Is the U.S.Complying with the JCPOA?Posted: July 6, 2016
One often reads complaints by Iranian officials, and by the Iranian public, that the U.S. is not complying with the commitments it undertook in the JCPOA to ease economic sanctions on Iran in exchange for Iran’s compliance with its JCPOA commitments to limit its nuclear program. This got me wondering whether this is in fact the case.
As far as I can tell, the U.S. has in fact complied with all of its specifically delineated sanctions-lifting commitments that are due for compliance at the present stage of the JCPOA’s schedule. This explanatory document released by the U.S. Treasury provides a detailed review of the specific sanctions-lifting actions the U.S. has taken, and their relationship to the JCPOA. I haven’t seen any commentator seriously call into question this recitation of what the U.S. government has done, nor have I seen any persuasive allegations that the U.S. has not complied with the letter of its commitments under the JCPOA to this point.
Rather, what seems to be at the root of the complaints by Iranian officials and the Iranian public is disappointment caused by an earlier excess of expectations about the economic benefits that would flow from the JCPOA’s commitments of sanctions relief, and about how quickly those benefits would be realized.
As others have explained, the reasons why the economic benefits of the JCPOA’s sanctions relief commitments have to this point been disappointingly slim are manifold and complex. First, the JCPOA sanctions commitments only required the U.S. to remove sanctions that were specifically related to Iran’s nuclear program, leaving in place a complex legal architecture of primary and secondary economic and financial sanctions targeting Iran based on U.S. concerns about human rights in Iran, and Iran’s connection to terrorist groups. These remaining sanctions have, by many accounts, significantly deterred foreign investment and commerce with Iran, due to fears particularly by non-U.S. banks that they will inadvertently run afoul of this byzantine web of continuing sanctions, and face stiff financial penalties. Second, Iran’s economy is notoriously opaque and riddled with corruption. This creates an environment of business risk that is simply unattractive to many foreign companies.
These and other factors have combined to produce only modest economic benefits for Iran over the past six months since the lifting of sanctions, which has in turn made the initial excitement and optimism about the JCPOA in Iran fade significantly.
Tyler Cullis has written extensively on the issue of U.S. sanctions on Iran post-JCPOA, including detailed analysis of the most recent developments, and possibilities for narrowing the gap between commitments and expectations. I recommend his work to readers.
So what are we to make of the gap between Iranian expectation and commitment reality with regard to sanctions relief in the JCPOA? Were Iranian negotiators bamboozled by their U.S. counterparts into thinking that the sanctions relief commitments the U.S. was undertaking would lead to an economic windfall for Iran? I doubt it. I’m confident that the Iranian negotiators were sophisticated enough to know exactly what they had bargained for, and understood the limited nature of the economic benefits that would flow to Iran, particularly during the early months following the lifting of sanctions. I suspect that, just like the negotiators from the P5+1, the Iranian negotiators knew they were not going to get everything they wanted out of the JCPOA. That’s the nature of compromise.
But I also suspect that the Iranian negotiators understood that with the lifting of U.N. Security Council sanctions and European Union sanctions, also provided for under the JCPOA, doors would be opened that were not previously open to foreign investment and commerce with Iran, and that even under the pall of continuing U.S. sanctions, eventually businesses in Europe and Asia would become confident enough to take their first furtive steps back into the potentially hugely lucrative Iranian economy. And that as ever when there is sufficient economic incentive, creative minds would devise financial means to facilitate these transactions.
For those of us who want the JCPOA to be successful and to remain adhered to by all of its parties, the hope now must be that the understandable disappointment felt by Iranians can be tempered by a more realistic, cautiously optimistic patience, and that it does not translate into political loss for President Rouhani and his moderate allies in the 2017 Iranian Presidential election.
And please God don’t let Donald Trump be elected President here.