Iran Internally Stable, Safe for Foreign Investment: Finnish Minister

Pointing to the exceptional status Iran enjoys in terms of political stability in a volatile Middle East region, Mykkanen highlighted the growing interest among foreign companies, including Finnish businesses to invest in Iran.

“I think we are prepared to see Iran as an internally stable state in the future as well,” said Mykkanen in an interview with Tasnim last month, during a visit to Iranian capital, Tehran, as part of a large business delegation headed by Finnish President Sauli Niinisto.   

The Finnish president arrived in Tehran on October 27 and met with senior Iranian officials, including Leader of the Islamic Revolution Ayatollah Seyed Ali Khamenei and President Hassan Rouhani. The two countries signed four memoranda of understanding (MoUs) in the fields of energy, communications, finance and investment.

In the interview with Tasnim, the full text of which has been provided below, Mykkanen discussed different issues including his meetings with senior officials in Iran, execution of the MoUs and prospects for future cooperation between Tehran and Helsinki.  

Tasnim: Who did you meet here, and what were the achievements of your official visit to Tehran?

Mykkanen: Thank you. I am very happy that I had the opportunity to be the part of our delegation. With my president we are very happy that we can be part of opening the relations to Iran.

The meetings (were) with my colleagues from Iran especially Minister of Energy, Minister of Industry, Mining and Trade and the Deputy Minister of Transportation and the Minister of Communications and tele sectors; these three main meetings were very effective and successful and I must honestly say that I am impressed of the professionalism of your sector ministers that they are actually senior experts of their sectors, and not only like general politicians, as in Europe usually. They have a long history of their own sectors and it helps because, then, we can discuss about concrete projects, concrete factories, or whatever; and then that’s where we should actually achieve the concrete results.

And actually as I was participating (in) the meeting of the President of Finland and the Supreme Leader of Iran just one hour ago, both of the heads of the states stressed the importance that we must execute the memorandums of understanding that I signed today in the presidential palace. If there is only memos and papers, that’s nothing, we must have results. Concrete investment projects where there is a Finnish counterpart helping Iran to be modernized - with your huge investment challenges here.

Tasnim:  How do see the grounds for expanding the economic relations between the two countries? And how many MoUs were signed?

Mykkanen: Four memorandums were signed. So the most important one is actually that which refers to financing. It was singed between our state financing corporation Finnvera and the state authority of Iran when it comes to financing arrangements. And this memorandum is paving the way for our Finnish Finnvera, a Finnish financial institution, to be able to issue guarantees- bank guarantees- for exporters. And that’s basically a necessary step in order for us to be able to participate in the process, too. That’s definitely one of the most important [memorandums]. Then we also singed three other MoUs. One about energy cooperation. I can mention that actually we, already, during today’s meeting with the Minister of Energy, agreed about starting three working groups to execute the memorandum of understanding. Then, one about waste processing, and waste-to-energy; so this is because we were told that there are large -scale challenges in growing waste processing and we have know-how to change them into energy; and then there’s one about financial issues when it comes to and energy sector.  And also when it comes to ICT-- well obviously, basically the main flagship company from Finland is NOKIA, which is nowadays concentrating on networks and so this is not anymore mobile phones. We sell very high speed networks - 4G, 5G- and so which is able to be used in new kind of applications in the mobile phones, and it seems that we have quite good possibilities to increase cooptation between Iran’s leading Telecom operators and our Nokia.

Then it comes to Minister of Industry, we also discussed the important question of investments to Iran; so I also see possibilities in that field. There are several companies within our business delegation who are planning investing in Iran and there is also some other companies that I know from Finland that are seeking possibilities to invest also in Iran.

Tasnim:  If you want to prioritize those areas, which section or sectors are more interesting to the Finnish side in terms of getting engaged and to the business with Iran? [Among] those areas you mentioned, which is more important?

Mykkanen: Well it would be hard to choose just one because there is a few which are equally important but I will say that the telecommunications, energy productions and then wood and forest. These three are the mains.

Tasnim: And do you have something special of the biggest achievement of the trip or the MoUs, in terms of its volume?

Mykkanen: Well the most important thing is to enable banking relations to be normalized and, in this sense, the memorandum referring to Finnvera and financing issues is the most important one. And also there is representative of Bank of Finland having a meeting with Central Bank of Iran and giving information on certain clearance issues which I’m trying to work back at home that Nordic banks which operating in Finland would speed up the process to open payment systems towards Iran.

Tasnim:  You know this is one of the areas where Iran has a bit of a problem with other countries- I mean banking transactions and how banking transactions happen. Will it be done directly or via some European banks, major banks or small banks and do you think such things are done smoothly or there could be some problems in the short term?

