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Iran: Investment regulations
The Economist Intelligence Unit estimates that inward direct investment in Iran totalled US$500m in 2004 and decreased to US$280m in 2005. The conservative-dominated Majlis (parliament) elected in February 2004 has taken a hostile stance concerning foreign investment. Conservatives have objected to giving banking, telecommunications, transport and border-control responsibilities to foreign firms.
The Majlis effectively blocked two major foreign-investment deals in 2004 and 2005. Turkey's largest mobile-phone operator, Turkcell, signed a US$3bn contract in September 2004 for Iran's first private mobile-phone network. Iran's armed forces dramatically shut down Tehran's new Imam Khomeini International Airport (IKIA), built and operated by a Turkish-Austrian consortium, Tepe-Akfen-Vie (TAV), at a cost of US$350m, on its opening day, May 8th 2004. The Majlis passed a bill on September 26th 2004 giving itself veto power over both the Turkcell and IKIA deals. The Guardian Council quickly approved the legislation. The Majlis initially tried to give itself power over all such contracts but, in the face of opposition from the Guardian Council, watered down the legislation to just these two contracts.
The Majlis passed legislation on February 15th 2005 lowering Turkcell's share in Irancell to 49% from 70% and increasing Iran's stake from 30% to 51%. Turkcell responded by saying that the Majlis's decision "increases the risks" attached to the project. The bill then went to the Guardian Council, which ruled on March 7th 2005 that the legislation did not go far enough in protecting Iran's national security. The Guardian Council decided that both the armed forces and the Ministry of Intelligence must examine the national security implications of the Turkcell contract and give their views, with the final say resting with the Supreme National Security Council. Iranian authorities announced on October 3rd 2005 that Turkcell was no longer involved in the project and that Iran was negotiating with Mobile Telephone Networks (MTN), a South African mobile operator. On October 16th 2005 Turkcell filed a lawsuit against the Iranian government in a Tehran court and was reportedly seeking US$10bn compensation for damages. On October 23rd 2005 the government officially awarded the foreign-mobile-operator contract to MTN, but Iranian authorities...