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Easing Sanctions Could Launch A Tech Boom In Iran

Iranians surf the web in an internet cafe at a shopping center, in central Tehran, Iran, Sunday, Jan. 6, 2013. Iran’s police chief says the Islamic Republic is developing new software to control social networking sites. Iran’s leaders have placed a top priority on efforts to stamp out online dissent and fight the co-called “soft war” against perceived Western influence via the Internet, which remains highly filtered in Iran but blocks are often bypassed by the country’s educated and tech-savvy population. CREDIT: AP
Iranians surf the web in an internet cafe at a shopping center, in central Tehran, Iran, Sunday, Jan. 6, 2013. Iran’s police chief says the Islamic Republic is developing new software to control social networking sites. Iran’s leaders have placed a top priority on efforts to stamp out online dissent and fight the co-called “soft war” against perceived Western influence via the Internet, which remains highly filtered in Iran but blocks are often bypassed by the country’s educated and tech-savvy population. CREDIT: AP

Iranians have become major fans of the HBO series Silcon Valley, and the country’s burgeoning tech sector boasts offices festooned with foosball tables and videogame consoles that rival those in the show’s namesake tech hub.

In Iran, “Startup fever is everywhere,” Mohsen Malayeri, the head of a Tehran-based startup incubator called Avatech Accelerator, told NPR.

Strapped by decades of sanctions and hamstrung by some of the most extensive censorship laws in the world, Iran is an unlikely place for a tech boom — and yet some of Iran’s tech startups are raking in hundreds of millions of dollars a year. Those earnings may only grow if the United States and other Western countries ease up on financial restrictions against Iran, which is an exciting prospect to both Iranian entrepreneurs and would-be foreign investors.

Even if the process of opening up could be as slow and complicated as the nuclear negotiations process that will make it possible, it’s enough to stir up a lot of excitement.

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“It is going to become very popular year by year,” Sotoodeh Adibi, a co-founder of a virtual wallet company said as she practiced her pitch to venture capitalists at a recent tech conference in Istanbul. Beyond the familiar appeal of a PayPal-like program is the fact that Iranians are effectively barred from international commerce. Iranians have no access to international credit cards due to sanctions, and Iranian banks are prohibited from making international transactions with the United States or Europe. While a final deal might change that fact, doing so will take time. As the two founders of Zarin Pal found out, investors are not willing to risk stepping afoul international sanctions, no matter how great the payoff might be.

“I think it’ll be a slow process getting back into Iran, just because there is a lot of suspicion across the countries,” Darrell West of the Center for Technology Innovation at the Brookings Institution told the National Journal. “But I think if sanctions are lifted, that could be a very valuable opportunity for the tech sector.”

In a country of at least 75 million people, half of whom are under the age of 24, the opportunity to grow interest in tech seems even more valuable. The fact that so many of them are highly educated and have already shown a hunger for the latest technology only sweetens the prospects.

“Iran has millions of Internet users, many of whom are young and tech savvy, so they are certainly appealing to companies around the world as potential customers,” Danielle Kehl, of New America’s Open Technology Institute told ThinkProgress.

Imagine trying to start a web company only to find out that you can’t access a range of cutting edge tools as well as basics like certain Google and Adobe products.

Still, Iran’s tech industry has had to overcome serious hurdles. Iran’s internet censorship apparatus that has been called “among the most extensive in the world.” Iranians who want to access the internet often have to go through proxy-servers to reach sites blocked by government sectors.

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“The sanctions create a lot of challenges for Iran’s tech sector and for ordinary users living in Iran,” Kehl noted. “Many of the tools that developers and techies would want to use are built by Western companies, which means they often aren’t available in Iran. Imagine trying to start a web company only to find out that you can’t access a range of cutting edge tools as well as basics like certain Google and Adobe products.”

Many of the biggest tech companies in the country emerged to meet needs that Iran’s didn’t have because of the dual of sanctions — but doing so has meant overcoming the barriers of censorship. But Iranian tech enthusiasts have managed to develop new websites — and to cash in on them.

Iran’s biggest tech business started when, after months of painstaking research, two brothers bought a DSLR camera. Unable to buy one from a site like Amazon because of sanctions, and since there were no e-commerce sites in Iran at the time, they ended up buying one from a shop in Tehran — only to find that the lens had been swapped for an inferior one.

And so, the two brothers used their savings to start Iran’s first e-commerce site, Digikala, which is now receives 3,000 orders a day and is valued at $150 million.

Other top tech sites in Iran have similar backstories.

With a government block on YouTube and the inability to pay to stream movies from other sites because of sanctions, Iranians had to create their own site to watch movies — and make sure to abide by laws on sharing content deemed “inappropriate.” So Aparat was born — and now offers more than a million movies for Iranians to watch.

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Café Bazaar is an app store that offers more than 25,000 apps, both Iranian and international. It was created since Iranians struggled to purchase apps from Google Play or the Apple Store because of restrictions on international banking transactions.

The restrictions have forced Iranian tech entrepreneurs to get creative — and to create, often from scratch, the digital products they think the country lacks.

“The restrictions have actually been in our favor,” Ali Tehraninasr, of Saba, the parent company of the video-streaming site Aparat.

Without access to international e-commerce and with some of the world’s most popular sites blocked, Iranians have had a wide open playing field to develop new tech products — a business that’s been not just well-received, but extremely lucrative.

Danielle Kehl of New America isn’t as quick to call the restrictions an opportunity, however.

“It’s possible that the reduction in competition could make a little more room for companies in the domestic market, but I don’t know if I would call that a positive effect,” she said in an email to ThinkProgress.

While a nuclear deal may not end Iranian internet restrictions, many are hopeful that opening up economically will be a boon to business — especially for the tech industry which relies on specialized equipment.

“If you’re looking for a technology, if you’re looking for a device, if you want to buy a server, if you really need investment from other countries, yes in these parts sanctions are very bad,” Shayan Shalileh, who started Iran Web Festival, said.

“Iran is open for business,” the country’s President Hassan Rouhani has said repeatedly over the last couple of years.   Secretary State John Kerry, who has led negotiations with Iran for the United States, refuted that point in March, but now, it could only be a matter of time.

In 2012, Café Bazaar co-founder and Chief Executive Hessam Armandehi asked his counterpart at Google, Eric Schmidt, if he could do anything to ease restrictions against Iranians.

“The answer is, no, I’m sorry, because it’s a U.S. law issue,” Schmidt said, then added, that one can feel imprisoned without bandwidth.

But Iran does have bandwidth — and with a shift in U.S. law, Google and other companies might be able to dip into it.