Bridging the gulf: why we need to build links with Iran

Iran offers great potential for Australian business following the lifting of sanctions, but ignorance about the country could result in lost opportunities, says management expert Associate Professor Bernard McKenna.

A favourite moment during my recent trip to Iran was at the closing conference dinner. As I shared a table with 12 female students, we exchanged ideas about our cultures and they spoke frankly of what they wanted in life in terms of career and family, and how proud they were of their county without being insular.

Before I left Australia, almost everyone I spoke to had tried to talk me out of going to Iran. However during the seven days I spent touring the country and addressing business leaders and academics, I was truly amazed by the generosity of the people, and the funky Western orientation of the under 35s, the country’s stability and its readiness to re-engage globally.

One young man laughed when I said my hotel blocked Facebook. “We easily get around that,” he said. TV satellite dishes are banned; yet they are clearly visible on many middle-class apartments.  This is a country that will take off post-sanctions, I believe.

Iran’s potential in the region is similar to Germany’s current role in Europe. Both countries have a population of around 80 million and a sound infrastructure. They are well educated, technologically advanced, politically stable, and provide public services in health, education and welfare for their people.

Iran is currently the second largest economy in the Middle East and North Africa (MENA) region after Saudi Arabia, with GDP estimated at US$D 406 billion in 2014. However, after the sanctions, it should gradually become the largest economy in the region, and will remain so for the foreseeable future.

There are three reasons for this. Firstly, they have world-class scientists, engineers and medical researchers. Secondly, more than half the population are under 40. They are well educated and quite Western oriented.

Thirdly, Iran is an amazingly resilient country. Having to survive the sanctions period forced it to become much more self-reliant. For example, in the airline industry, it was forced to develop high quality aircraft maintenance skills because it was unable to renew its fleet at sufficient levels. Losing one million young men 35 years ago in the Iran-Iraq War also built a steely resolve. 

Iran is one of the most misunderstood countries in the world. For example, it is a safe country to travel in. This is because it is well policed without being overt, extremist groups are prohibited, and its people are honest and courteous. The most active policing I observed was on the highways to enforce speed limits. Very few police wear side-arms so common in the west.
While the political administration is still deeply conservative, the vibrancy of the educated class, especially the younger ones, is unmistakeable. Because they are able to access Western news and Western culture every day, they are politically savvy. They want to maintain the best traditions of Persia and Iran, but adapt them to their needs without necessarily incorporating some of the negative western values that come with that.

This is best seen in the role of Iranian women. Although all women must wear either a full chador or a manteau and scarf — this varies by city — it would be wrong to assume that they are not strong participants in business, education, and craft.

In a Tabriz university, veiled women demonstrated their exquisite filigree silver work to me, adeptly using tools in a workshop that we might associate more with men in the west. The Director of the Industrial Management Institute, an independent body which hosted my visit, was a woman.

At an individual level, Persians are exceptionally generous people. While speaking to one young man, I commented on the lovely topaz ring he was wearing. He immediately took it off and offered it to me! I learnt after some time to restrict my compliments because I would usually find the object beautifully wrapped as a present for me the next day.

It would be wilfully stupid to rush into Iran as though it were the last frontier. Respect and humility should characterise any relationship with Iranians. They are well educated, thoughtful, and positive. By learning and listening before proposing anything, your respect and humility will be rewarded.

Iran is deeply proud of its Persian heritage: it is one of the cradles of Western civilisation. This is the country that developed science, mathematics and philosophy to levels that exceeded the ancient Greeks. This heritage is evident today in the intensely competitive university entrance system.

For example, construction of Persepolis, one of eight UNESCO World Heritage sites, began in 518 BCE under King Darius the Great who made Parsa the new capital of the Persian Empire. It is far more impressive than the Acropolis in terms of its size and preservation.

Iran’s potential to exploit cultural tourism is very good and it is already gearing up, with some magnificent six-star hotels such as the Shiraz Hotel. The food is attractive and beautifully presented. Staff are polite and front desk staff are multilingual. Getting to sites is easy… by taxi. A 90-kilometre round trip to the spectacular cave houses of Kandovan cost AUD$30.

A major problem for Iran is, paradoxically, its abundance of very cheap energy. It holds the world’s fourth largest oil reserves and the largest natural gas reserves while its nuclear plants, which began under the Shah of Iran in the 1970s, generate domestic power. This has been a point of contention in the recent sanctions negotiations.

Without wishing to simplify very complex geo-politics, I would say that the West needs to understand Iran’s proud history of technical achievement in maintaining a nuclear industry, although the concern about a nuclear armed state in this region is also understandable. In any case, an energy hungry world that also faces catastrophic climate change effects would be a better focus for potential collaboration.  

Australian academic and business expertise would be welcome in Iran. Medical research, one of Australia’s big achievers, is an obvious area of collaboration. The University of Queensland already has strong medical and engineering research collaboration with Iran, although this has diminished recently because of the sanctions.

My impression is that they are aware that their business schools are not as impressive as their science and technology schools, and that they wish to quickly reach Western standards of research excellence while also adapting Western concepts to an Iranian context. Because infrastructure, including energy, must expand to assist economic growth, Australian research and investment could be well directed there.

Iranian business schools need expertise in corporate governance, marketing, finance and banking. It’s a well-kept secret that there is serious Iranian money funding Middle Eastern business including Dubai. Unless Iran imposes strong fiduciary and prudential guidelines, its banking and finance industry could undermine its economic growth.

Iran’s management institutes also expressed strong interest in developing methods to better translate research to production, and in developing organisational team culture, which tends to be too competitive and individualistic at the moment.

Australian businesses and business schools need to take Iran seriously, forget the stereotypes, and develop strong relationships with a creative and generous people.


Bernard McKenna is an Associate Professor in Management at UQ Business School. He teaches and researches in communication, organisations, and leadership. His major research area is wisdom.

Last updated:
27 February 2019