The Political economy of Iran and Germany Relations: The Case of Foreign Investment

Today, foreign investment is one of the most sophisticated financing sources in the world. Most of the countries are seeking to attract these resources by creating political and legal reforms. Political factors are very influential on the attraction of foreign investment. In early 2001, by adoption of Foreign Investment Protection Act, Iran has been struggling to attract foreign investment in the country. In this regard, Germany was one of the most important partner and target country for Iran. During 1997 to 2017, there were some fluctuation in trend of German investment into Iran, due to various political components.. From 1997 to 2004 when the political tensions were at the lowest level, the German investment in Iran were at the best position. The question raised here is concerned with factor which served as a basis for the political economy of German FDI in Iran. Hypothetically, the fluctuations in trend of German investment in Iran is a sequent of various components including US policy, Middle Eastern peace processes, terrorism and human rights. The method of research is explanatory with referring to statistics and analyzing the trend of German investments in last 20 years. We will consider the influence of political component on the FDI of German companies during the presidency of Khatami, Ahmadinejad and Rouhani especially after the US withdraws from the JCPOA.