Investors determine the riskiness of the investment climate in a target country. They measure country risk. The same thing applies for investments in Iran. Some factors are behind a fear or a feeling of insecurity to invest in Iran, in spite of the fact that in the dire political and security climate in the Middle East, Iran has remained almost the most secure country with political friendliness. This contribution examines the realities and falsehoods behind the feeling of insecurity for investing in Iran.

Country risk refers to the economic, political and business risks unique to a specific country that might result in unexpected investment losses. Some investors often neglect this important first step in the process of international investing. Sometimes these kinds of risks are unexpected and can be an expectation, even if a country has political and economic stability.

An investor might consider two main risk sources. First, economic risk, i.e., a country without stable finance and economy, as a country with stable finances and a stronger economy should provide more reliable investments than a country with weaker finances or an unsound economy. Second, political risk, i.e., political decisions made in a country that might result in an unanticipated loss to investors. Even if a country's economy is strong, if the political climate is unfriendly or becomes unfriendly to outside investors, the country may not be a good candidate for investment.

With all this in mind, there are some factors that might limit or promote foreign investment in a country. First, some measurements for country risk based on sources that are seriously flawed and defective for various reasons such as the information provider or sources' opposition to the target country, which are not trustworthy sources to act on. In other words, the sources of information for country risk are substantially important. Second, the nature of policymaking on foreign investment might work as the driving factor and as incentives directly influencing the preferences of foreign investors. Thus, a country's political structure plays a significant role in this respect. Third, various global and regional crises and geographical and geopolitical parameters affect decision makers and thus investors' measures of country risk.

With regard to these factors, what could be the possible economic and political risks for investors in Iran? Why, despite all the anti-Iranian propaganda, are there still huge numbers of companies that would like and are willing to invest in Iran, particularly in clean and renewable energy? Do these companies not look at the risks or do they measure the country risk for Iran using perfect sources? What generally brings them to Iran? There are at least eight incentives for investing in Iran:

1) Iran is quite rich in fossil fuel resources, but also has comprehensive natural capabilities in clean and renewable energies, such as wind, solar, biomass and geothermal.

2) Iran has started new initiatives to promote infrastructure and has provided opportunities for foreign investors in the field of clean and renewable energies for the past five years. Iran's macro plan consists of the best use of existing fossil fuel resources and promotion of diverse resources of clean and renewable energies to supply huge domestic energy demands.

3) In the sixth development plan, construction of a new 26,000-megawatt power plant is planned, and only 5,000 of the 26,000 megawatts would be produced by construction of wind and solar power plants. Based on the timeline, the 70th government had no interest and believes in producing electricity through renewable resources, but the 80th government started some feasibility studies and allocated budgets. The 90th government implemented the law modifying the consumption pattern, reinforcing the development of infrastructures for renewable resources.

4) The current renewable power plant in Iran is 1 percent of the country's energy basket and is should reach 5,000 megawatt in four years.

5) Pay attention to Iran's rich natural resources, climatic variety, windy areas with excellent wind direction and speed, such as Zaboul with 120 days of constant wind and sometimes 170 days from May 10 to Sept. 21 each year, and the Manjil wind tunnel that extends from Takistan to the Ghazvin desert. Experts in and outside the country believe the governments could have done more by now.

6) Many parts of the country have more than 4-square-meters-per-kilowatt-hour of solar radiation, while solar radiation in EU countries produces 40 percent of the world's solar electricity, but is in fact less than 60 percent of the solar radiation in Iran. Solar energy is a huge advantage to secure energy supply in Iran.

7) While under many years of bone-breaking sanctions, Iran has been bold enough to sign many protocols and made a commitment to reduce greenhouse gasses. The last was the COP 21 Paris International Climate Summit in December 2015. Such commitments also pushed the current government to pass a new bill on the framework for the sixth development plan. This approach has strengthened Iran's status globally in terms of clean and renewable energy initiatives.

8) For the past two years, the Iranian Energy Ministry has introduced a new approach to the development of energy efficiency and clean energy, which has caused a sharp rise in participation by the private sector in Iran to invest in construction of renewable energy power plants. This trend has encouraged foreign investors more than ever. Based on a report, 47 percent of foreign investments in Iran in 2016 focused on clean and renewable energies.

