Iran's nuclear deal: separating political dreams from economic realities

Published December 16th, 2013 - 07:41 GMT
“The talk about the impact of lifting the sanctions after the recent nuclear deal is very premature, because the pertinent laws need special decrees to be passed,"
“The talk about the impact of lifting the sanctions after the recent nuclear deal is very premature, because the pertinent laws need special decrees to be passed,"

Less than a month after Iran and the P5+1 countries reached a deal over the latter’s nuclear program, the Iranian people and many international stakeholders are still waiting for economic sanctions on Iran to be lifted.

It is still early to speak about the impact of the November 24 nuclear interim agreement reached in Geneva on lifting economic sanctions on Iran. For one thing, according to a number of economic experts in the Islamic Republic, any move in this direction would require months, if not years to pan out, and we should not expect an immediate and comprehensive impact in the short term.

Nevertheless, some politicians in Iran believe otherwise. They reckon that the nuclear deal will have unprecedented positive effects. One such politician is Mansour Haqiqat Pour, deputy chairman of the Committee on National Security and Foreign Policy in the Islamic Consultative Assembly of Iran.

Haqiqat Pour said, “The Geneva agreement is a bright horizon for Iran and all countries of the world, because those who were advancing an ‘Iran-phobia’ were defeated,” adding, “relations between Iran, and the West and the Arab countries will return to rationalism and logic.”

After the talks in Geneva, some regional officials, such as Turkey's Foreign Minister Ahmet Davutoglu and UAE Foreign Minister Abdullah bin Zayed al-Nahyan visited Tehran. Meanwhile, Iranian Foreign Minister Mohammed Javad Zarif visited Kuwait and the UAE. According to Haqiqat Pour, “Bilateral relations between Iran, regional countries, and the countries of the world will develop steadily as part of the positive results of the Geneva agreement.”

Former Iranian President Akbar Hashemi Rafsanjani plans to visit Saudi Arabia and meet with Saudi officials as well, led by King Abdullah bin Abdul-Aziz. This, in addition to improved relations between Iran and the rest of the world, Pour said, promises good tidings for the region and the world. Pour also said that Saudi Arabia is an influential country, and with growing bilateral cooperation between Iran and the kingdom, many disputes in the region and the world can begin to be resolved.

Pour said that in accordance with the Geneva agreement, some sanctions are supposed to be lifted. With the continuation of this trend, he argued, “Iranian-Western relations will become more logical and realistic, because many countries are interested in forging economic ties with Iran, especially in oil and energy.”

In the opinion of MP Haqiqat Pour, “Many buyers of Iranian oil have problems related to payment, but after the Geneva agreement, we see that many of these problems have been resolved.”

“Sanctions on trading in gold and precious metals have been lifted, and the banking sector will gain access to outside banks. Some Tajik and Turkish banks have already been allowed to deal with the Iranian side,” he added.

But opinions among politicians and economists on this matter differ to some extent. Iranian banking expert Inayat Fahandej, who worked for years as branch manager at Iranian banks in Arab countries, said, “Being unable to transfer money and suspended cooperation with foreign banks are among the most prominent problems for the Iranian banking sector in the current circumstances.”

Fahandej continued, “The talk about the impact of lifting the sanctions after the recent nuclear deal is very premature, because the pertinent laws need special decrees to be passed, and it will take a long time before they can be implemented.” He then added, “Iraq, even after 10 years of the US invasion, continues to be affected by the sanctions imposed upon it, especially in the banking sector. Furthermore, we cannot expect sanctions on Iran to be lifted overnight. We have to wait because such issues take time more than anything else.”

“In addition,” Fahandej maintained, “some international entities profit greatly from the sanctions, given that there is a black market in which goods that the private and public sectors need in Iran are sold. These foreign gangs influence international resolutions and are among the main obstacles to lifting economic sanctions on Iran.”

The Iranian aviation sector was also among the sectors significantly affected by economic sanctions against the country. Yet the impact has not been completely negative, as some experts and engineers in the national carrier Iran Air assert.

Mohsen Atapour, an Iranian aviation expert, worked for years in aircraft maintenance and repair in Iran. He said, “True, the aviation sector is not a homegrown industry in Iran and was widely affected by the sanctions. But the creativity of Iranian engineers meant that many problems and crises were averted in this area.”

Atapour went on to say that the aviation sector in Iran has lived through very tough circumstances, but did not stop functioning even for a day because those in charge at Iran Air were able to procure spare parts from informal sources at higher prices in order to repair the aircrafts and keep them in service.

The Iranian aviation expert continued, “In recent years, the sanctions did not allow us to transport airplanes to Europe for repairs, forcing us to try to repair them at home, even if at a higher cost. So we can say that the sanctions gave us additional strengths in this area, which is something positive for us.”

Of course, the nuclear deal will not spell immediate relief for Iranian aviation. In recent days and weeks, there have been no dramatic changes. Nevertheless, if the agreement were to be implemented, we will probably see a lot of development in the Iranian aviation sector. For one thing, the sector will need to acquire a number of new aircrafts to meet demand at home.

Transfer of funds is also among the most important problems facing Iran Air, because the carrier’s offices abroad need access to banking services in order to continue operating, and also to purchase fuel from various airports around the world. The sector is waiting for this problem to be resolved as sanctions are lifted on Iranian aviation.

Despite these challenging obstacles, planes in Iran have been able to take off at Iran’s airports safely throughout years of sanctions, thanks to the efforts of Iranian experts in repairing and maintaining aircrafts to high standards.

In the maritime and shipping industries, things are somewhat different. The shipping industry in Iran is one of the largest of its kind in the region. According to shipping expert Hussein Mirsadeghi, who for years served as director of the office of the National Shipping Company of Iran in Tunisia and Libya, the sanctions have had a positive impact on the Iranian shipping sector.

After sanctions on Iran were tightened, especially in recent months, almost all international shipping companies suspended their Iran operations. Mirsadeghi said, “For this reason, the National Shipping Company of Iran is currently operating at full capacity.” Accordingly, lifting the sanctions would change little, and the company would continue to work at full capacity, as he said.

Mirsadeghi continued, “The sanctions gave Iran a lot of experience, and helped it learn who is truly a friend and who is a foe. In my opinion, even after the sanctions are lifted, we will not have much confidence in the Europeans and Westerners, because they might impose sanctions on us again in the future.”

In the future, Iranian shipping will focus more on Asia than on Europe and America. Meanwhile, regarding the nuclear deal, the agreement has had a more psychological effect than an actual one. To this psychological effect one may attribute, for example, the gains made by the Iranian rial against the dollar.

At any rate, it seems that reality as politicians see it is somewhat different from reality as economists see it. According to most economic experts, the road to the complete lifting of sanctions will be long.

Lebanon Benefits From the Lifting of Sanctions

Lebanon is in dire need of more electricity. Sanctions have prevented Iran from supplying Lebanon with electricity in recent years, so as the sanctions are lifted, Lebanon could benefit from bilateral cooperation in this area.

As is known, Lebanon and Iran had agreed for the latter to export 1,000 megawatts of electric power to Lebanon, to be produced on Lebanese territory. But the sanctions blocked the implementation of this agreement. After the Geneva deal, Lebanese officials welcomed the breakthrough and the move to lift some sanctions. A few days ago, talks were held between the Lebanese side and a delegation from the Iranian Ministry of Energy on the subject of electricity.


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