How Shifts in Public Policy Impact Economic Opportunities

Alfons Diekmann GmbH, is standing at check-in counter 40 at Imam Khomeini Airport early in the morning, together with 98 other representatives of small and medium-sized companies from Lower Saxony, Germany.  They include logistics and waste disposal experts, leading manufacturers of turbofans, plaster products, port cranes, special paints and pumping equipment, dump trucks and reel slitters, and now, at 2:30 a.m., they want the same thing: to get into Iran, at last.

After years of talks, the agreement on the Iranian nuclear program was signed in Vienna on July 14, 2015, paving the way for an end to the embargo against Iran.

These are relatively vague prospects. Nevertheless, when the business owners from Lower Saxony go to breakfast the next morning, they quickly realize that they are not alone.

The various delegations seem to be sizing each other up, eager to determine which competitors are there, who has already established relationships with Iranians and who has quietly taken up positions.

Alfons Diekmann is sitting off to the side. He may have started out as an electrician, but he made an important realization during that time: “Every negative has its positive side.”

The embargo is a case in point, because it made the Iranians realize that not every German product could be replaced with a Chinese replica.

The German businessmen, dubbed “The Mittelstand from Lower-Saxonie” by their Iranian hosts, are taken in busses to the spice bazaar and the “JoJo” brewery, which makes non-alcoholic beer. They also visit a plant that builds Peugeot cars under license. In the meantime, the minister meets with high-level Iranian politicians.

These small and medium-sized business owners from Lower Saxony are just as worldly as tattooed and bearded executives from Silicon Valley, they just happen to wear light-colored socks..

Mammut produces large numbers of trucks, cars and cranes, builds hotels throughout the Persian Gulf region and manufactures telephone systems and precast concrete components. According to Ferdows, half of Dubai was made using parts from his company. In Iran, the embargo kept the competition off Mammut’s back. The delegation is impressed, especially when they look out the window and see workers playing soccer during their lunch break.

The Asians took advantage of the embargo.  Their goods are often cheaper than German goods, but they are also not as well made.  The business owners take every opportunity to emphasize how special the relationship between Iran and Germany has always been. Goethe treasured the Persian poet Hafiz and wrote a collection of poems called the “West-Eastern Divan.” There is a large Iranian community in Hamburg, and many academics in hospitals and at universities have Iranian names. Many Iranians built their careers at German universities. The story of Germany and Iran is a Romeo-and-Juliet tale, much like Germany’s relationship with Russia: They belong together, but their relationship is forbidden, and yet they yearn for it to be allowed.

Of course there has been trade between Germany and Iran, trade that has included businesses from Lower Saxony. It’s just that containers took a little longer to reach their destination. The shortest distance between two points was no longer a straight line. Reliable partners in China and Dubai were needed. And the money eventually arrived, even if it had to be transported in suitcases.

On the last day of their trip, the members of the delegation receive a message on their smartphones, and for a moment the reality of life in Germany catches up to them. The tageszeitung newspaper has published a story on defense companies from Lower Saxony that have made their way to Tehran. The article points out that the Iranian regime funds Hamas, and that the occasional promising “human resource” is executed by public hanging.

When the subject is broached, people are quick to point out that their consciences are clean — a bit too vehemently for it to be entirely convincing.

By the end of the delegation’s four-day trip, the minister has handed out about a dozen Pelikan fountain pens with the Lower Saxony crest, and he discussed human rights openly. It was a successful trip, and the businessmen from Lower Saxony even managed to make it to Iran before Ilse Aigner and the Bavarians.

The men make one last trip to the bazaar. Now it feels like they’re in Iran again.

Some sense a “German way of thinking” among his contacts. And Prof. Issendorff is still impressed by the “brilliance of these 25-year-old female engineers.”  Iran may be the place to go.

Apple: Jobs to Cook.  Managing a Company

Scientists at Indiana University have created a highly efficient biomaterial that catalyzes the formation of hydrogen — one half of the “holy grail” of splitting H2O to make hydrogen and oxygen for fueling cheap and efficient cars that run on water.

A modified enzyme that gains strength from being protected within the protein shell — or “capsid” — of a bacterial virus, this new material is 150 times more efficient than the unaltered form of the enzyme.

“Essentially, we’ve taken a virus’s ability to self-assemble myriad genetic building blocks and incorporated a very fragile and sensitive enzyme with the remarkable property of taking in protons and spitting out hydrogen gas,” said Trevor Douglas, the Earl Blough Professor of Chemistry in the IU Bloomington College of Arts and Sciences’ Department of Chemistry, who led the study. “The end result is a virus-like particle that behaves the same as a highly sophisticated material that catalyzes the production of hydrogen.”

Other IU scientists who contributed to the research were Megan C. Thielges, an assistant professor of chemistry; Ethan J. Edwards, a Ph.D. student; and Paul C. Jordan, a postdoctoral researcher at Alios BioPharma, who was an IU Ph.D. student at the time of the study.

