Reaching a nuclear deal will benefit Iran’s economy, region

The Biden administration believes the time is running out for negotiations on reining in Iran's nuclear program.

 Fireworks are set off on the occasion of the 43rd anniversary of the Islamic Revolution around Azadi Tower in Tehran, Iran, February 10, 2022.  (photo credit: MAJID ASGARIPOUR/WANA (WEST ASIA NEWS AGENCY) VIA REUTERS)
Fireworks are set off on the occasion of the 43rd anniversary of the Islamic Revolution around Azadi Tower in Tehran, Iran, February 10, 2022.

The Biden administration believes time is running out for negotiations on reining in Iran's nuclear program. 

The White House believes it has until the end of February to rescue the 2015 Iran nuclear agreement, known as the Joint Comprehensive Plan of Action, but if that doesn't happen the US will have to shift its approach and resort to more aggressive efforts to prevent Tehran from obtaining a nuclear weapon, CNN reported, citing multiple administration officials.

At the same time, Iran’s new conservative administration is hoping to repair ties with its regional neighbors and the international community.

Muhammad Sahimi, professor of Chemical Engineering and Materials Science at the University of Southern California, told The Media Line that reaching a deal on Iran's nuclear program for a second time will help Iran's oil sector.

"It will benefit the region as a whole. It will also enable Iran to resume, or expand, its oil exports, and other products, such as petrochemicals. With Iran's oil returning to the international market, the oil price will go down," he said. 

 Iranian clerics set fire to American flag during the 43rd anniversary of the Islamic Revolution in Tehran, Iran, February 11, 2022.  (credit: MAJID ASGARIPOUR/WANA (WEST ASIA NEWS AGENCY) VIA REUTERS) Iranian clerics set fire to American flag during the 43rd anniversary of the Islamic Revolution in Tehran, Iran, February 11, 2022. (credit: MAJID ASGARIPOUR/WANA (WEST ASIA NEWS AGENCY) VIA REUTERS)

Sahimi says an agreement will require Iran’s government to address its flailing economy, since it will have more resources coming into its treasury.

"It will not be able to blame everything on the sanctions anymore, since mismanagement and deep corruption have contributed greatly to the terrible state of Iran’s economy, but the ruling elite only blames the sanctions," he said.

As a result of the crippling sanctions, the economy is teetering on the verge of collapse. Unemployment has skyrocketed, and Tehran's ability to export oil is hampered by strict sanctions, which has crushed its economy.

"Obviously the US and its allies have been trying to starve the Iranian population. The ‘maximum pressure’ campaign is directed at women, children and ordinary citizens. The United States and its allies want people to suffer as much as possible," Professor Mohammad Marandi, head of the American Studies Department at the University of Tehran, told The Media Line.

In an attempt to bring Iran to its knees, Washington targeted the Islamic Republic’s economy with hundreds of sanctions.

All those sanctions are still enforced by the current administration of US President Joe Biden.

Marandi added that reaching an agreement and lifting the sanctions will help the economy and help improve the lives of ordinary Iranians.

"People have died because of shortages of certain medicines, goods became more difficult to get. Also, machines and supplies [are] needed to produce Iranian medicines. It wrecked many families by destroying their livelihood," he said.

The administration of former President Donald Trump unilaterally pulled the US out of the Iran nuclear deal in 2018 and re-imposed crippling sanctions on the Islamic Republic, including cutting its banks off from the Society for Worldwide Interbank Financial Telecommunication – SWIFT, the global financial messaging system.

Trump followed the US withdrawal from the landmark deal with a “maximum pressure” campaign, with its objective being to exert pressure on Tehran to get back to the nuclear negotiating table to rewrite the agreement.

"Iran's economy is expected to improve and expand, which will improve employment and will benefit ordinary Iranians. It will also help stabilize the rate of exchange between Iran's rial and major foreign currencies, which will help control the high inflation and lower it," Sahimi said.

In 2020, the White House imposed a series of other punitive steps, by slapping sanctions designations against Iranian banks, effectively cutting off the country’s financial sector from the rest of the global economy.

If US sanctions are lifted, some $100 million will be released to the Islamic Republic.

Houchang Hassan-Yari, a professor of Political Science at the Royal Military College of Canada, told The Media Line that the Islamic Republic is in desperate need of an immediate real job creation plan, industrialization and investment in the country.

"This will not solve the problems of this very ailing economy," Hasan-Yari said. That is because there are structural problems that need to be addressed. 

He says the structural problems have arisen for several reasons. "There's the question of mismanagement and corruption, and that needs to be addressed," he said, adding that the Iranians’ lack of confidence in the political system will hinder the growth of the country’s economy.

