The Wall Street Journal reported Tuesday that Iran’s economy is making an impressive recovery from the sanctions relief granted as part of the interim deal with the P5+1 nations last November. It begins by noting that the president of Iran’s chamber of commerce, Gholam Hossein Shafei, “greets trade missions from the Middle East, Asia and Latin America almost every day.”
Moreover, international businesses are anticipating a deal by the July 20 deadline, which will make Iran “open for business.” (Google search terms)
As talks between Iran and six major powers on limiting its nuclear program enter the final stages of diplomacy this week in Vienna ahead of a July 20 deadline, global companies are fact-finding, meeting with potential Iranian partners and jockeying for position should an end to sanctions open the isolated economy. …
Iran’s economy has been struggling under a web of U.S., United Nations and European Union sanctions designed to force the country to freeze its nuclear program. An interim pact signed in November resulted in the unfreezing of more than $4 billion of Tehran’s oil funds, the easing of some sanctions and the spike in investor interest seen at Mr. Shafei’s offices. A potential July agreement could lift sanctions on Tehran’s central bank and reduce restrictions on the finance, energy and technology sectors. This could free Western companies to pursue investments in potentially high-growth industries that have been closed off for nearly a decade.
According to the report, automotive and energy companies are especially anxious to return to Iran. The report also mentions the degree to which Iran’s economy has recovered due to the relaxed sanctions.
Monthly inflation has been cut in half, the rial, the currency, has strengthened and the IMF is projecting economic growth to return this year. Iran’s crude oil exports have also increased to around 1.2 million barrels per day from as low as 700,000 last year, according to the Iranian government, though still well short of pre-sanctions levels of nearly three million.
The relaxing of sanction,s combined with Iranian President Hassan Rouhani’s outreach to convince trading partners that Iran is “open for business,” has the Islamic Republic poised to return to international trade upon the completion of a deal later this month.
Iran has now exceeded its oil export limits for the eighth consecutive month. The latest news is further confirmation of an international “gold rush” to do business with Iran. The enthusiastic response Iran has received to its overtures and the resulting boon to its economy calls into question the Obama administration’s assurances that the sanctions relief granted was “limited, temporary, targeted, and reversible.” With Iran likely to benefit even further from a deal on its nuclear program in the coming weeks, bipartisan support is growing for strengthening sanctions against Iran for its human rights abuses and support of terror.
As Emanuele Ottolenghi observed in Iran is *Really* Good at Evading Sanctions, which appeared in the September 2013 issue of The Tower Magazine, “[b]ecause sanctions are getting tougher and the corporate world is becoming more alert, Iranian procurement agents need to be more creative and their operations more elaborate in order to elude Western authorities.” As the sanctions regime weakens, Iran will need to rely on that creativity less and less.
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