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Last Updated: Wednesday, 12 May, 2004, 14:38 GMT 15:38 UK
Airport debacle is 'bad for Iran'
Passengers from Dubai at Imam Khomeini airport on Saturday
The airport has been three decades in the making
The forced closure of Iran's foreign-owned new airport is a big blow to investor confidence in the country, analysts have said.

Named after the late Ayatollah Ruhollah Khomeini, the new Tehran airport was built and expected to be run by Turkish and Austrian consortium TAV.

Yet the Iranian army closed it down on Saturday, citing that its foreign ownership was a security concern.

The army also criticised what it said were TAV's business links with Israel.

As a result of the closure, airlines have been forced to re-route flights to Tehran's congested Mehrabad airport, which the $475m new facility, 30 miles south of the city, was meant to replace.

"It's a bit of a joke... you can't give out a contract and then do this," said Dr Ali Ansari, lecturer in Iranian studies at Exeter University and fellow at the Royal Institute of International Affairs.

Contract difficulties

"It's clearly going to have a negative impact on investor confidence," he says.

"There are potentially lucrative deals [in Iran] but the legal framework is lacking and until the government sorts that out, foreign companies aren't going to be interested in the way the government would like them to be."

File photo of Ayatollah Khomeini
The airport's name is symbolic for some Iranians

The Iranian authorities declared the closure illegal and threatened legal action against "irresponsible officials".

But Iran's armed forces said the decision to entrust the airport's operation to a foreign company "threatens the security of the country as well as its dignity".

"Unfortunately airport officials took this untimely decision without taking into account either security constraints or the Supreme Council law on national security banning the use of foreign forces," a statement said.

The government has reportedly promised the consortium compensation; TAV said it had invested $15m in the deal.

The affair was "not a good sign", given the proximity of the 2005 presidential elections, particularly as conservatives forced out reformists in February's parliamentary poll, a Western diplomat told AFP news agency.

Concerns would be heightened if the incident was repeated, given Iran's investment climate is currently "moderately positive", said a locally-based economist.

Meanwhile, Turkey said trade ties with Iran could suffer.

"Our economic relations could be influenced negatively by this situation," a spokesman for the Turkish foreign ministry Namik Tan told correspondents on Wednesday.

He said talks were being held concerning the issue.

In 2003, Turkey's imports from Iran - made up of mainly oil and gas - amounted to $1.8bn while exports totalled $524m.

Iran 'red-faced'

The Iranian press were damning of the affair.

"The nation is left red-faced on the international scene," said the pro-reform Iran Daily.

We have been very successful in managing to portray our system as incompetent, mismanaged and lacking in professionalism
Iran Daily
"Can't we even do a simple thing such as putting an airport into operation without getting bogged down in useless controversy or complicating the issue?" it asked.

"Shouldn't those in charge be concerned how the rest of the world looks at us at a time when we are simultaneously striving hard to enter the global market and wooing foreign investment."

"Unfortunately in the case of the IKIA (Imam Khomeini International Airport) we have been very successful in managing to portray our system as incompetent, mismanaged and lacking in professionalism."

But according to Dr Zhand Shakibi, lecturer in the Department of Government at the London School of Economics, foreign investors will still view Iran with interest.

"Conservatives want investment in the country, especially in the energy field... which they control," he said.

"The airport was a bit different, especially given its name... For them, Khomeini was against imperialism and foreign investment."

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