"It prevents many Iranians inside the country from investing in the economy," he explained.

The Iranian Parliament Research Center in Tehran revealed this week that the number of Iranians living under the poverty line has increased to 28% so far this year, compared to 18% in 2021.

And the Iranian Statistics Center reported last month that the annual household inflation rate in the country stands at 42.4%.

The report also indicates that prices of major goods like bread, cereals and tobacco also have risen.

"The economy is not producing new jobs and if you look at the most important sector in the country, which is energy, the installations are old and are in desperate need of parts and, in some cases, rebuilding," Hasan-Yari said.

He explains that fear and distrust of the government forced Iranians to invest millions of dollars in the UAE, for example.

"Despite the fact that in the past few years Iranian investors in the UAE have suffered immensely at the hands of the government, it is still a more stable market,” he said. 

Hasan-Yari doubts that the release of the millions of dollars or the financial benefits that come with it reach the pockets of ordinary Iranians.

"I'm not sure if the money that will be returned to the country would help people much. There are several allies that are waiting for the money to start coming in so they can get their share," he said.

Iran’s economy has been steadily shrinking since 2017. Its national currency, the rial, has lost more than half of its value in the past three years, as oil exports fell from roughly 2.5 million barrels per day in 2017 to less than 0.4 million barrels per day in 2020, according to the US Energy Information Administration.

Iran has built up a vast network of proxies through which it wields influence across the Middle East. It has proxies throughout the region in Iraq, Yemen, Syria, Lebanon and the Palestinian territories.

Marandi rejects the term. "Proxies have their own definition, Iran doesn't control them, Iran doesn't dictate terms to them,” he said. 

"First of all, Iran doesn't have proxies, it has allies. Hezbollah is not a proxy, Ansar Allah and the Yemeni government in Sanaa is not a proxy. Nor are the allies that Iran has elsewhere," he asserted.

Marandi insists that Iran has strong ties with its regional allies, despite Tehran's financial difficulties, adding that "US policy in this region is Western disregard for the dignity and sovereignty of the peoples of this region and their support for despots and extremism and engaging in dirty wars and supporting apartheid."

Hasan-Yari disagrees, saying that, since the 1979 revolution, Iran has built a network of allies across the Middle East, and has taken on the responsibility of funding these groups.

"That money should go to the Iranian people," he said.

"Back in 2015 after the signing of the nuclear deal, Hezbollah in Lebanon and other proxies like Hamas and the Islamic Jihad in the Gaza Strip, as well, were extremely happy, because they receive a good chunk of money from Iran," Hasan-Yari said.

He doesn't believe that, once Iran starts exporting oil on a large scale, the financial gains will trickle down to the local markets and help the local economy. He adds that it is the political and military arms of the Islamic Revolution that will gain the most from lifting the sanctions.

"There's no doubt that the IRGC (Iranian Revolutionary Guard Corps) will benefit from the money coming in, so it will be able to finance its operations in the region. It is in control of the nuclear program, and the missile program," he said. 

Sahimi, who has written many articles about Iranian politics, particularly the Iranian nuclear program, believes that inking a deal in Vienna will help push Iran to change its regional policy and help warm up ties with neighboring countries.

Hasan-Yari does not think that a nuclear deal will lower the tension between Iran and the US, saying that Tehran will do anything to preserve the existence of the regime.

"The money will not calm down the Iranian regime for the simple reason that they believe the duty of the Islamic Republic is to do what it is doing regionally and internationally. They have to support the oppressed, as it says in the constitution," he said. 

For Tehran, Hasan-Yari adds, the oppressed – or mustaadafin in Arabic – are Hezbollah, Hamas, Islamic Jihad, the Houthi, and the Syrian regime.

Hasan-Yari argues that Iran's policy approach will become more aggressive regionally, as it becomes more emboldened than before.

"Its missile program will continue, and you will see more difficulties with its neighbors, more and it will continue to pursue the policy that they have since February 1979," when the shah was overthrown in Iran’s Islamic Revolution.

Iran will mark the 43rd anniversary of the revolution on Friday.  

Hasan-Yari says that, under current Iranian President Ebrahim Raisi, “one cannot expect the IRGC to lower its profile and its intervention in the economy or the political process, nor can we expect the Quds Force to lower its profile in the region unless the US and Iran agree on a sort of grand bargain."

Over the last four decades, successive US administrations tried to contain Tehran’s regional influence with little success.

In 2020, the US State Department estimated that Iran gave Hezbollah $700 million a year. Iran has provided more than $100 million annually to Palestinian groups, including Hamas and Palestinian Islamic Jihad, the State Department reported in 2020. It also alleges that Iran trains, finances and arms the Yemeni Houthi rebels.