For Iran, the JCPOA is Worth Restoring, Even if Trump Returns
The Raisi administration appears poised to resume negotiations over the US re-entry into the Joint Comprehensive Plan of Action (JCPOA). But there remain many critics of the JCPOA in Iran who question whether restoring mutual compliance with the nuclear deal makes sense given that a Republican president might once again tear up the agreement in 2025. It is a reasonable fear. Trump has an iron grip on the Republican party and has shown interest in running for president again. Other aspirants to the Oval Office, such as Nikki Haley and Mike Pompeo, are decidedly Trumpian in their views, including towards Iran. Given the JCPOA’s nature as a political agreement, there is no way for Biden to provide a legal guarantee that future administrations will remain in the deal.
But if Iranian leaders are concerned that the “economic war” might resume in 2025, they ought to remember that they are in an economic war right now. What the restoration of the JCPOA represents, therefore, is an opportunity for a ceasefire. The spectre of a Republican president taking office in 2025 reduces the likelihood that this ceasefire will become a durable peace. Still, the possibility of the deal’s future demise does not negate the certain benefits of sanctions relief on offer now. Political leaders and parties frequently pursue policies that might be overturned in the future because they wish to reap the benefits for as long as they can. In rare cases, reputational concerns may dissuade political actors from adopting a policy that is bound to be overturned—such an outcome may be viewed as a failure of implementation, as was the case in the Rouhani administration’s experience with the JCPOA. But this reputational concern is probably less significant for Iran’s new president, Ebrahim Raisi, given the political consolidation and electoral engineering that brought him to office. On the other hand, not pursuing a genuine opportunity to secure sanctions relief will likely deepen social grievances. The Raisi administration has consistently signalled that it will “definitely seek to eliminate and lift the tyrannical sanctions.”
This framing helps us reconsider the primary role of the “objective guarantees” sought by Iran’s negotiators as they prepare for a seventh round of talks over the restoration of the JCPOA. Iran is not seeking guarantees to eliminate the risk that the nuclear deal is undone by a future American president. Rather Iran needs to guarantee that it gets significant benefits from the deal for the remainder of Biden’s term—the period of approximately three years during which mutual compliance would not be in doubt. Should the deal be implemented successfully during this period, Iran will be able to achieve two things.
First, Iran can seek to maximise the economic benefits of sanctions relief, providing Iranian companies and households a much-needed reprieve after a decade of economic stagnation. The period of boosted growth, even if limited to about three years, will provide companies and households a chance to either make long-delayed investments or replenish their savings. In both cases, companies and households will be increasing their resilience in the face of any future economic crisis, including one precipitated by reimposition of sanctions. At the same time, the Iranian government, with the benefit of more fiscal space and renewed access to its ample reserves, can bolster the welfare state and rein in inflation, giving those Iranians hardest hit by the recent years of economic recession a chance to recover.
Second, Iran can use the period of sanctions relief to make its economic system more resilient in the face of future shocks. Trump’s reimposition of secondary sanctions taught Iranian leaders harsh lessons about the impacts of unilateral sanctions on the country’s trade relations and the mechanisms behind those impacts. With these lessons in mind, Iran can work to gird its economy against the exogenous shock of sanctions. Iranian policymakers have been remarkably successful at building a “resistance economy,” relying in large part on the grit of Iranian businesses and households. But when it comes to economic war, rebuilding defences is best done under a ceasefire.
It is true that the uncertainty over the long-term future of the JCPOA may diminish the economic benefits in the short-term. As Darya Dolzikova wrote in an analysis for the Bourse & Bazaar Foundation published in January, “the possibility of another snapback of US nuclear-related and secondary sanctions on Iran under a future change of administration in Washington will also discourage businesses investment.” But Dolzikova’s analysis also made clear that this is a problem that can be addressed as part of the deal’s implementation. Iran has cited the “verification” of sanctions relief as a key demand for this reason. While there may be a smaller pool of companies willing to do business with Iran, a greater proportion of those companies that are interested in conducting trade or making investments should be able to see their projects through. For Iran, successful sanctions relief does not mean that one hundred oil companies or one hundred automakers flock to the Iranian market, but rather that the likes of Total and Shell and Peugeot and Volkswagen, thwarted in their previous attempts to invest in Iran, are able to get to the stage of ribbon cutting this time around.
Despite these challenges, the economic benefits of sanctions relief are not in doubt. As Bijan Khajepour has projected, by the Iranian calendar year ending in March 2025, Iran’s economy would be 13.5 percent larger if sanctions were lifted than if they remained in place. It is difficult to project exactly what sanctions relief will entail for the Iranian economy—but the outcome will certainly be an improvement over the economic malaise of the status quo. American negotiators should make clear to their Iranian counterparts that they wish to help deliver these economic dividends. In doing so, they would be building a kind of “sanctions relief wall” that can help protect the nuclear deal from any economic war waged by a future Republican administration.
Finally, we should be careful about overstating the probability that the JCPOA will be torn-up in just a few years. There is no guarantee that Trump nor another Republican will win. Even if they did, there is no certainty that they will focus their political energies on undermining the nuclear deal. By 2025, the political context could be dramatically different. Given the current trajectory of regional diplomacy, it is possible that US partners in the Middle East will lobby against an unwarranted US withdrawal from the JCPOA, which would again destabilise the region, threatening the achievements of the regional diplomacy underway today, however meagre those achievements might be. Looking at the trajectory of American politics, it is very possible that Democratic and Republican hawks will be laser-focused on China in the next few years, with Iran ceasing to be the lightning rod it was in the final years of the Obama administration. Plus, if the regional dynamics continue to improve and attentions turns towards China, it is reasonable to expect that fewer think tanks and lobbying shops in Washington will be agitating against the deal.
In deciding to let the US back into the deal and restore mutual compliance with the JCPOA, Iranian policymakers are weighing the certainty of a meaningful economic reprieve against the prospect that the reprieve will be cut short. Trump’s return in 2025 is a possibility that Iran must face. Lifting the “tyrannical” sanctions is an opportunity to prepare.
Photo: IRNA
