The latest accusations from Tehran blaming the US for not upholding the JCPoA (UNSC 2231) by “warning” Western investors about the risks of investing in Iran is “strange”, to say the least, for four simple reasons:
- Non-nuclear-related sanctions: It’s strange that Tehran is blaming the US’s “warnings to investors” the lack of foreign investments in Iran when it is actually other UNSC sanctions related to terrorism and missiles (UNSC 1737 and UNSC 1929) which are effectively stopping financial institutions to do business with Iran – if Tehran wanted to lift all sanctions, not only the nuclear ones, why did it repeatedly block any efforts by the US to tie the JCPoA to issues of terrorism, missiles and human rights?
- Ban of US brands from Iran: It’s strange that Tehran is upset that the US is “warning” foreign investors to not invest in Iran while Tehran actually banned over 200 American brands from Iran and continues to forbid negotiating or dealing with the US – if Tehran doesn’t want to do business with the US, why should the US help Iran to do business with other countries?
- Missile tests in violation of the JCPoA: It’s strange that Tehran is maintaining that it’s the US which isn’t fulfilling the JCPoA while it defiantly carries out missile tests aimed at intimidating Israel by writing “Israel must be wiped out” on the missiles despite the fact that the JCPoA distinctly called on Iran “not to undertake any activity related to ballistic missiles designed to be capable of delivering nuclear weapons, including launches using such ballistic missile technology” – if Tehran really wanted the US to uphold its part of the deal, why is it continuously baiting the world with these missile tests?
- De-dollarizing trade: It’s strange that Tehran is so upset with global banks who are shying away from Iran due to non-nuclear-related sanctions while it is striving to de-dollarize deals with Russia and China to trade in Euros and in even in Rials and Roubles – if Tehran isn’t interested in trading in dollars then why should the US help it do so?
It’s as if Tehran is trying to rewrite the JCPoA in order to eat its cake and leave it whole. It’s now up to the US to decide whether to stand its ground or to cave in once more to Tehran’s demands.
Iran’s post-JCPoA provocations
The JCPoA was signed in order to resolve outstanding violations of IAEA rules and protocols regarding Iran’s nuclear program in return for the lifting of nuclear-related sanctions and for all intents and purposes, it has achieved this goal: IAEA reports from Iran show that Tehran is complying with the JCPoA agreement as far as its nuclear program is concerned and the nuclear-related sanctions have been lifted.
But Tehran continues to provoke the US and its allies through its fiery rhetoric and its actions. Have the Iranians forgotten Khamenei’s support for “Death to America” calls or the banning of 227 US products? Have they forgotten how they humiliated the US sailors who crossed into Iranian waters by accident? Have they forgotten that threatening to wipe Israel out is tantamount to threatening the US? Have they forgotten that testing long-range ballistic missiles is a violation of the spirit of the JCPoA (Iran was “called on” and not “forbidden” to carry out missile tests)? Have they forgotten that Khamenei continues to promote a “resistance economy” based on local entities and limited imports?
No, Tehran hasn’t forgotten any of these provocations but it did forget something more crucial: Signing the JCPoA succeeded in getting Washington and Tehran to talk after over 30 years, in lifting nuclear-related sanctions and in opening Iran to the world once again (over 400 trade delegations landed in Tehran in less than one year) but it didn’t succeed in changing the regime’s animosity towards the “Satan” US nor did it lift all of the remaining non-nuclear sanctions.
The other dangers of doing business in Iran
So now Tehran is calling on the US to lift other sanctions and to allow it to trade in dollars and the White House is seriously contemplating doing exactly that although such a move transgresses the boundaries of the JCPoA. Meanwhile, although the big banks are content to stay out of Iran, smaller banks from the EU, Russia and Asia are willing to step in.
But let’s be honest: foreign investors don’t only need financial services in order to invest in Iran, they need stability and although Iran’s economy has huge potential, it is far from stable. Here are a eight reasons why Iran remains an unstable market in which to invest at the moment:
- The regional conflicts involving Saudi Arabia, the Gulf States, Syria, Yemen and Iraq.
- The domineering role of the IRGC in Iran’s economy, effectively partnering up with all foreign investors.
- The rampant corruption and bureaucracy in Iran.
- The arrests in Iran of journalists, artists, activists, sectarian and religious minorities, moderates, returning dissidents and Western businessmen.
- The banning of brands from Iran and the paranoia of Western/foreign “infiltration.
- The preferential treatment given to non-Western countries such as Russia.
- The threat of snap-back sanctions.
- (New) The growing clash between Khamenei (the regime) and Rouhani (the people).
Remember, a foreign investor may shy away from doing business with Iran for only one of these reasons, not for a few or all of them. Were Iran a stable economy, foreign investors would be only too glad to do business with Iran even if it were to be conducted through non-global banks in currencies other than the US dollar.
The CATCH 22 options in Washington and in Tehran
Washington is at a cross-roads now: It could hold its ground and force Tehran to comply fully with the JCPoA and other sanctions but in the process, it is likely to seriously hurt Rouhani’s chances of bringing about change to Iran because Rouhani’s popularity is based largely on his promises for a better economy. On the other hand, if Washington caves in and lifts non-nuclear sanctions in order to save Rouhani, it will come under serious fire for giving away too much and receiving nothing in return.
Tehran is also at a crossroads: It could tone down its anti-US rhetoric, opt for an open-engagement economy with the West and desist from testing long-range ballistic missiles and, by doing so, enjoy a huge boom in its economy but by doing so, it will lose its revolution ideals and the power held by the regime – this option is tantamount to a counter-revolution designed to topple the regime. On the other hand, it could stand its ground, opt for a resistance economy and continue its anti-US/Israel stance and return to its pre-JCPoA status of a pariah not to be dealt with by the West.
There might be other options out there but as it is, it seems that both Washington and Tehran are stuck in a mutual CATCH 22 situation in which winning isn’t possible.