How Uncertainty Over the Nuclear Deal Is Strangling Iran's Economy
The protests erupting across numerous cities in Iran in December and January seemed, on the surface, to have little to do with the country's politics and foreign policy. "These were economic protests," wrote Vali Nasr in The Atlantic. "They reflected deep-seated frustration with economic stagnation, mismanagement and corruption, and growing income inequality along with conspicuous concentration of wealth at the top."
These problems are hardly new in Iran, which has long struggled to overcome the weight of economic sanctions imposed on the country due to its pursuit of a nuclear program. In 2015, Iran agreed to curtail its nuclear activities in exchange for sanctions relief that could kickstart its long-dormant economy.
These benefits have largely not materialized. And while corruption and mismanagement bear some of the blame, President Donald Trump's repeated vows to withdraw the U.S. from the Iran Nuclear Deal have also had a pronounced chilling effect on Iran's economy.
"Plenty of international companies have expressed strong interest in investing in the Iranian market — they've even signed agreements," said Trita Parsi, founder of the National Iranian American Council (NIAC) and a frequent commenter on Iran. "But they cannot get financing. That's because none of the banks are willing to provide it for fear that Donald Trump will kill the deal."
Since emerging on the American political scene in 2015, Trump has expressed vehement opposition to the JCPOA, which he has frequently dismissed as the "worst deal ever." On January 12, he announced he would certify the deal "for the last time" and gave France, Germany, and the U.K., three co-signatories, four months to "improve" its terms. For banks considering large-scale investments that may not pay off for some years, this uncertainty provides an incentive to stay out of Iran.
"These banks want security and assurance," said Parsi. "They're not charities."
Absent increased foreign investment, Iran is unlikely to experience the economic benefits promised when it signed the deal, increasing the likelihood that Tehran will reconsider its commitment to the JCPOA. In February, Deputy Foreign Minister Abbas Araghchi told an audience at London's Chatham House that Iran cannot remain in the deal if it "does not profit from it."
Watch the complete video of Parsi's appearance at Asia Society: