Winners and Losers of a post-sanctions Iran

By DR AMIR M KAMEL

January 16, 2016 marked a significant day for the Iranian regime. On this day, aka ‘Implementation Day’, the International Atomic Energy Agency (IAEA), informally known as the United Nation’s (UN) nuclear watchdog, announced that Tehran had ‘completed the necessary preparatory steps to start the implementation of the Joint Comprehensive Plan of Action (JCPOA)’. Under the agreement (signed in July 2015 between Iran and the P5+1), Iran was to scale back its nuclear programme and would  have sanctions levied against it removed. As I noted in a previous post titled Did US Sanctions Succeed In Bringing Iran To The Table?, the JCPOA represented a landmark agreement between Iran and the international community, and was facilitated by the multinational dimension of the deal. As I noted in the post, it was based on my article titled The Political Economy of US-Iranian Relations (2005-2014) which highlights some of the risks associated with the JCPOA. Indeed, these risks highlight some of the winners and losers which have surfaced and the potential to surface as a result of the nuclear agreement being implemented.

The proponents of the deal can be seen as the winners, they do after all stand to gain from its implementation. Within Iran, these include the current administration, headed by the moderate President Hassan Rouhani, and his supporters, as well as the Iranian public who have suffered from the politically motivated economic sanctions. Indeed, the alleviation of the sanctions is set to unlock an estimated $100 billion worth of governmental assets, allow Iran to increase its oil exports and reinvest the accrued benefits into its economy, in addition to the projected benefits in the private and tourism sectors, as well as the benefits of ‘coming out of the cold’ in the political realm. Outside of Iran, this camp also includes the demand side of the market for Iranian goods, from oil to pistachios and Persian carpets. Consequently, the removal of restrictions on Iranian goods has the potential to benefit the population – a key to maintaining stability within the country, as well as the international community security concerns over the threat of a nuclear Iran.

Conversely, the performance of the agreements is met with equal distaste by those who opposed the deal, or the losers. Within Iran, these include the political opposition parties and their supporters (both within the Majlis and outside of it). Particularly, the hard-liner camp which has been sharpening its rhetoric and actions to try and derail the deal. Indeed, the hard-liners have accused the Rouhani Administration of diluting the regime’s dedication to its constitution espoused revolutionary mantra of rejecting foreign interference and influence in domestic affairs. Additionally, criticisims from the political opposition in the US, as well as those who oppose the deal in the Middle East region (e.g. Israel and Saudi Arabia) also have incentive to see the deal go sour.

In the case of Saudi Arabia, Riyadh’s decision to maintain its oil production levels (in order to keep a hold onto its market share) has the knock-on effect of: dissuading and limiting Russia’s profiting from hydrocarbons, alternatives (i.e. states who are perfecting fracking means of extracting energy) and Iran from assuming a portion of the oil market.

As it stands, the stated plans and actions of the JCPOA critics have the potential to unseat the deal. This is significant due to the fact that Rouhani’s promise of alleviating the sanctions is predicated on the notion that the people of Iran will experience improved conditions (in socio-economic terms), through the benefits accrued from being re-introduced into the international economy. Therefore, if the ‘losers’ succeed in continuing to limit and follow through on their threats to deriding the JCPOA, there is a real possibility that the deal to collapse. The potential knock-on effects are also negatively weighted, with respect to the economic prosperity of the country, the level of political isolation (which it has endured on some level since 1979), and of course Iran’s incrementally important role in the fight against DAISH.

Image: US Secretary of State John Kerry holds a bilateral meeting with Iranian Foreign at the UNs Headquarters on the side lines of the 70th Regular Session of the UN General Assembly in New York, on September 26, 2015, courtesy of State Department Photo/ Public Domain.

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