Getting Rid of "Primary" Iran Sanctions

Tuesday, April 19, 2016

Kaveh L. Afrasiabi

Three months after the implementation of the Iran nuclear agreement known as the Joint Comprehensive Plan of Action (JCPOA), the Iranian Foreign Ministry has submitted a new report to the Parliament (Majlis) that provides an overall assessment of the JCPOA's results and problems and lingering issues. This report makes it abundantly clear that substantial progress in a relatively short period of time has been achieved in terms of creating a brand new post-sanctions environment for trade and investment in Iran, reflecting a new level of internationalization of the Iranian economy.

At the same time, this report confirms what is already common knowledge, that is, the environment of fear and uncertainty about doing business with Iran gripping the western financial and other economic institutions, rooted in the so-called "primary" non-nuclear sanctions and the difficulty of separating and distinguishing those sanctions (related to such issues as terrorism and human rights) from the nuclear-related sanctions. According to the Foreign Ministry Report to Majlis, the two types of sanctions are "interconnected" and therefore it is difficult to assess which sanctions have been lifted and which are not.  In addition, the report blames the US Treasury Department of procrastination and foot dragging on the JCPOA, a view shared by the head of Iran's Central Bank, Valiolah Seif, in his recent US visit.

Clearly, there is something amiss here that could threaten the longevity of the JCPOA in the years to come. According to Mr. Seif, Iran has barely benefitted from the JCPOA, a view somewhat at odds with the more sanguine picture painted in the Foreign Ministry report. What matters, however, is to find a suitable solution for the big gap between the sanctions lifted on paper and their staying power in reality, which is traced to their conflation and mixture with the "primary sanctions" enacted as laws by the US Congress.

Obviously, the Republican-dominated Congress is in no mood to rescind the primary sanctions on Iran and, in fact, is nowadays plotting more, not less, sanctions on Iran.  Added to this are uncertainties regarding the next US President -- all the Republican presidential candidates are on record vehemently opposing the JCPOA and promising to scrap it once in the White House, while the leading Democratic contender, Hillary Clinton, does not appear as firm a supporter of the JCPOA as President Obama.  Therefore, it is likely that as of 2017, the political woes confronting the JCPOA will grow in importance and, as a result, the prospects for the weakening or removal of the "primary sanctions" do not seem bright.

In turn, this unsavory situation can continue to hamper Iran's efforts to normalize trade and financial relations with the international community, thus emboldening the agreement's critics at home. The relative gains of the JCPOA must be balanced or there will be increasing fissures at home and abroad that would chip away at the resolve to stick by the agreement. 

Clearly, the ball is in the US's lap and much depends on the political will and determination of the US officials to address Iran's legitimate complaints and devise new, and transparent, guidelines for the banking transactions with Iran, so that there would be business confidence restored to a healthy level. The past patient of sanctions-hit Iranian economy is still in many ways in the emergency ward due to the primary sanctions, negatively affecting the removal of secondary sanctions, and the promise of a post- sanctions era has yet to be fulfilled.

Getting rid of the primary sanctions is an important prerequisite for the complete release of this patient to the unfettered world of free trade, yet at this point there is little room for optimism regarding this important matter. So, the best that one can hope for is incremental improvement that would over time whittle away the intricate web of sanctions.

*Kaveh Afrasiabi, Ph.D, is a former political science professor at Tehran University and the author of several books on Iran’s foreign policy. His writings have appeared on several online and print publications, including UN Chronicle, New York Times, Der Tagesspiegel, Middle East Journal, Harvard International Review, and Brown's Journal of World Affairs, Guardian, Russia Today, Washington Post, San Francisco Chronicle, Boston Globe, Mediterranean Affairs, Nation, Telos, Der Tageszeit, Hamdard Islamicus, Iranian Journal of International Affairs, Global Dialogue.

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*Photo Credit: Greg Groesch for The Washington Times

*These views represent those of the author and are not necessarily Iran Review's viewpoints.

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