Iran Can’t Afford to Delay a Deal

To appreciate the significance of a nuclear deal revival for Iran, one need only cast a cursory glance at the grave economic, foreign-policy, security, and environmental crises plaguing the country today. Without a functioning deal that keeps U.S. sanctions lifted, if only for a few years, no Iranian government can hope to adequately respond to most—if not all—of these challenges.

Consider first Iranian President Ebrahim Raisi’s ambitious economic promises. They include constructing 1 million housing units per year; taming runaway inflation, which he has described as his government’s “redline”; resolving “once and for all” the financial woes of Iran’s teachers; neutralizing the impact of currency volatility on the lives of ordinary Iranians; creating 1 million new jobs; and tackling power outages. Even a partial fulfilment of these ambitious goals will prove highly unlikely so long as the full force of U.S. sanctions continues to choke the economy, despite the Raisi administration’s questionable rhetoric that a “Look to the East” policy alone can act as a countermeasure against U.S. sanctions and hegemony, and that economic prosperity can be decoupled from the nuclear talks.

To be sure, sanctions relief alone is not the panacea for all of Iran’s economic woes. There are also other barriers to its economic growth and the normalization of trade relations with the rest of the world. Nor can sanctions singlehandedly bring about the total collapse of the economy. The country has in recent years shown itself able, ultimately, to withstand sanctions. But sanctions do serve as a key bottleneck in Iran’s economic development, ensuring that the country is continuously kept in survival mode, thereby denying it access to capital, trade, and investment. For ordinary Iranians, this means higher inflation rates and subsequent dips in their purchasing power, and of course unemployment, factors that also hasten the migration of valuable human resources from the country. Already, the same teachers whose financial woes Raisi had promised to resolve “once and for all” have staged protests in various cities.

To appreciate the significance of a nuclear deal revival for Iran, one need only cast a cursory glance at the grave economic, foreign-policy, security, and environmental crises plaguing the country today. Without a functioning deal that keeps U.S. sanctions lifted, if only for a few years, no Iranian government can hope to adequately respond to most—if not all—of these challenges.

Consider first Iranian President Ebrahim Raisi’s ambitious economic promises. They include constructing 1 million housing units per year; taming runaway inflation, which he has described as his government’s “redline”; resolving “once and for all” the financial woes of Iran’s teachers; neutralizing the impact of currency volatility on the lives of ordinary Iranians; creating 1 million new jobs; and tackling power outages. Even a partial fulfilment of these ambitious goals will prove highly unlikely so long as the full force of U.S. sanctions continues to choke the economy, despite the Raisi administration’s questionable rhetoric that a “Look to the East” policy alone can act as a countermeasure against U.S. sanctions and hegemony, and that economic prosperity can be decoupled from the nuclear talks.

To be sure, sanctions relief alone is not the panacea for all of Iran’s economic woes. There are also other barriers to its economic growth and the normalization of trade relations with the rest of the world. Nor can sanctions singlehandedly bring about the total collapse of the economy. The country has in recent years shown itself able, ultimately, to withstand sanctions. But sanctions do serve as a key bottleneck in Iran’s economic development, ensuring that the country is continuously kept in survival mode, thereby denying it access to capital, trade, and investment. For ordinary Iranians, this means higher inflation rates and subsequent dips in their purchasing power, and of course unemployment, factors that also hasten the migration of valuable human resources from the country. Already, the same teachers whose financial woes Raisi had promised to resolve “once and for all” have staged protests in various cities.

But the destructive impact of sanctions is not limited to the pauperization of the Iranian masses. It extends to other areas such as the country’s environmental degradation and its energy sector. Though not the root cause of the problem, sanctions have in recent years intensified the degradation of Iran’s environment by continuously diverting capital, technology, know-how, and political will away from issues such as environmental protection and the sustainable development of the country’s power and energy sectors. As a result, Iran is today one of the largest emitters of fossil-fuel carbon dioxide worldwide and has also been flagged by international organizations as a high-risk area for violent conflicts triggered by water scarcity. This past summer, the country saw widespread electricity blackouts. As a result, protests related to water shortages and power outages are now a political reality in Iran.

Poverty, environmental degradation, water shortages, and power blackouts are coalescing to drastically increase the likelihood of civil strife in the country. And when the flawed legitimacy of Raisi’s ascent to the presidency—hardly free or democratic even by Iranian standards—is brought into the picture, the result is a powder keg of social unrest waiting to be ignited.

Widespread civil unrest may not automatically dethrone Iran’s ruling elites. But it can combine with other sanctions-induced dynamics—in particular the failure to resolve tensions with Washington and to normalize diplomatic and trade relations with the rest of the world—to significantly erode the country’s regional clout in the long term. A cash-strapped and isolated Iran in the throes of civil strife cannot adequately respond to the fast pace of change in its surrounding area, and its regional rivals and foes are more likely to challenge and threaten its position, despite the country’s very real military strength.

Recent developments on Iran’s doorstep provide clues to the eroding impact of sanctions on its geopolitical strength. In neighboring Afghanistan, traditionally within Iran’s orbit of influence, Tehran’s response to the rapid Taliban takeover of the country seemed largely muted, especially when contrasted with the palpable role played by other regional actors. So much so that one of Iran’s most veteran diplomats has described his country as “the main regional loser” after the U.S. withdrawal. In contrast, he described Iran’s rival Pakistan as “the prime victor”. Even geopolitical minnows Qatar, which share no borders with Afghanistan, have shown themselves far more capable than Iran in capitalizing on the U.S. withdrawal. Iran’s role, on the other hand, has been limited in large part to receiving refugees fleeing the Taliban and U.S. military hardware previously operated by the Afghan military. Careful not to rile its new neighbor to the east, Tehran’s overall reaction to the Taliban takeover resembles that of an anxious and reticent bystander.

