Iran says that the West is not honouring its side of the nuclear deal. Poppycock
THE Supreme Leader, Ayatollah Ali Khamenei, is not happy. “Anyone who has ever trusted the Americans was eventually slapped by them,” he declared earlier this month. “The experience of nuclear talks proved that even if we compromise, the United States will not stop its destructive role.”
This was the latest in a stream of attacks by Iranian hardliners on the deal reached a year ago. Some of this is politics: they never wanted the deal and have tried to sabotage it in order to damage their rival, Iran’s reformist president, Hassan Rohani. But the charge that the West has failed to honour its side of the bargain—lifting most sanctions in return for strong curbs on Iran’s nuclear programme—is growing. It is also wrong.
Even the most hawkish critics of Iran agree that it has done its bit. Within months of the deal being signed last July, Iran began to dismantle almost all of its centrifuges, which could be used to enrich uranium to weapons-grade purity, and to move its stockpile of low-enriched uranium out of the country. That work has been speedily completed. Iran’s apparent compliance with the intrusive inspection regime under the deal has also been a milestone for non-proliferation.
The West, too, has kept to the letter of the deal. The sanctions imposed on Iran as its nuclear programme intensified in the 2000s have been lifted. Iran is increasing its production of oil and foreign investment is rising.
The problem lies outside the accord. Iran has tested nuclear-capable ballistic missiles and is waging wars, directly and by proxy, around the Middle East. America maintains its unilateral sanctions, which were imposed long before the nuclear crisis. They concern Iran’s dire human-rights record; its support for terrorist organisations, including Hamas in Gaza and Hizbullah in Lebanon and Syria; and its development of long-range missiles. These sanctions were excluded from the nuclear negotiations. For Iran to suggest otherwise is untrue.
America’s non-nuclear sanctions are hurting Iran in two ways. The “primary” ones ban American companies and individuals from dealing with the regime, subject only to a tightly controlled list of exceptions which include food, medicine and commercial airliners (Boeing has just signed a big order with Iran). Any transaction that passes through an American bank or insurance company, even tangentially, or uses the dollar, or involves an American citizen working for a foreign company, is theoretically subject to sanctions. This is creating a chilling effect on the financing of even non-American trade and investment: all remember the $9 billion fine slapped on BNP-Paribas in 2014 for sanctions evasion.
Under “secondary” provisions, America reserves the right to punish foreign firms if they do business with anyone on a list of designated people and institutions, among them Iran’s Islamic Revolutionary Guards Corps. This Praetorian guard has a murky hand in practically every aspect of Iran’s state-dominated economy. The risk of getting caught up unwittingly in an American sanctions prosecution is all too real.
Fix it quickly
In graphics: The implications and consequences of Iran's nuclear deal
Perhaps the Supreme Leader did not understand the nuclear deal, or perhaps Mr Rohani oversold it. More likely, Iran is trying to extract extra concessions that it has not negotiated. Some had hoped that the nuclear accord, though limited, would help open the Iranian economy, normalise the revolutionary regime and ease fraught relations with America and the Sunni Arab world. That will not happen for a long time, if only because Iranian hardliners draw strength from their enmity with the Great Satan.
Even so, the unravelling of the nuclear deal would hurt reformists and fuel the fires of the Middle East. The Obama administration can help preserve its only real diplomatic success in the region by issuing clearer guidance on exactly how foreign banks must act to comply with sanctions. It could also allow Americans working for foreign firms to advise on such issues, and permit some kinds of dollar transactions.
But the burden falls mostly on Iran. It must clean up its opaque corporate culture. It should bring its accounting and banking rules up to date, so that investors know whom they are dealing with. If that pushes the Guards out of business, so much the better. For Iran to find jobs for millions of educated, underemployed young Iranians, it will have to give up the hardliners’ cherished idea of a “resistance economy”. Ironically, sanctions could yet prove a route to prosperity.
This article appeared in the Leaders section of the print edition under the headline "Sanctions busting"
