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◢ President Trump has violated the Joint Comprehensive Plan of Action and withdrawn from a landmark arms control agreement that enjoyed broad international support. Crucially, he did so more decisively than many expected. It is this decisiveness which may offer a sliver lining for Iran and Europe, who will find it easier to coordinate a robust response in the face of such a definitive action by Trump.
◢ European leaders have been assiduous in lobbying Washington on the nuclear deal. But Europe must step up its diplomacy to ensure it does not lose Tehran in the process and should further make a strong case to the Iranian government and public as to why the nuclear deal can continue to serve Iran’s security and economic interest even without the US.
◢ Forced to respond by Iran’s recent currency crisis, the Central Bank of Iran is approaching regulatory reform in the financial sector with new energy. A critical deadline to meet standards set by the Financial Action Task Force is forthcoming in June. Iran needs to demonstrate progress in tackling financial crime estimated to include at least USD 27 billion in transactions annually.
◢ With the United States looking set to withdraw from the Iran nuclear deal, the question now becomes how that withdrawal will take place. The European Union and Iran will face complex decisions about legal and diplomatic responses. Even though U.S. policy will be come more clear in the aftermath of May 12, the overall uncertainty facing businesses is likely set to increase.
◢ The forthcoming visits to Washington by French President Emmanuel Macron and German Chancellor Angela Merkel come at a time of great importance for the Iran nuclear deal, regional security, and transatlantic relations. European policymakers are considering credible ways to signal that the EU is willing to take action if confronted with U.S. withdrawal from the deal, but a significant resolve will be needed.
◢ The last Iranian year, which ended in March, saw several interesting developments for Iranian energy, both domestically and internationally. Despite persistent challenges, Iran is keen to build on the momentum of last year’s developments. In doing so, the question of whether the Trump administration will stay in the JCPOA and renew sanctions waivers on May 12 will have great importance.
◢ The logistics industry in Iran is burgeoning with international players such as DHL Freight and Maersk Line connecting Iran's supply chains to the world. But Iran's logistics infrastructure remains underdeveloped. Iran Warehouse is making a big bet on logistics real estate and is building Iran’s first true Grade A warehouse park—a 60,000 square meter development in West Tehran.
◢ During confirmation hearings yesterday, Secretary of State nominee Mike Pompeo sought to ensure the members of the Senate Foreign Relations Committee of his deep commitment to diplomacy, even in the case of Iran. But committee members were well-prepared, challenging Pompeo on his record of hawkish statements. To defend himself, Pompeo was forced to defend the JCPOA as he struggled to stick to the administration's illogical talking points.
◢ With the May 12 deadline for the issuing of key sanctions waivers as part of the Iran nuclear deal fast approaching, the legal impact of the collapse of the 2015 agreement ought to be considered. Regardless of how Iran responds to a change in U.S. policy, the possible withdrawal of the United States from the JCPOA will have a legal impact on its parties. Any possible change in the partnership or the provisions of the agreement will be reflected within the domain of international law.
◢ In a decisive move intended to stop the further devaluation of the rial, the Rouhani government announced it would unify the official and free market dollar exchange rates, settling on an official rate of IRR 42,000. First Vice President Eshagh Jahangiri made the announcement last night, declaring that trading dollars above the new rate would be a serious crime.
◢ The governor of the Riksbank, Sweden’s central bank, is visiting Iran on April 5th on the invitation of Iran’s central bank governor Valiollah Seif. With an agenda focused on technical exchanges, a spokesperson for the Riksbank confirmed to Bourse & Bazaar that Ingves will give a presentation entitled “Central Banking and Financial Crisis: Lessons Learned.”
◢ The filing of a complaint against Italian telecommunications firm Italtel under the OECD Guidelines for Multinational Enterprises for its business activities in Iran is a warning about the scrutiny and politicized climate surrounding investment in the Islamic Republic. But companies can navigate these claims succesfully if they remain committed to responsible business and proactive monitoring.
◢ A new report in Austria's Die Presse confirms that one of the first Western banks to sign a deal to provide project financing to Iran has had to put its projects “on hold” due to the uncertainties surrounding the Iran nuclear deal. Oberbank had signed an agreement to extend a EUR 1 billion line of credit to Iran in September of last year.
◢ The JCPOA has become a liability for Iranian diplomacy. The "fix not nix" strategy has allowed the U.S. to sour the Europe-Iran relationship and focus nearly all diplomatic efforts on preserving the deal, rather than building new foundations for political and economic engagement. Iran ought to consider taking control by leaving the JCPOA as part of a strategy that keeps its key non-proliferation commitments intact.
◢ A new report from the International Monetary Fund (IMF) examining “selected issues” in Iran’s economy, including the expansion of non-oil exports and the role of women in the labor force, places special emphasis on the importance of the development of Iran's government securities market, which is a priority under the Sixth National Development Plan (NDP).
◢ With the announcement March 22 that John Bolton will soon be joining Mike Pompeo in the Trump administration, US adherence to the Iran nuclear deal looks doomed.
◢ But officials in Tehran who may be arguing that Iran should also quit the JCPOA if the US does, should remain patient. The Trump administration is in trouble and the Republican majorities on which it depends in Congress are looking almost as endangered as the Iran nuclear deal.
◢ John Bolton's appointment as Trump's new national security advisor likely spells the end of the JCPOA as we know it. Bolton is a vocal opponent of the deal and seeks military confrontation with Iran.
◢ But while Trump may finally nix the Iran Deal, he will cannot impede the forces that brought it into existence. In the long run, Iran's geopolitical significance and need for engagement will outlast Trump and keep Iran at the table alongside reasonable actors in the international community.
◢ If Europe is serious about saving the nuclear deal, then the appointment of Pompeo, an Iran-hawk in Washington, should serve as an urgent prompt to rethink its current strategy.
◢ Europeans should be clear-eyed about the chances of success of current talks with the United States. Based on recent precedent, Trump is likely to perceive Europe’s flexibility and accommodation over Iran policy as a weakness that he can exploit to raise the benchmarks of demands.
◢ Despite recent uncertainty surrounding the 2015 nuclear deal, Iran Air has been moving forward with its expansion efforts, drastically changing its face in the airline industry.
◢ Iran Air's network has grown significantly since 2015, but remains much smaller than that of a decade ago. In 2002, the airline was serving 18 European destinations, compared to today’s 13 destinations.
◢ Russian news agency TASS is reporting that Zarubezhneft, a Russian state-owned oil company, has signed two major contracts with the National Iranian Oil Company (NIOC).
◢ The agreements will see Zarubezhneft exploit the Aban and Western Paydar oil fields in a consortium with Dana Energy, an private sector Iranian oil services company.