Having correctly sensed that Tehran’s geopolitical options are today limited, neighbors in Pakistan, Turkey, and Azerbaijan are now mustering the confidence to provoke Iran by holding joint military exercises right across its northwestern border. Even Russia, which the Raisi administration ostensibly considers an ally, shows indifference toward many of Iran’s key concerns and wishes. The costs of angering Tehran are today so meager that Azerbaijan, a country 19 times smaller than Iran, feels emboldened enough to turn itself into a base for anti-Iran activities and to raise tensions with its giant neighbor to its south.

Indeed, it is no coincidence that the recent thaw in Iran’s relations with Saudi Arabia came on the heels of significant progress made in the earlier rounds of the Vienna talks earlier this year. Even a partial restoration of the JCPOA, which reduces tensions between Tehran and Washington, is likely to facilitate the ongoing rapprochement between the Iranians and their Persian Gulf neighbors.

There are, of course, clear disagreements between Iran and the United States on how to return to full compliance with the 2015 nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA). For instance, since it was the United States that first reneged on its commitments and imposed sanctions on Iran, Tehran expects sanctions relief before it moves toward compliance. Iran’s other key concern is that even if it strikes a revival deal with the Biden administration, the next U.S. president can, with impunity, run roughshod over the deal and in three years send the Iranian economy into a veritable tailspin regardless of whether Iran sticks to its JCPOA commitments or not. As Donald Trump’s presidency demonstrated, this is not a mere hypothetical but a real possibility.

But this possibility and its real long-term ramifications for the Iranian economy should not blind Tehran to the definitive short-term benefits of a JCPOA revival, which can, in the long run, help Iran combat the scourge of future sanctions should the next U.S. president be as committed to torpedoing the nuclear deal as Trump. And should the deal be fully restored during the Vienna talks, it will be at least three years before the end of Joe Biden’s presidency, at which point Iran will have had at least three years to move towards integration into the global financial and economic system. Even if the next U.S. president is as hostile to the deal as Trump was, they will be confronted with the bureaucratic inertia of a three-year-old institution that will hold great significance for global security and international trade with Iran. Furthermore, the disastrous consequences of Trump’s crusade against the deal and the numerous complexities of reviving it are now part of the historical record. This, too, is likely to discourage the next U.S. president from leaving the deal even if he or she is hostile to the agreement.

Meanwhile, a total collapse of the nuclear talks will likely tip the scales in a dangerous direction for everyone, but especially for Tehran. Why? Firstly, although the administration of former Iranian President Hassan Rouhani and world powers had agreed in June on a framework to revive the deal after six lengthy rounds of intensive talks, by the time Iran returned to the Vienna discussions with Raisi’s new negotiating team, more than five long months had elapsed. This delay was compounded by the confusing messaging from Iran’s diplomatic apparatus during this period. Secondly, after its delayed return to Vienna, the new negotiating team anticlimactically put forth a series of new proposals that, although perfectly just, were not politically feasible and ran counter to the diplomatic consensus reached in June.

Thirdly, Iran has been ramping up its nuclear activities and has not been fully cooperative with the International Atomic Energy Agency, which, although understandable, has been gradually diminishing the potential returns of a revived JCPOA for world powers, in effect eroding the appeal of continuing the talks in their current format. These developments have fueled confusion about Tehran’s intentions and its resoluteness in returning to the deal, thereby making it easier for Iran—rather than the United States—to appear recalcitrant and hard to please.

Should this be the prevalent framing of the nuclear impasse if and when talks come to naught, it will be easier for the United States, the prime victimizer in this standoff, to cast Iran, the unmitigated victim, as the pariah. This, in turn, will likely bring the United States closer to the one goal it has thus far failed to achieve: enlisting the other parties to the JCPOA in Iran’s economic and diplomatic encirclement through a slew of European Union and United Nations sanctions. As a prelude to such an escalation, the Biden administration may lay the groundwork for an emergency board meeting of the International Atomic Energy Agency. Should such a meeting ever take place, it can serve as a stepping stone for further isolating Iran with the aid of a broader range of countries. Also, the administration is purportedly moving toward tightening the enforcement of U.S. sanctions against Iran.

A full restoration of the nuclear accord will not automatically transform Iran into a dominant regional superpower capable of eating up the region, as some Israeli leaders contend. It may, however, regulate the behavior of U.S. allies such as Saudi Arabia and Israel by forcing them to revisit their conception of national security. It may also serve as a diplomatic springboard from which Iran and the United States can collaborate and manage differences on other outstanding issues. Indeed, amid the current nuclear standoff, we are all too prone to forget that more than once, Iran and the United States have even acted with lethal efficacy as de facto military allies against both the Taliban and the Islamic State.

On the contrary, repeated delays in the deal’s revival benefit Iran’s strategic rivals, while the complete breakdown of talks coupled with an expanding nuclear program may create fertile ground for increased tension between the United States and Iran, which may soften Washington and its Western allies to the idea of sabotage operations against Iran’s nuclear installations, as well as assassinations (even though overt U.S. or Israeli strikes will remain highly unlikely). But these scenarios will pale in comparison to the potential long-term erosion of Iranian power under the weight of sanctions and a dysfunctional relationship with Washington.