Mykkanen: Yes. Well that’s a puzzle of several levels, these payment challenges; a Rubik’s cube; but first of all European banks are interconnected in the Europe euro system so basically it will always happen through European central banking system. But Basically the question here is that whether the commercial banks - was it Finnish, Swedish or German one- they are confident enough that if they transfer the payment they won’t get problems in their compliance about US Treasury sues or some anti-money-laundering rules, etc; and I think that the hindrances are mostly because of, reluctance to invest enough in know-your-customer procedures --that if you don’t know very well the Iranian counterparts, you are not sure who is actually the owner for example; and then you are reluctant on taking the risk and it’s easier to say OK  we are waiting. Then there are a few cases which are executed safely without problems; then also banks get more relaxed and start to operate more normally. But this is definitely something that I will talk to our bankers back home that we will hopefully now get information from Central Bank of Iran on their procedure for making the, know-your-customer procedure easier because we understood there is a department who helps in this know-your-customer procedure, so that they could give some assurances about Iranian companies that 'OK! This is the ownership structure', and to be the neutral part who says OK this is the fact; and if we get that information, let’s say from Iranian Central Bank to the Finnish banks, then they will be relaxed to put the payments through; So there is a practical work which we have to do both in Finland and in Iran but I think this payment problem will be solved within months.

Tasnim: And so at the moment it has not been resolved?

Mykkanen: There are some banks who are more ready to go forward even if it’s hard to obtain all the information. But there are banks who are reluctant and would like to wait and see the clearance of the situation. So it’s a bit mixed situation. But there are already banks who are doing payments also in Finland and I think that several other banks will also come on board once we make a bit more clearance to the environment which I depicted.

Tasnim: And assuring the ownership of the company or knowing the customer, that will be done directly between only Iran and Finland? I mean bilaterally?

Mykkanen: No it’s the commercial bank who must know was it Finnish or…

Tasnim: No other third party on third country is involved in the process?

Mykkanen: Not necessarily; of course, in the event it comes to large deals then there is kind of consultation with OFAC, which is US Treasury instruction body, but the normal procedure must be that there is a Finnish commercial bank which fills in their own compliance blanket, and then if they are confident and the information is assured then they can proceed.

Tasnim: And you referred to the instructions by the US treasury. After the nuclear deal there were instructions or the guidelines in term of how to do business with Iran. I have been interviewing some European officials. They have been sometimes saying that those guidelines or instructions are not transparent or clear enough to help us to do business with Iran. What is your evaluation of those guidelines? Do you think that they are transparent enough?

Mykkanen: Well I think Finnish companies, mostly those who have a serious appetite of getting involved in Iran they feel they understand the regulations. So that it’s not the problem so much. It’s more about this financial rules and which is then a different problem and I’ve not heard that this would be a major problem for those who have serious talks.

Tasnim: Is Finland, like some other countries, also waiting to see what the implications of US recent elections will be on doing business with Iran?

Mykkanen: No we are not waiting. We are here today and not next month; but when it comes to commercial relations of course, it’s always up to the companies themselves; some companies might be rationally thinking that let’s not work on this month but let’s work on December if things seem to go smoothly. Because obviously, there is a rational risk that if for some reasons- was it US election or was it some other reason- if for some reasons the tensions between the US and Iran would emerge again then of course probably the environment for doing business would be worsened. Of course this is also one reason for certain slowness of the development that it must be stable, so that, businesses are confident that it will be continued. And there is many -- of course, before you make significant investments or engagements you want to see that it seems to be really happening. 

Tasnim: And in this volatile situation in the international arena, how do you assure Finnish companies to come to Iran and to do business with Iran? And there is one argument that may be Boeing, the American company, doing business with Iran, it can have a positive effect on European companies to work with Iran. Do you see such thing a valid argument?

Mykkanen: Yes. Definitely I think that the Boeing deal will be a positive signal for Finnish companies, as well, because then they see that actually a large US company, very closely related to US government as well, is in position to close deal with Iran and there must be financial flows which then settled directly to the United States. As I  already mentioned  over all, solving this puzzle is going to be happening in  a way like,  there is a bottle neck  and when some large deal is put through the bottle neck, and then after that, it’s easier to go .

Tasnim: Are Finnish companies still afraid of US punishments or do you think the appetite is more?

Mykkanen: I think they understand that sanctions have been lifted, in that sense that if they obey the limits- where you can go and where you can’t go then there shouldn’t be any problems. I think that the fact that actually almost hundred companies joined our delegation last December, led by my predecessor minister, and now there are fifteen leading large Finnish corporations in this presidential visit, so it shows that there is interest; they wouldn’t be here if they would be afraid of doing business. They are not tourists here.

Tasnim: Apart from supplying manufacture projects or some engineering services, are there any investment plans or suggestions in Iran by Finnish corporations to be done?

Mykkanen: As I already mentioned yes. First of all, I must say that, all Finnish companies, which would sell large-scale projects to Iran, let’s say for example that if Wartsila heat and power plant. So then basically, if it is a significant project, there’ve always been hundreds of local people working on the project, both, on the side of Wartsila and on the side of subcontractors. So always it’s an investment also when it comes to exports. But on the other hand, there is also companies in this delegation who are planning investing in Iran and I also know some Finnish industrial producers who are not this time with us but are planning to make investments in Iran and it’s important then that we have enough stability of, let’s say, VAT refunding systems and tax systems and rule of law, intellectual property rights; these are important segments that businesses must be confident of the reliability of Iranian court system to be able to invest here.

