guard, the arm of Iran’s military charged with protecting its Islamic system, is likely to remain under sanctions for alleged terrorism and human-rights violations.

That could pose a risk for companies eager to enter businesses where local partners, or even conducting standard transactions, could trigger scrutiny from Washington or European capitals.

“The hard work is just beginning,” said Esfandyar Batmanghelidj, the organizer of the second Europe-Iran Forum, an event on Iran’s business opportunities in Geneva in September.

Other companies have long histories of doing business in Iran that could ease re-entry.

Coca-Cola Co., for instance, already sells its products in Iran, operating for nearly two decades under a license from the U.S. government’s Office of Foreign Assets Control. It is allowed to sell concentrate to an independent bottler, but the Atlanta-based beverage giant doesn’t have any ownership interest in the Iranian bottler or tangible assets in the country.

A Coke spokeswoman declined to comment on how Tuesday’s deal could affect its business plans.

“In my experience, Iranians value loyalty,” said Nigel Kushner, chief executive of law firm W Legal Ltd. and a specialist in international trade and sanctions. “Those Western companies who retained a close relationship during the sanctions regime will likely be the first to reap the benefits.”