The Forum for Partners in Iran's Marketplace

March 2021, No. 96

Q & A

Economic Diplomacy

There have always been obstacles. One of the obstacles is that public and private companies do not trust our embassies.

Ali Majedi, Economist

The Ministry of Foreign Affairs has always been criticized for not pursuing economic diplomacy as required by Irans economic situation. Although many attempts have been made in this regard, the result has not been satisfactory to observers. This is an issue that Ali Majedi, an economist and former Iranian ambassador to Germany, Japan and Brazil, analyzes, and argues that the reason for the Foreign Ministrys failure to pursue economic diplomacy should be sought in the lack of skilled manpower.

According to him, the government should be very serious in training skilled human resources, otherwise it should not be too happy to revive a structure such as the economic deputy in the Ministry of Foreign Affairs. He also believes that one of the most important steps that should be taken at the Ministry of Foreign Affairs is to motivate the Iranian embassies. Embassies, which are often just for day-to-day operations, and if they are occasionally creative in communicating with companies in their host country, for example, it is the result of personal initiative, not a pre-determined task, and this is a big drawback.

According to him, if we want to address this shortcoming, specific tasks must be defined for embassies. Embassies should be activated and examine what capabilities their host countries have for Irans economy. Embassies can identify target countries for Irans economy and examine how their capacity can be used to import into Iran, including technology, and which countries can be used to receive financing and foreign investment for our country? Also, which countries can be considered a suitable market for the export of Iranian products and how can the grounds for increasing exports be provided? 

Although at various times after the Revolution there was an attempt to activate economic diplomacy in the Ministry of Foreign Affairs, there has always been criticism against the performance of this ministry in this regard, why? And what is your analysis?

All in all, I can say that, unfortunately, the foundation of the Ministry of Foreign Affairs is based on public diplomacy, and if we want to look at the body and managers of this ministry, we come across a few people who have education and experience in international economics. This is an issue that has existed, at least in all post-revolutionary foreign ministries - I do not know exactly before that. In other words, the weakness of economic diplomacy is institutionalized in the Ministry of Foreign Affairs, and we have rarely seen the activity of economists in this ministry. 

Why dont Iranian ministries and companies go to our embassies abroad? Do they think the embassies might create obstacles for them?

Most economic ministries, including the Ministry of Economic Affairs and Finance, Agriculture Jihad, etc., prefer to do things through their own structure when they want to travel to a foreign country. In embassies, too, the situation is such that a number of routine tasks are performed and there is usually no initiative in this regard. Their job is, for example, to make appointments and organize some matters related to the ceremonies and prepare and send a report of this trip to the Ministry of Foreign Affairs, and so on.

But, for example, if an agreement has been reached, the matter will be returned to the relevant ministry. How much the ministry pursues the agreements reached in cooperation with the deputy minister of economy and the embassies is now up to their personal decision, and often does not. Therefore, the work done by deputy FM for economic affairs and our embassies can often be done on their own initiative, otherwise there is no clear definition of special responsibilities. There are some embassies that, for example, have an economic perspective and prepare reports on the economic situation of the host country, including economic growth, inflation, etc., and submit them to the Ministry of Foreign Affairs. However, the same group does not usually enter the operational phase. 

How can this shortcoming be remedied?

If we want to address this shortcoming in general, we must first activate the embassies, and define specific tasks for them. If the embassies are activated, they can examine the conditions of the target countries for the Iranian economy, how the capacity of these countries can be used to import to Iran, including technology, and which countries can be used to receive financing and foreign investment for the country? Also, which countries can be considered a suitable market for the export of Iranian products and how can the grounds for increasing exports are provided? All this requires the appointment of an ambassador with an economic background to know what to do. 

When you were at the Ministry of Foreign Affairs, you paid attention to economic diplomacy. What factors led you to this path, and why do other embassies not do so?

Most of the initiatives to establish economic communications were all made by the embassy itself and nothing was defined. We tried to bring Volkswagen to Iran, and when this was going to happen, all the related work was done by the embassy. Also note Siemens; when Siemens had an office in Iran, it had 120 employees, but due to the actions of the embassy, ​​it increased to 240 (although now I think there are not more than 50).

When I was Irans ambassador to Japan, Germany and Brazil, I tried to communicate with large companies such as Siemens, Volkswagen, BMW, Bosch, etc., and I also contacted the highest level of these companies or their board members. My attempt was to invite them to come to Iran and invest here. At the same time, I tried to appoint experts to provide communication between domestic and foreign companies. All these actions were due to personal experiences and initiatives. If you look at the actions of other economically active embassies, you will find that their work was also initiated by themselves. Among them is Seyed Hossein Mousavian, another former Iranian ambassador to Germany, who also more or less sought to establish economic relations with German companies. 

 What was the level of internal cooperation with you?

Of course, there have always been obstacles. One of the obstacles is that public and private companies do not trust our embassies. It is interesting to say that public and private companies coming from Iran initially tried to bypass us! I saw this phenomenon in both Japan and Germany. For example, something interesting happened about a large domestic auto manufacturer in Iran. We had tried to establish a connection between this company and Daimler Benz, but when this connection became possible and the companys representative came to Germany, they did not even inform the embassy, ​​and we heard from the Germans that a guest had come from Iran! I remember raising this issue with the auto plant at that time emphasizing that the embassy did not intend to cause them trouble but if there was a problem, it would definitely help.

Another issue is that some ambassadors think their level is too high to enter into negotiations with various levels of management to advance matters. Most ambassadors do not even enter into talks with the director generals of ministries; in other words, they do not agree to talk to people lower than a deputy minister, while I personally believe that most things can be done with the director generals because it is the middle management who does the work. 

What can be done to train the right manpower?

The desire for engineering and medicine in Iran has become a culture. It is common for people who fail to enter engineering or medical schools to study economics. Fewer cases can be found that have attracted interest in this field. In my opinion, the position of the field of economics in Iran should be revived.

This is an old issue in Iran. I remember when Martyr (Mohammad Ali) Rajaei became prime minister, I was working at the Central Bank of Iran. He told me at the time that there were many good engineers and teachers in Iran, but there was no good economist who could be named minister of economy.

It is interesting to note that in a country like the United States, this is not the case at all, and it so happens that high-ranking people have often studied either economics or law. I think there is a need to change the attitude in this field in Iran as well. At the same time, the training of human resources should be on the agenda. I remember when I was working at the CBI, a number of diploma students with GPAs above 18 took the banks entrance exam and were selected for scholarships at the universities of Cambridge, Oxford and Harvard. Although some of these people left Iran some returned and took some significant steps. Such measures must now be taken to train manpower in the field of economic diplomacy. I emphasize that the forces recruited by the Ministry of Foreign Affairs must be trained and also use the existing experiences.


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  March 2021
No. 96