The Iran Deal Lives Another Day

The “worst deal ever” will most likely live to see another 120 days.

The Associated Press reported Wednesday that President Trump will this week extend relief from nuclear-related economic sanctions on Iran. If it seems like a procedural matter, it is, but it also means in practice that it keeps alive the Joint Comprehensive Plan of Action, as the Iran deal is known. Reinstating the sanctions would have put the United States in violation of the agreement. The president must decide every 120 days whether to waive the sanctions.  

The AP cited six officials who insisted on anonymity for its reporting, but cautioned that no final decision had been made. Rex Tillerson, the U.S. secretary of state; James Mattis, the defense secretary; and H.R. McMaster, the national-security adviser, had all endorsed keeping the JCPOA alive. The AP report said Trump’s decision would be complemented by new sanctions targeting Iranian businesses and individuals, which “could hit some firms and individuals whose sanctions were scrapped under the 2015 nuclear agreement.”

Trump faced two separate choices. One was whether to certify or decertify the JCPOA under the Iran Nuclear Agreement Review Act, which Congress passed in 2015 to give it the right to review the accord and require the president to verify Iran’s compliance with the agreement every 90 days. In October, Trump declined to certify compliance, but did not tear up the deal—in decertifying the deal, he left to Congress the decision of what to do about it. Congress has been focused on other things, however. The other and more consequential choice was whether to waive or reimpose sanctions related to Iran’s nuclear activities, and it is on this decision that U.S. participation in the deal lives or dies. If AP’s report is correct, Trump has passed up this opportunity to withdraw.  

The additional sanctions that are expected to be announced are not related to Iran’s nuclear programs, but to its human-rights violations, its crackdown on peaceful protesters this month, its support for terrorism in the region, and its continued ballistic-missile tests—none of which are covered by the deal. Obama-era sanctions, which were lifted after the nuclear agreement was signed in 2015, that had targeted Iran’s access to the international financial system, as well as those that penalized entities for buying Iranian oil, will not be reimposed, the AP added.

The new sanctions will almost certainly anger Iranian officials, but are likely to be cautiously welcomed by the other parties to the JCPOA: the European Union, China, France, Germany, Russia, and the U.K., all of which wanted the deal to be preserved because, they said, it had succeeded in freezing the Islamic Republic’s nuclear program and its uranium-enrichment activity.

The Trump administration’s withdrawal from the Paris climate deal and the Trans-Pacific Partnership trade deal, both signature foreign-policy initiatives of President Obama, bolster fears that the JCPOA could go the same way. Trump’s remarks on the presidential campaign trail, where he called the agreement the “worst deal ever,” further cast its future into doubt. But the JCPOA’s other signatories, especially the EU and the U.K., have been vocal in their support of the agreement and have made their case to the White House and lawmakers. China and Russia, who are also parties to the deal, have also signaled they will stay in it.

Iran itself has sent mixed messages. Officials said they would stay with the deal even if the U.S. withdraws, but the head of Iran’s nuclear body, Ali Akbar Salehi, said Tehran would reconsider its cooperation with the International Atomic Energy Agency, the UN’s nuclear watchdog that certifies Iran’s compliance with the agreement, in that case. Such a decision would almost certainly embolden the JCPOA’s opponents, who say Iran is merely biding its time before it resumes its nuclear activities, and make it impossible for the accord’s other signatories to go along with it.

The Iranian signaling reflects the ambivalence toward the JCPOA in the Islamic Republic itself. President Hassan Rouhani had promoted it as a way for Iran to open itself to the world. It would, his supporters promised, bring in a flood of much-needed foreign investment and reinvigorate Iran’s stagnant economy, which had been crippled by international sanctions. But those gains have been slow to materialize—and Iranians, especially in smaller towns and cities, have found their lives haven’t changed considerably. This month, they marched across 80 cities, protesting against the government; the demonstrations were crushed by security services. More than 20 people were killed and thousands arrested. On Wednesday, the White House demanded their release.

Part of the problem has been that, beyond the headlines trumpeting sales of aircraft to Iran by Boeing and Airbus, and energy investments by European and Chinese companies, there has actually been little real foreign direct investment in Iran since the JCPOA was signed. Last April, Iran’s finance minister said memorandums of understanding worth $50 billion were signed after the JCPOA went into effect in January 2016. But a government spokesman said that from March 2016 to March 2017, the Iranian fiscal year, Iran received $13 billion in foreign investment. It turned out that the memorandums were for the most part only that—the investments have yet to materialize.

Practically speaking, then, the removal of one set of sanctions against Iran—that is, the policy Trump is reportedly set to reaffirm—has not resulted in the financial windfall for Iran that the deal’s opponents feared. Iranian officials themselves are skeptical about how much foreign investment the agreement can reasonably bring. Corruption and a lack of transparency, not to mention geopolitical uncertainty, keeps investors away. Additionally, not all Iranian officials see foreign investment as necessarily a good thing.

“It is excessive to expect a radical change in the field [of foreign investment] as long as the concept is controversial for the top influential elites,” Majid Tehrani, an organization development adviser in trade, transport and finance industries, told Al-Monitor.

Existing U.S. sanctions on Iran are broad enough to hinder any potential economic activity. The fact that Iran’s Revolutionary Guard Corps, the target of U.S. sanctions, has significant stakes in Iranian companies makes investing in the country a legal minefield. Had the U.S. reimposed sanctions, multinational companies would have hesitated to invest in Iran. Now that it looks like the JCPOA is alive for another 120 days, the uncertainty over the agreement’s future hasn’t gone away.