The genetic material used to create the enzyme, hydrogenase, is produced by two genes from the common bacteria Escherichia coli, inserted inside the protective capsid using methods previously developed by these IU scientists. The genes, hyaA and hyaB, are two genes in E. coli that encode key subunits of the hydrogenase enzyme. The capsid comes from the bacterial virus known as bacteriophage P22.

The resulting biomaterial, called “P22-Hyd,” is not only more efficient than the unaltered enzyme but also is produced through a simple fermentation process at room temperature.

The material is potentially far less expensive and more environmentally friendly to produce than other materials currently used to create fuel cells. The costly and rare metal platinum, for example, is commonly used to catalyze hydrogen as fuel in products such as high-end concept cars.

“This material is comparable to platinum, except it’s truly renewable,” Douglas said. “You don’t need to mine it; you can create it at room temperature on a massive scale using fermentation technology; it’s biodegradable. It’s a very green process to make a very high-end sustainable material.”

In addition, P22-Hyd both breaks the chemical bonds of water to create hydrogen and also works in reverse to recombine hydrogen and oxygen to generate power. “The reaction runs both ways — it can be used either as a hydrogen production catalyst or as a fuel cell catalyst,” Douglas said.

The form of hydrogenase is one of three occurring in nature: di-iron (FeFe)-, iron-only (Fe-only)- and nitrogen-iron (NiFe)-hydrogenase. The third form was selected for the new material due to its ability to easily integrate into biomaterials and tolerate exposure to oxygen.

NiFe-hydrogenase also gains significantly greater resistance upon encapsulation to breakdown from chemicals in the environment, and it retains the ability to catalyze at room temperature. Unaltered NiFe-hydrogenase, by contrast, is highly susceptible to destruction from chemicals in the environment and breaks down at temperatures above room temperature — both of which make the unprotected enzyme a poor choice for use in manufacturing and commercial products such as cars.

These sensitivities are “some of the key reasons enzymes haven’t previously lived up to their promise in technology,” Douglas said. Another is their difficulty to produce.

“No one’s ever had a way to create a large enough amount of this hydrogenase despite its incredible potential for biofuel production. But now we’ve got a method to stabilize and produce high quantities of the material — and enormous increases in efficiency,” he said.

The development is highly significant according to Seung-Wuk Lee, professor of bioengineering at the University of California-Berkeley, who was not a part of the study.

“Douglas’ group has been leading protein- or virus-based nanomaterial development for the last two decades. This is a new pioneering work to produce green and clean fuels to tackle the real-world energy problem,” said Lee.

Beyond the new study, Douglas and his colleagues continue to craft P22-Hyd into an ideal ingredient for hydrogen power by investigating ways to activate a catalytic reaction with sunlight, as opposed to introducing elections using laboratory methods.

“Incorporating this material into a solar-powered system is the next step,” Douglas said.

Big Banks Getting Back in the Business of Making Loans to Small Businesses in US?

Here’s good news for entrepreneurs: Big banks are becoming a tad more generous with small-business loans.

Major banks and institutional lenders have been approving small-business loans at higher rates, while the pace is holding steady at alternative lenders, according to a report this week from Biz2Credit, an online marketplace for small-business loans.

At banks with more than $10 billion in assets and at institutional lenders — including credit funds, insurance companies and nonbank financial institutions — approval rates on small-business loan applications climbed in June, to their highest level since Biz2Credit began tracking them in 2011, the report says.

On the other hand, approval rates at alternative lenders and credit unions were mostly flat. The report was based on an analysis of 1,000 loan applications on the Biz2Credit platform.

“We’ve come a long way,” Biz2Credit Chief Executive Rohit Arora said in a statement. “These are the best numbers for big bank lending since the recession. … It is a good time for entrepreneurs in search of capital.”

This trend is significant because big banks and lenders pulled back from the small-business market during the financial crisis. Alternative lenders stepped in to fill the void in small-business financing, helping create a vibrant, growing market.

That market has started to draw the attention of traditional banks, but Sam Hodges, founder of alternative lender Funding Circle, says big financing companies are, for the most part, still wary of lending to small businesses.

Molly Otter, chief investment officer at Lighter Capital, another alternative lender, says the Biz2Credit report paints an upbeat picture.

“Banks becoming more aggressive in their approvals — I think that is great for business owners.  The more options they have,  the better off their business is going to be, and banks are currently the cheapest form of debt there is.”

• Big banks approved 22.1% of small-business loan requests in June, up slightly from May and the eighth consecutive monthly increase. By comparison, at the lowest point in June 2011, big banks approved only 8.9% of small-business loan applications.
• Institutional lenders approved 61.4% of small-business loan applications, which is slightly higher than the rate at alternative lenders. Arora says institutional lenders are now mainstream players in small-business loans and are replacing cash advance companies, whose interest rates he calls “simply too high.”
• Credit unions approved 43% of small-business loans applications, flat from the previous month. While considered a good option for lower-cost loans, credit unions “continue to lag in small business lending,” Arora says.