0520 GMT December 01, 2022
Iran and the U.S. are on the verge of reviving the Joint Comprehensive Plan of Action (JCPOA). Even though some minor details still remain to be settled by the two parties, evidence and assessments suggest that the possibility of concluding the deal is greater than ever.
But it’s important to ask what Iran went through over the past year to get on the verge of signing a deal.
When the incumbent Iranian government took office in August 2021, the U.S. ‘Maximum Pressure’ policy was still in effect, and the effects of the sanctions that Washington unilaterally imposed can still be felt a year later. During the Vienna talks, some assessed that prolonging the negotiations in addition to keeping the sanctions in place would make the economic situation more difficult for Iran, which in turn would force Tehran to give more concessions in the negotiations.
President Raeisi’s government, however, had promised that it would not tie the country’s economy to the results of the negotiations. Iranian Finance Minister Ehsan Khandouzi noted on August 6 that two distinct scenarios were on the government’s economic table: (1) Assuming the deal is signed and the sanctions are lifted; and (2) assuming the sanctions are maintained.
Even though Iran’s government is ready to reach an agreement that safeguards the country’s national interests, it has also planned for the possibility of the agreement breaking down. The planning is in line with the same double-sided policy that Raeisi’s government highlighted from the early days, which aimed to simultaneously end the sanctions and plan to neutralize their effects.
During the year that has passed since Raeisi’s administration began, it seems that the double-sided approach has been pursued. While the Iranian negotiating team was trying to lift sanctions in Vienna, various members of the cabinet were working on adopting policies, the results of which are presented in the statistics released by the ministers. The statistics indicate that the country’s economic indices have improved over the past year.
According to the Iranian finance minister, the number of foreign investments that were authorized has doubled this year, standing at $5 billion. Moreover, the volume of foreign trade rose by $22 million, to reach $92 million in the first nine months of President Raeisi’s administration.
The unemployment rate has also decreased to 9.2 percent in the first three months of the current Iranian calendar year.
Despite the fact that the annual inflation rate of 40.5% is still high, it has dropped by 4% and it is expected to be further slashed following the adoption of a set of short-term policies.
Khandouzi also reported that Iran’s oil export revenues had multiplied by 11 in the previous Iranian year (ending March 20, 2022), compared to the preceding year. So far this year, the revenues have been five times higher than the previous year.
Iranian Oil Minister Javad Owji said that more than $100 billion worth of oil and gas contracts and memoranda of understanding were signed during the past year. Just one such memorandum of understanding with the Russian gas giant Gazprom is worth around $40 billion.
Mehdi Safari, the Deputy Foreign Minister for Economic Diplomacy, recently announced that as a result of diplomatic efforts, Iran’s exports are 50% higher over the previous 12 months.
Although the expansion of ties with China and regional countries has been the top priority of Iran’s incumbent government, Tehran’s efforts to improve relations and increase exchanges were not exclusively aimed at those countries. According to Eurostat, the European Union's statistics office, trade between Iran and the 27 members of the European Union saw a 15% boost in the first half of 2022, compared to the same period last year.
More specifically, the EU’s imports from Iran grew by 37%, to 362 million euros, while its exports to Iran rose by 10%, standing at 310 million euros.
These economic achievements under sanctions come at a time when, following the failure of the remaining parties to the JCPOA to honor their commitments, the Islamic Republic has reduced its JCPOA commitments in five phases and increased the quality and quantity of its nuclear activities since a year after the previous U.S. government abandoned the deal.
In fact, as the negotiations protracted, Tehran adopted policies to develop its political and economic relations with other countries to neutralize the effects of sanctions. Meanwhile, Iran also improved its nuclear infrastructure. Consequently, it raised its enrichment of uranium to 60 percent, and mass-produced and used the IR-6 centrifuges.
What is more, unveiling new military equipment and holding various military exercises have demonstrated Iran’s preparedness to defend itself. The latest successful exercise was the Iranian Army’s massive two-day joint military drone drills, held in four different parts of the country. It came right after rumors spread that Russia was willing to buy Iran’s drones, which followed the news of the inauguration of a joint drone-manufacturing factory in Tajikistan.
In the meantime, the Ukraine war has seemingly put Iran in a superior position since the economic consequences of the war, and particularly the global energy crisis has befallen the West. The EU coordinator Josep Borrell’s initiative in proposing a draft deal to Tehran and Washington that puts Iran’s interests into consideration bears witness to Europe’s concerns over the shortage of energy as well as its hopes to have Iran’s oil and gas pumped back into the global market.
So it seems that Iran is on the threshold of concluding the deal with a much better hand than before. If the JCPOA is revived, the stars would align for Iran’s economic leap. But if, for any reason, the negotiations yield no fruit, Iran would play out the scenario of neutralizing the sanctions and expanding relations with various countries.