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Michael Jansen: Implications of a failed N-deal
April 25, 2016
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The failure of the Iranian nuclear deal to deliver prompt relief from sanctions for Iranians suffering from a sluggish economy, unemployment, and a shortage of essential medical supplies has given right-wing opponents of the deal an opportunity to attack President Hassan Rouhani, his ministers, and other liberal figures. Such attacks could weaken Rouhani’s bid for re-election next year.

Potential trade and investment arrangements remain hostage to the US Treasury Department, although Tehran has complied with the terms of last July’s agreement to dismantle its nuclear programme. Nevertheless, the primary US embargo remains in place since Iran stands accused of supporting groups regarded by Washington as “terrorist,” such as the Palestinian Hamas and Lebanese Hizbollah. While Iran remains charged by Washington with “terrorist” financing, other countries, including the US, are seriously engaged in doing precisely this and suffer no consequences. But double standards are regularly practised by Washington.

Last week Iran’s Foreign Minister Mohamed Javid Zarif met twice with his US counterpart John Kerry with the aim of overcoming obstacles faced by Iran and commercial partners. Although Kerry attempted to reassure Zarif, Iran still faces near total blockage on dollar-denominated transactions cleared through US banks which are still banned from dealings with Iran as UN but not US sanctions have been lifted.

Of the estimated $100 billion in Iranian funds frozen in foreign banks, only $3 billion has been released to Iran, due to US restrictions and the fear of non-US banks of being heavily fined for violating the complex web of US sanctions. Some $15 billion in fines has already been imposed over the past five years.

The US prohibits dealings with leading Iranian banks, institutions, organisations and individuals. The Treasury Department has promised to provide guidelines for non-US banks and businesses but this promise has been a long time a-coming. Consequently, the US is stifling trade at a time deals are supposed to be proliferating. Foreign participation in the Iranian stock market is still under 1 per cent and GDP growth remains at 0.5 per cent.

Since the nuclear deal, dubbed the Joint Comprehensive Plan of Action (JCPOA), faces serious opposition from Congress and influential figures in the US political establishment, the Obama administration needs to make haste in implementation. When President Barack Obama steps down next January, his successor is certain to be less committed to the Iran deal than he is and may, in fact, be an opponent of the JCPOA which, if the US expects to retain international credibility, must be honoured and defended.

The failure of the US to unlock its sanctions regime has angered Iran’s Supreme Leader Ayatollah Ali Khamenei and the high command of the powerful Revolutionary Guards Corps.

Both supported the nuclear agreement with the five permanent members of the Security Council plus Germany and expected an early exit from UN sanctions, a burst of economic activity, and normalisation of Iran’s status in the world community.

Khamenei has castigated Washington for “bad faith” and has called for maintaining the country’s policy of economic independence adopted following the ouster of the shah in 1979. The Revolutionary Guards Corps has tested ballistic missiles and displayed the recently delivered Russian S-300 defensive missile system in the army day parade.

Opponents of the JCPOA and Rouhani have recently locked onto an all-important issue when it comes to trade. Iran has been theoretically readmitted to the SWIFT system of inter-bank financial transactions but in practice remains excluded. Before the JCPOA, Iranian banks and firms had devised means of evading sanctions by effecting financial transactions through middlemen but since the JCPOA this has become more difficult.

Although trade with Asia continues as before and SWIFT payments are operating for China, India and South Korea – which have declared independence from US sanctions – European banks and firms remain wary of SWIFT. Consequently, European businessmen who have travelled to Iran and discussed deals with Iranian officials and firms have not finalised agreements.

Iran’s fundamental problem with the US is Washington’s refusal to re-engage with Tehran since the 1979 revolution that ousted the shah. It must not be forgotten that in August 1953, the US Central Intelligence Agency (CIA) overthrew Iranian Prime Minister Mohammed Mossadegh after parliament nationalised the British-owned Anglo-Iranian Oil Company. Following the coup, the role of Shah Mohammed-Reza Pahlavi was strengthened. He became a key US asset in this region and remained so until his ouster by popular action and the takeover by Ayatollah Ruhollah Khomeini, a longstanding US antagonist.

While the US has not forgiven the current Iranian regime for toppling the shah, Iranians have never forgiven the CIA for bringing down Mossadegh. He continues to be seen by Iranian democrats and liberals as the leader who could have made Iran into a proper parliamentary democracy independent of the US political interference and economic domination that existed under the increasingly repressive rule of the shah whose internal security service was trained by the CIA and Israel’s Mossad.

In 1976, three years before his ouster, Amnesty International reported that Iran had “the highest rate of death penalties in the world, no valid system of civilian courts and a history of torture which is beyond belief. No country in the world has a worse record in human rights than Iran.”

It is ironic that since 1979 the US has imposed sanctions due to Iran’s admittedly dismal human rights record while backing the authoritarian and abusive shah to the hilt before his fall.
 
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The author, a well-respected observer of Middle East
affairs, has three books on the Arab-Israeli conflict
 

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