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Challenges Persist One Year After Iran Nuclear Deal Signed

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U.S. Secretary of State John Kerry talks with Iranian Foreign Minister Mohammad Javad Zarif (R) after the International Atomic Energy Agency (IAEA) verified that Iran has met all conditions under the nuclear deal, in Vienna, Austria, 16 January 2016. Photo Kevin Lamarque

On 14 July 2015, representatives of the permanent members of the United Nations Security Council – China, France, Russia, the US and the UK plus Germany (P5+1) – reached a landmark agreement with Iran in Vienna, Austria to curb the Islamic republic’s nuclear activities. The nuclear deal was based on a basic give-and-take principle. In exchange for Iran agreeing to intrusive international inspections and monitoring, and limits on its enrichment and heavy water capacity, the P5+1 would respect Iran’s right to nuclear enrichment and remove all nuclear-related sanctions.

By ‘implementation day’ of the Joint Comprehensive Plan of Action (JCPOA) on 16 January, Iran had followed through on all of its commitments, reducing its enriched uranium stockpile by 98%, capping its number of centrifuges enriching uranium to 6,000, modifying its heavy water reactor and implementing strict surveillance measures, among other commitments verified by the International Atomic Energy Agency.

However, the future of this quid pro quo is under threat. Foreign business leaders have descended on Iran this year, eager to jump-start deals worth billions of dollars as international sanctions against Tehran are lifted. But the promise made to the Iranian people – economic growth on a scale that would change their lives – has yet to materialize, and Iran has yet to derive the expected benefits, especially since US financial and banking sanctions have prevented Iran from repatriating its much-hyped frozen oil revenues held at banks abroad. For Iran to retrieve this money, much of which was denominated in US dollars, requires the foreign banks to conduct dollar-clearing transactions for Iran, which they are hesitant to do for fear of running afoul of US regulations that prohibit dollar dealings with Iranian firms. According to US Secretary of State John Kerry, Iran has so far been able to repatriate only $3 billion of its $55 billion to $100 billion in funds frozen abroad.

Adding insult to injury, the US Supreme Court recently ruled that almost $2 billion worth of frozen Iranian assets can be turned over to families of American victims of a 1983 Beirut bombing. Iran’s centrist and pragmatic president, Hassan Rouhani, called the decision a “continuation of hostilities against Iran” and a “flagrant theft and a legal disgrace”.

Among other US steps that have been seen as provocative by Iran were the changes to the Visa Waiver Program (VWP), which bars nationals of Iran, Iraq, Sudan and Syria, as well as nationals of VWP countries who have travelled to these countries in the past five years, from visa-free entry to the United States. Iran views such measures as discouraging business people and tourists.

During an address to workers in Tehran on 25 April, Supreme Leader Ayatollah Ali Khamenei accused the US of undermining its nuclear deal with Iran. “On paper the United States allows foreign banks to deal with Iran, but in practice they create Iranophobia so no one does business with Iran,” Reuters reported Khamenei as saying. “The United States creates disruptions and then asks us afterwards: ‘Why are you suspicious?’” Khamenei added.

That being said, there is still reason to hope that the hurdles of the deal will be overcome and Iran will reap the benefits it is due from sanctions relief. Secretary of State Kerry and Foreign Minister Zarif met twice in late April to discuss how to resolve these problems. Kerry said after the meetings: “The United States is not standing in the way and will not stand in the way of business that is permitted with Iran since the [nuclear deal] took effect.” He added: “We’ve lifted our nuclear-related sanctions as we committed to do and there are now opportunities for foreign banks to do business with Iran. Unfortunately, there seems to be some confusion among foreign banks and we want to try to clarify that as much as we can.”

Meanwhile, there are powerful forces in American politics that seek to intensify US-Iran enmity and put the two countries back on the path to (cold) war. These interest groups are doing everything in their power to undermine the landmark diplomatic agreement and hold strong sway over Congress, which is pushing for over a dozen new sanctions against Iran. A last-minute fight over a Republican effort to undercut the Iran nuclear deal and scuttle US plans to buy Iranian ‘heavy water’ – which will help Iran meet the terms of the deal – threatened to derail the appropriations process in the US Senate. Republican Senator Tom Cotton of Arkansas offered an amendment to the energy and water bill to restrict the purchase.

Besides, a new US president will take office in January 2017, and all of the current candidates are likely to be harder on Iran than President Barack Obama, according to US analysts. In his foreign policy speech on 25 April, Donald Trump described the Iran deal as “disastrous”, saying that the deal, “like so many of our worst agreements, is the result of not being willing to leave the table”. He added that the US has “given the store away simply by sitting down…with a committed enemy of the US and the world’s prime state sponsor of terrorism, when Iran was actively fuelling anti-American jihadists, calling for death to America, holding American hostages, threatening the annihilation of Israel, persecuting its own people, and developing nuclear power and ballistic missiles in violation of international law”.

Has Iran’s Attitude to the West changed since Nuclear Deal?

The US administration has hinted that the nuclear deal will help Iranian “moderates” in their power struggle with hardliners, but the outcome of Iran’s opaque internal power struggle is wholly unpredictable, according to analysts. President Rouhani is the smiling face of the Iranian state, but Ayatollah Ali Khamenei, Iran’s supreme leader, remains the implacable kingpin of the country’s Islamic revolution. Recent parliamentary elections have, however, strengthened Rouhani’s position.

In addition, practices by Iran’s Islamic Revolutionary Guard Corps (IRGC), which controls Tehran’s nuclear programme and ballistic missile force and has repeatedly challenged US naval forces in the Persian Gulf since the nuclear agreement was reached, remain unchanged. IRGC vessels launched rockets within 1,500 yards of the carrier Harry S. Truman near the Strait of Hormuz in late December. In January 2016, it flew drones over US warships and detained and humiliated ten American sailors who had strayed into Iranian waters.

US critics of the deal believe that the way to encourage the emergence of a more moderate leadership in Iran is not to appease pragmatic factions but to penalize and frustrate the plots of hardliners. They argue that the major beneficiaries of the many trade deals signed between Iran and foreign powers since sanctions were lifted have been giant state-owned Iranian enterprises, not the smaller private companies that might have an interest in a genuine opening to the West.