A man reads the news of the November 9 US election in Tehran. Many Iranians hope that President Biden will lift the sanctions imposed on Iran by his predecessor. Anadolu Agency / Anadolu Agency via Getty Images Hide caption
Anadolu Agency / Anadolu Agency via Getty Images
Anadolu Agency / Anadolu Agency via Getty Images
One of President Biden’s election promises – the revival of the 2015 Iranian nuclear deal – stands still. Iran has ramped up its nuclear program and is demanding that Biden lift the economic sanctions that are being imposed to deprive the regime of cash.
The nuclear deal between the world powers and Iran was based on the lifting of crippling international sanctions – such as blocking Iranian oil sales in the billions – in return for Iran curtailing its nuclear program.
Ardavan Amir-Aslani, an Iranian-French lawyer who advises foreign companies looking to do business in Iran, recalls that when the deal was signed, there was great optimism that investment opportunities would be created there.
“The bet was that through these investment opportunities, Iran’s return to civilized diplomatic society, Iran’s return to financial markets,” he says, the hope, with all the newfound prosperity, “was that Iran would change its behavior dramatically would. “”
“That was the bet. Trump didn’t allow it,” he added.
In 2018, President Donald Trump pulled the US out of the nuclear deal and again imposed sanctions on Iran. Amir-Aslani, who represented French automakers Citroën and Peugeot at the time, said the impact was immediate.
“All of these world-class companies wanted to go to Iran. But with Trump’s withdrawal, they all left within 24 hours,” he says.
Amir-Aslani says Peugeot left $ 450 million in Iran that it cannot restore. The French oil company Total left $ 50 million. He says large projects like oil terminal and airport conversions have been abandoned.
The Trump administration threatened international companies would be cut off from the US financial system if they deal with the Iranian economy – from manufacturing to steel and aluminum companies to banks. The Iranian economy, which experienced a brief boom after the deal, collapsed. Inflation and the cost of living rose.
Richard Goldberg, a National Security Council official under the Trump administration, now with the Foundation for the Defense of Democracies, says the sanctions have been an effective tool and the Biden administration should not rush to relax them yet.
“When you’re in a negotiation, it’s all about leverage,” he says. “If you give up on that leverage from the start, you will never be able to get to that definitive deal with the best results you seek.”
But if Biden is too inflexible, Iran won’t believe it is interested in talks, says Amir-Aslani.
“In Tehran, people will say that there is no difference between Biden and Trump because Biden maintained Trump sanctions despite his promises,” he says.
In February, the US agreed to informal talks with Iran hosted by the European Union, but Iran declined the offer. Iran wants all sanctions to be lifted – there are more than 1,500.
There are halves Biden can do to show Iran that it means business, says Djavad Salehi-Isfahani, an economics professor at Virginia Tech and a non-resident senior fellow at the Brookings Institution. The US could start easing some of the many sanctions and the Treasury Department could turn a blind eye to Iran-related companies.
“The moment they can determine that something is going to happen, companies in each country will likely receive a memo that it is okay to do A, B, and C from now on,” he says. “The fact that there won’t be a billion dollar fine on a company on the other end, I think that’s really key.”
The US could also provide access to oil revenues that are frozen overseas, says Salehi-Isfahani.
Iran has pressured South Korea to pay $ 7 billion worth of oil. Earlier this year, Iran seized a South Korean tanker in the Persian Gulf. Salehi-Isfahani says there is reportedly movement to unlock some of these funds.
“I was told that some phone calls had been made to Koreans and if they wanted to free up 1 billion of the 7 billion they owe Iran, the US would look the other way,” he says.
That’s the step foreign companies look for when they think of Iran again, says Omid Gholamifar, the Tehran-based CEO of Serkland Invest, a Swedish company. His company has invested around $ 60 million in four major Iranian companies that focus on consumer markets such as pharmaceuticals and beverages that are approved under US sanctions.
EU countries as well as China, Russia and the United Kingdom remain in the Iran Agreement.
Gholamifar recently took part in a virtual European economic forum in Europe and Iran looking for ways to lift the sanctions. There were about 2,000 attendees.
“There is a sense of optimism. I think anyone who has attended the forum by definition believes that things are going in the right direction and that there is a great opportunity to capitalize on them,” he says.
Gholamifar says even if the US lift many of the sanctions, companies will likely be nervous about investing in Iran. However, he points out that Iran has a young, talented and well-educated workforce and a lot of raw materials.
“Now I want to be absolutely clear, I always say that doesn’t mean Iran is perfect or Iran is risk-free,” he says. “Everything could still go wrong.”