The Electronic Republic

How Sanctions Could Damage Iran's Startup Scene

Inside an Internet service provider in Tehran, February 2011. Caren Firouz / Reuters

Over the past two months, Iranian cyberactivities have moved up the list of grievances against the Islamic Republic. In October, U.S. President Donald Trump warned of Iranian cyberattacks in his speech decertifying the Joint Comprehensive Plan of Action. Less than a month before, the U.S. Treasury sanctioned 11 Iranian entities for “malicious cyber-enabled activity,” and the security company FireEye claimed that a hacker group known as APT33—likely working for the Iranian government—had been conducting cyberattacks against U.S. and Saudi aerospace firms since at least 2013. Likewise, over the course of two weeks between August and September, Apple and Google removed Iranian apps from their online stores, joining a host of other companies that deny services in compliance with U.S. sanctions regulations.

Iranian-sponsored cyberattacks are the sinister side of the tech scene. But there is another side as well, and the same policies that protect U.S. institutions from malicious attacks also prevent the Iranian public from taking advantage of such services as hailing taxis on their phones and ordering clothes and food online. That leaves a gap that Iranian firms are struggling to fill.


The evolution of Iran’s tech startup scene—characterized by fluctuating levels of government support and investor interest—has been complicated. According to last year’s Science, Technology, and Policy Review published by the United Nations Conference on Trade and Development (UNCTAD), the Islamic Republic’s Science, Technology, and Innovation policy has undergone three waves since the 1990s. The first two, from 1990–2000 and 2000–2010, involved improvements in higher education and scientific publications, and an increase in the number of research labs and efforts to develop new technologies. The most recent wave, according to UNCTAD, is a “transition towards innovation and a knowledge-based economy” characterized by new regulations to support knowledge-based firms, increase competition, and protect intellectual property rights.

Iran’s shift to a “knowledge-based economy”—though still in its nascent stages—combined with a lack of competition resulting from international sanctions, has allowed entrepreneurial

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