Tasnim: How much do you think the trade volume between the two countries will increase in a certain period of time in future?

Mykkanen: Tenfold easily. Because we have other trade partners of similar size in this Near East region, where we have a ten times larger volumes than that of Iran and I also believe that Iranian economy will grow faster than it has grown now, when economy is opening for international relations. So, really we have a large potential in increasing our trade.

Tasnim: Do you have any numbers in mind regarding this increase?

Mykkanen: Well, five hundred million Euros exports to Iran will be possible which is about ten times larger than that of last year.

Tasnim: What other areas of development is Finland interested to work with Iran; such as environmental issues, climate change, tourism and science and technology? Are these areas also available for cooperation?

Mykkanen: Yes. For sure. Especially environmental issues which are important for us in Finland when it comes to energy production or waste treatment or water treatment which we have a world-class leading solutions; and then science and education and there are already now a few educational institutions working here in Tehran, for example Aalto University’s executive education which is training business directors here. In Finland the education system is overall strong; And strongly appreciated internationally and we are now trying to internationalize it more, so there are institutions who sell for example services in educating teachers or educating engineers.

Tasnim: Finland has a successful record in knowledge-based economy. And in this area do you think the two countries will share experiences? Is Finland ready to share its experiences with Iran?

Mykkanen: Definitely. I refer to what I just said; education cooperation would be strongly potential as well. This time our delegation is gathered from industrial businesses but next time we could come with our education sector.

Tasnim: The extremism in the region has made a situation where everything in volatile. It’s not a stable situation in the region. What kind of effect does it have on doing business with European countries in general or Finnish companies? Not just regarding Iran but regarding the region? Because you said that you have many partners in the region to do business with.

Mykkanen: Well, of course, overall it’s sure that the readiness to invest in Middle East is not at its best highs because people tend to feel that it’s a nervous region and there are uprisings and instability. But I think that at least so far, Finnish business leaders, they tend to think that Iran is an exception; that Iran is stable in this sense; that risks when it comes to Iran, they are more tied to the international relations between states, as mentioned between Iran and the United States. But, it’s not that much felt that the risks that we see in Afghanistan or Iraq or Syria would be related to the internal situation of Iran. I think we are prepared to see Iran as an internally stable state in the future as well.

Tasnim: And because the region is a little bit unstable, do you have anything, I mean the Finnish business sector to maybe shift its focus or attention from this area to a different area, maybe to Asia or other parts?

Mykkanen: As I said I think that in this sense, the interest that we have seen today from Finland and already earlier delegations shows – and everything I hear from Finland – that actually there is growing interest about Iran. If we would try to gather a business delegation for example to Baghdad it would have not been interesting because most companies are not interested but when it comes to Iran there is a growing interest. And on the other hand, there is now very good markets—there is very rare currently good markets where you look at, because for Finnish companies for example the Russian market has been diminishing during past five years quite strongly because of the economic problems of Russia, Europe is growing almost zero, so no growth; the United States is growing and is actually gaining more and more share of Finnish exports, and now is more important than Russia. And then actually countries like Iran could be new emerging fast growing markets and are interesting for us.

Tasnim: You talked about what Finnish companies can do in Iran. Is there anything which is vice-versa or for the Iranian side to work. Was anything discussed in this regard that Iranian businesses does something in Finland?

Mykkanen: Well, we are open of course for vise-versa cooperation of Iranian companies to Finland. We had a discussion about energy product sales of Iranian gas and oil companies. So, that’s something that our companies are looking to negotiate with Iranian counterparts. We didn’t talk so much about concrete investments from Iran to Finland, we would be of course very happy to talk about such investments because Finnish economy is also in need of new investments and new businesses as well.

Tasnim: And are there any future trips planned from Finland to Iran or Iran to Finland?

Mykkanen: Well, I hope very much that and I’m sure that there will be. We invited Minister of Energy of Iran to visit Finland first half of next year and hopefully that will be the next visit from Iran to Finland.

Tasnim: Do you have any specific points about the past couple of days and the meetings?

Mykkanen: I think that I refer to that point actually that the meetings with the ministers were very effective and I really appreciate their professionals in the sectors that they hold and they got strong -like- instructions from heads of the state to go forward with the execution of the Memorandums of Understanding, and I really look forward to help in that as well. So hopefully we will just manage to execute common projects within next six months.

Tasnim: And for example in the MoUs you said in the energy or the Telecommunication or the finance or industry, are they about short term or long term cooperation?

Mykkanen: They have to be followed by concrete working groups which put companies together to execute concrete investments already next year. If nothing happens next year, then the papers will be forgotten. So, that’s a test for this and I was happy to know this that the common understanding on both sides that we need results and not just papers.