Safer Than It Seems; World markets have weathered random acts of terror.(Cover Story)

Byline: Sassan Ghahramani, Ghahramani is chief operating officer at Medley Global Advisers in New York.

I was anxious when I arrived at Tehran's Mehrabad International Airport recently and handed my passport to a surprisingly young female Customs agent. How would she react to the fact that my father had worked for the former shah's government? And to me, an Americanized emigre returning for the first time in 28 years? After a few hushed whispers with her supervisor, the agent merely stamped my passport and waved me through with a smile and a "Welcome back, sir."

This is a country of many surprises. Consider: in December Iran issued its second eurobond since the 1979 revolution. International investors snapped up the 375 million euro offering. Since then, news from Iran has focused on an earthquake, an ugly election that led to mass parliamentary resignations and new revelations about Iran's nuclear-weapons programs. Yet on the eve of the election, Japan announced a $2 billion agreement to develop Iran's Azadegan oilfields--the largest deal since the revolution. And those bonds? "We still get phone calls from investors looking to snap them up," says a European bond trader. "But no one wants to sell them."

Investors worldwide are not ignoring political risk. But they are becoming more sophisticated in analyzing exactly what it means to their investments, not just in Iran but other political trouble spots like Indonesia and Colombia. While Western politicians and journalists obsess over the war on terror and the clash with Islam, international investors care more about stable economic governance. For them, the biggest shock came with the financial crises of the 1990s--from Mexico to Southeast Asia, Russia, Argentina and Brazil. The years since have seen the rise of the cautious technocrat, who believes in neither the rigid markets of controlled economies nor the unfettered capitalism of the 1990s. Today's markets like what they see.

China is the most prominent example. In 2002 it sailed through a generational transition as new leaders vowed to continue pragmatic economic policies. Chinese Communist Party chiefs and Politburo members now discuss things like the capitalization of the banking sector and the pace of initial public offerings. Money is now flowing into China fast, creating fears of a bubble. Malaysia has undergone a similar transition, engineered by former prime minister Mahathir Mohamad, whose successors now openly debate lifting the ideologically charged economic controls he imposed five years ago.

In country after country, markets have weathered ...