Can business leaders help Iran become a "good country?"

Can business leaders help Iran become a "good country?"

Is Iran a good country? This important question is being asked of business leaders as they try to justify market entry plans to board members, shareholders, and the general public. As Iran’s post-sanctions economic opening gains momentum, the question is gaining a new urgency. Critics of the Iran Deal are doubling down on the claim that investing in Iran will further enable the “bad behavior” they see as characteristic of the Iranian state. For the most part, major multinationals have brushed aside criticism, noting that their activities in Iran are consistent with the sanctions relief granted as part of the JCPOA nuclear deal. But the question of whether Iran is a good country remains, as does the question as to whether there exists any obligation for Iranian and international business leaders to try and make Iran a better country.

Simon Anholt has made it his mission to understand which countries are good and what “good” really means in this context.  Having spent twenty years advising heads of state and governments around the world, Anholt developed a specific formulation of what makes a “good country.” In a popular TEDTalk with nearly four million views, he describes how earning the mantle of a “good country” requires a “government and people who care… and who think outwards instead of only thinking selfishly.”

To examine what it means to be a country that cares, Anholt developed the Good Country Index, which uses data from organizations like the United Nations and the World Bank, weighted by GDP, in order to measure the relative outward contributions of 163 countries across 35 indicators. In 2016, Iran was ranked a dismal 136, between Zimbabwe and the Ivory Coast. By way of comparison, Sweden ranks first in the index, the United States ranks at 20, Turkey at 56, and Saudi Arabia at 89. Why does Iran compare so poorly, particularly for a country of its considerable wealth and proven talent? What can be done to improve its standing?

Anholt notes that Iran has a low ranking, “simply because it is not doing very much in the areas which we have been able to find reliable measures for.” He sees two explanations here. On the one hand, Iran has willfully downplayed any obligation to contribute to the global community, positing economic and cultural self-sufficiency as a kind of resistance to foreign aggression. On the other hand, the global community isolated Iran, necessarily impacting its ability to make contributions towards a greater good. Anholt concedes that when being “subjected to a tough regime of sanctions as Iran has been, it basically negates the ability to do good. This is honestly a very serious punishment.”

The seriousness of the punishment relates to its self-reinforcing nature. Iran was sanctioned because it was seen to be a “bad” country, allegedly fomenting conflict and undermining the international order—which has bearing on the “International Peace and Security” category included in the index. But as a result of being sanctioned, Iran’s ability to contribute to other key categories such as “Prosperity and Equality,” “Health and Wellbeing,” “Science and Technology,” “Culture,” and “Planet and Climate” was diminished. Iran’s contribution to global trade fell dramatically. Pharmaceutical exports suffered greatly. Participation in global science and technology research was stymied. Cultural exchanges were made impracticable. Efforts to tackle climate degradation were hampered. Worst of all, the Iranian state seemed to stop caring about its diminished means to engage with the world, adopting instead the language of a lonely, but determined, resistance.

At the same time, Anholt sensibly explains, “There is a risk under sanctions regime that people can start blaming that for everything. One thing I am not saying is that without sanctions Iran would be in the Top 10 of the Good Country Index. It wouldn’t be very high up. In the end, countries either have or don’t have a habit of cooperation and collaboration internationally.”

Overall, Iran’s low ranking reflects both local and global culture. Longstanding antagonism between Iran and the West warped incentives for collaboration. This antagonism is an example of what Anholt sees as the “simple diagnosis of what is wrong with the world.” In the face of 21st century challenges and the realities of globalization, countries continue to operate like “17th century nation states” with behaviors akin to “self-interested and competing tribes.” Anholt contends that today’s global challenges, which include issues such as economic crises, climate change, armed conflict, public health and so forth, “are beyond the capability of any individual nation to tackle. So clearly cooperation, not competition, has got to be the order of the day.”

Such a description of global challenges and the need for cooperation are commonly given lip service by politicians and business leaders seeking to demonstrate their conscientiousness.  But Iran’s recent history offers an encouraging example of how cooperation can be achieved in a very consequential way.

The JCOPA nuclear deal between Iran and the P5+1 was agreed largely because of the “win-win” philosophy adopted by the negotiators. Underlying this philosophy was the important realization made by all parties that their negotiating positions needed to take into account not only what was in the best interests of their own citizens, but also in the interests of the global community. This realization is an example of what Anholt calls the “dual mandate” and it is the fundamental cultural value he believes lies at the heart of a good country. The dual mandate posits that “anyone in positions of power and responsibility, including business leaders, have got to understand that they are responsible not only for their own people and their own territory but also every man woman and child on the earth and every square inch of the earth and the air above it.”

