Iran Needs More Than Limited Sanctions Relief to Recover

The decision to extend negotiations with Iran in pursuit of a final nuclear deal means a commitment to four additional months of diplomacy and collaboration. For Iran, this also means four additional months of limited sanctions relief contingent upon its continued cooperation with the IAEA and P5+1 countries as negotiations progress. Although some have argued that Iran is only interested in dragging negotiations out as long as it can to hold on to this sanctions relief, the fact remains that the relief provided has not been sufficient to alleviate Iran’s suffering economy in any substantial way.

Major sanctions relief remains a crucial element of any final deal with Iran.  While the Obama administration has estimated that the sanctions relief afforded Iran since the signing of the Geneva Interim Agreement amounts to about $7 billion, the fact that Iran still makes only half the revenue from petroleum exports that it did two years ago translates into a $52.8 billion net loss: an amount hardly compensated for by the minor gains made under the interim agreement. Additionally, despite the fact that the P5+1 agreed to unfreeze $2.8 billion in Iranian assets over the next four months, Iran still has almost $100 billion in total assets tied up in overseas accounts.

On July 18, US Secretary of the Treasury Jacob Lew emphasized that temporary relief provided over the past six months “has been extremely limited” and that Iran’s economy “remains in a state of distress” from the sanctions still in place. The argument that Iran’s economy has made significant advancements since the Geneva sanctions relief is hyperbolic and does not reflect the impact of the economic situation on the ground. For the Iranian people, who elected President Rouhani based largely upon his promises of economic recovery, this national state of distress is reflected in daily suffering.

“Everything became several times more expensive (after sanctions); even the rich were struggling. Many people, including my dad, had to close their businesses down because of high taxes,” said Toktam Amer, a former business owner from Tehran, referring to the changes that occurred after the introduction of harsh international sanctions that curtailed Iranian oil exports and froze proliferation assets. Despite limited relief under the Geneva interim agreement, the public still feels the effect of these harsh embargoes on the ground.

With these ongoing economic hardships in mind, how does the Iranian public view the extension of talks? Iranian magazine publisher and music teacher Mohammad Ayyobi summarized his perspective on the extension by explaining that at least the economic situation in his shop won’t worsen during the four-month delay. If this statement sounds familiar, it should; it’s reminiscent of the American argument that extended talks are positive because at least nuclear security in Iran won’t worsen during the four-month delay. However, while his economic situation won’t worsen, it also won’t improve. For Mohammad Ayyobi, a comprehensive deal with major sanctions relief is crucial to improving his living condition.

“We have to be self-reliant and assume the sanctions are forever,” said Hamid Reza Taraghi of the Islamic Coalition Party after the four-month extension’s announcement, blaming the United States for delay in reaching a final deal and expressing his cynicism over the possibility for economic recovery under current sanctions relief.

For the average Iranian citizen then, it seems that sanctions relief is the issue of most direct impact: not the number of centrifuges or the length of “breakout time.” Because of this, spending the next four months pursuing a future comprehensive deal remain squarely within Iranian interests. But while US analysts have pointed out that the extension of nuclear talks is a positive step forward from the interim agreement, this reaction has often been attached to the sense that it is positive for the P5+1 at the expense of Iran.

“Continuing the negotiations would still benefit the U.S. and its allies. Ending them prematurely [sic] serve only Iran’s interests,” one CNN contributor declared, in a message that was intended to garner support for the extension. Although the piece praised the continuation of diplomacy, it simultaneously assumed that Iran’s interests were starkly opposite those of the United States: that Iran would actually benefit from ending negotiations prematurely.

This sentiment has been echoed in multiple areas, as writers often champion the diplomatic outcome for keeping Iran’s enrichment capacity at limited, interim agreement levels for the next four months, while failing to analyze the importance that reaching a final deal holds for Iran in terms of sanctions relief.

The extension of nuclear talks is mutually beneficial not because an extended period of diplomacy will allow Iran to drag out limited sanctions relief. It is beneficial because it provides an avenue for reaching a comprehensive agreement that would benefit both sides. Framing the extension as positive only for the P5+1 creates a rift where none need exist, and highlighting only one side of the negotiations creates an incomplete image of Iran as a negotiator. It paints the picture of a state that cares only about nuclear capabilities, when in reality, Iran cares enormously about sanctions relief and economic recovery. These issues matter not just to the public, who feel the effect of sanctions in their daily lives, but also to Iranian leadership; Rouhani needs sanctions relief to retain support for his administration and to ensure national economic improvement. Obtaining a major win on sanctions relief is of utmost importance to Iran, and the four-month extension has simply provided the space and time necessary to achieve this.