Here are some reasons that might cause investor insecurity in Iran:

1) While investors are waiting to see tangible sustainability in foreign investment regulations and whether the government guarantees the purchase of the produced electricity, the government has not yet been able to fix the real price of fossil fuels for domestic needs to prevent the optimization of fuel consumption and promote the infrastructure for renewables.

2) There are still some sections in society that resist renewable energy. In fact, the amount of fuel savings based on the new regulations for modifying consumption patterns and the cost of energy conversion plus environmental costs are the parameters that the government could have set for the guaranteed price for renewables.

3) Different governments in Iran have followed a taste-based model in management. Where the government stands and where it does not.

The use of clean and renewable energy needs deep understanding and serious government support, besides providing new incentives for domestic and foreign investors. One example is enough to understand why and how Iran is not standing where it should be in terms of clean and renewable energies. The level of solar radiation in Iran is more than in Germany. At the same time, Germany covers an area of about 20 percent of Iran, but the Germans have managed to produce more than 31 percent of their energy from solar radiation and plans to achieve 35 percent of their energy needs from the sun based on the 2020 development plan.

Rouhani's government has pushed the process through the sixth development plan and emphasized the transition from producing fossil fuels to clean and renewable energies, which has been speeded up by the Joint Comprehensive Plan of Action, known commonly as the Iran deal or Iran nuclear deal, but in the meantime, some problems and instability in decision-making has caused dismay and despondency among domestic and foreign investors. Similarly, optimum use of fossil energy sources and an increase in the rate of operation of various sources of clean and renewable energy to meet part of the ever-increasing energy needs of the country are parts of the government macro program. In addition, the Ministry of Energy has facilitated regulations and the investment process. The Energy Ministry has increased the guaranteed purchase of electricity from producers to 20 years and to 30 years if the producer only uses domestic technologies. The ministry has also adopted some major steps to increase the share of renewable energies in the country's energy basket.

From regional and international perspectives, the policies of the world's major energy investors, namely China, the U.S., Russia and India and some EU countries may have significant effects on Iran's decision on clean and renewable energy initiatives. These countries support investments in oil- and gas-driven power production despite serious climate concerns, but have also modernized and expanded their own power sectors and compete in benefiting from the commercialization of huge clean and renewable-based power and energy resources. Of course, in terms of oil supply, the decision by other OPEC members is highly significant. For instance, their decision to reduce production has caused an increase in oil prices. In a similar vein, on Sept. 14, Azerbaijan's largest oil basin, Azeri-Chirag-Guneshli (ACG), informed the energy market that the agreement to end the oil supply in 2024 would be extended until 2050.

Upward and downward trends in the pattern of crude oil and gas prices and the unstained supply and demand of these resources affect the overall policies of Iran in energy fields, and in particular, clean and renewable energy.

To sum up, despite potential opportunities and capacities along with rich resources, issues such as decades of unilaterally imposed sanctions, negligence of the huge capacity for clean and renewable energy resources in vast desert and mountainous areas, mismanagement and the decades-long crisis in its region has hampered the formulation of sustainable investment policies. At the same time, unfortunately, different governments in Iran have followed a taste-based management model and have no or less intention or are limited, for some reasons, to maneuver to formulate sustainable strategies. There is no need to cover up some of the obstacles that might arise from time to time for investors in Iran as the result of mismanagement or taste-based regulations.

However, as an opposing argument, it should not be left unsaid that the nature of some obstacles for foreign investors in Iran are not unsolvable since Iran, especially during the past two decades, has become a hub for hundreds of foreign investors to produce and take their goods and products to emerging and even developed markets by land, sea and air. In addition, investors from China, Turkey, Austria, Germany, Italy, Tajikistan, Afghanistan, Switzerland, Sweden and Ireland in different provinces in Iran are investing in clean, renewable energy. According to a credible source, 47 percent of foreign investment in Iran in 2016 focused on clean and renewable energy. Moreover, the recent move by U.S. President Donald Trump's administration to sink the P5+1 nuclear deal with Iran has not yet cast negative effects on the ongoing projects and the move is believed to be fundamentally flawed.

Iran has remained the most secure and stable country in the region despite facing various pressures from inside and out. Opportunities for foreign investment in Iran in clean and renewable energies overshadow the challenges and obstacles.

* Iranian researcher and writer