For a policymaker or business leader, such a mandate might come across as so expansive as to be almost banal. But Anholt is a practical person. He is adamant that adopting the dual mandate is feasible because “cooperation and competition are mutually beneficial and not mutually exclusive” in this worldview. For example, while relations between the US and Iran remain contentious, implementation of the nuclear deal has emerged as an area of limited collaboration. Moreover, in the framework of the Good Country Index, countries can compete for power and influence, but are encouraged to do so by supporting the greatest good. 

Observers of relations between Iran and the West will note that at a political level, the barriers to further collaboration remain high. Western governments and the Iranian state have a mutual suspicion that is unlikely to give way to broad collaboration. But the triumph of the nuclear deal was the setting in motion of a series of political, economic, and cultural processes, which can help Iran to slowly become a better country, at least as measured by the Good Country Index.

Anholt makes it clear that countries can rise in the Good Country index relatively quickly. The measures are taken each year, and new policies such as lower tariffs, improved visa rules, and greater charitable giving can all boost a country’s ranking. But while the actual outward contributions of countries are relatively easy to improve, fixing the reputation of a country takes much longer. He believes that "[even] if a country changes dramatically, it may well be a decade or a generation for the world to get the message.”

Prior to the Good Country Index, Anholt developed a first-of-its-kind index called the Nation Brands Index. Published in partnership with GfK, a world-leader in market research, the index measures the global brand capital of major countries. In discussing Iran, Anholt notes an important relationship between the Good Country Index and the Nation Brands Index. Just as Iran ranks low in the Good Country Index, “Iran has always ranked 50 out of 50 countries in the Nation Brand Index.”

Anholt sees Iran’s negative reputation as both a product of falling contributions to the global community as measured in the Good Country Index, but also as “predominantly the consequence of anti-Iranian propaganda.” He “hesitates to sound like a conspiracy theorist” but feels the consequences of how Iran has been portrayed is clearly reflected in the Country Brand Index. “The picture of Iran I get back from the nation brands index around the world is almost comically different from the Iran that many know.”

For Iran’s policymakers, business leaders, and their international peers, the question is how to slowly and carefully resuscitate Iran’s reputation. While plenty of countries that have questionable reputations remain destinations for trade and investment, for Iran, a different standard has emerged. Many of the world’s largest companies, and particularly banks, have been hesitant to engage with Iran commercially, due to concerns over reputation risk. In effect, improving Iran’s global image will be fundamental to truly achieving the promise of sanctions relief.

Looking to this challenge, Anholt believes that the business sector “will play an important role in this effort because they, above anyone else, should understand the direct causal relation between national behavior, national image, corporate image, and commercial outcomes like export performance, talent recruitment, and tourism.”

As Anholt explains, the Good Country project is “all about is trying to move from a culture that is fundamentally competitive to one that is fundamentally collaborative.” The inspiration comes in part from the world of business and the manner in which industrial groups began to work on better cooperation in the 1970's, developing the concept of “cooptition.” While companies remained essentially competitive, they developed the capacity to work together to develop new technologies or solve shared challenges when it was in the benefit of all parties. While business forged ahead with this new culture of collaboration, Anholt believes that “the public sector has been lagging generations behind.”

Anholt argues that “if you are struggling economically, it is essential to have a good national image” so as to attract trade and investment. This may explain regular statements from Iranian officials about the desirability and preparedness of Iran’s marketplace for foreign investors. But such proclamations will make little difference. “The only way to earn a good national image is to take corporate social responsibility to the national level to be regarded as a country that does good as a matter of course,” notes Anholt. The commitment to repairing Iran’s reputation must not be superficial. It would be easy to try and counteract the “propaganda” that makes Iran look bad with propaganda that paints a positive image. But to affect lasting change, Iran needs to earn a better reputation by being a better country.

This is why the Good Country Index is potentially instructive. It identifies the key areas of focus by which Iran’s government and its business community can focus their commitment beyond their own borders.  For business leaders, the clarity of the model should be empowering. So long as the company can confidently assert its commitment to supporting Iran’s outward contributions to the world, the near-term reputational concerns should be minimal. Engagement of the country becomes part of a larger trajectory towards excellence.

Altering Iran’s course will be difficult, but alerting the course of its companies and their international partners will be easier. Anholt points to the potential for Iranian consumers to drive the change from a grassroots level by making demands of both local and foreign companies whose products and services they buy. Anholt thinks the demands is simple, “They should say, ‘We don’t want you to be selfish, we want you to be good.’” 

Why is infrastructure investment critical for Iran's post-sanctions success?

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