News / Middle East

Sanctions Crucial Issue in Iran Talks

FILE - Iranians hold posters of President Hassan Rouhani, while welcoming Iranian nuclear negotiators upon their arrival from Geneva at Mehrabad Airport in Tehran Nov. 24, 2013.
FILE - Iranians hold posters of President Hassan Rouhani, while welcoming Iranian nuclear negotiators upon their arrival from Geneva at Mehrabad Airport in Tehran Nov. 24, 2013.
Sanctions relief for Iran is the linchpin of the Islamic Republic’s motivation for cooperation with world powers in their efforts to curb elements of Iran’s nuclear activities.

The recent interim accord hammered out in Geneva freezes for six months Iran’s nuclear program. Meanwhile, negotiators will continue diplomatic talks aimed at a comprehensive plan to ensure that Tehran’s nuclear program will be used exclusively for peaceful purposes.

In exchange, Iran received what experts consider to be modest relief from international economic and financial sanctions that have crippled the Iranian economy.

Iran offers concessions

Joel Rubin, an expert on Iran with the Ploughshares Fund, a global security foundation, said the interim agreement contains significant concessions from Iran that will be closely watched by world powers who will be careful in the easing of sanctions.

“To eliminate the 20 percent enriched uranium fuel - that stockpile will be gone. Second, to stop construction at the plutonium facility Arak - that will now be halted,” Rubin said.

“And then third, to increase inspections of Iran’s nuclear infrastructure to the point where there will be daily inspections - so we will be able to see really what’s in their possession and get a better feel for what constraints need to be put on it," he said. "So those are the three core wins for the West.”

As talks lingered for years, the U.N. Security Council, along with the United States and the European Union, imposed sanctions to pressure Iran to end its uranium enrichment program, which can be used for civilian or military purposes.

Tehran says it is not developing nuclear weapons, but the United States and the European Union believe otherwise.

Iran hard hit

Gary Hufbauer, an expert on sanctions with the Peterson Institute for International Economics, said such measures have reduced Iran’s petroleum exports by about 50 percent.

“In addition, the sanctions cut off financial transactions between a great many Iranian banks and the rest of the world," he said. "Those banks are not permitted to do financial transactions through the ‘SWIFT’ system, which is an interbank mechanism for financial transactions based in Brussels."

"So that’s a big handicap, because if you can’t do financial transactions, it’s pretty hard to buy and sell goods,” Hufbauer said.

As a result of those sanctions, inflation and unemployment have increased substantially, while the value of Iran's currency - the rial - has plummeted.

Experts say a key political event several months ago was the election of Hassan Rouhani as Iran’s president - a man who favors engagement with the West and who ran a campaign based on restoring the country’s economy.

Hufbauer believes Western sanctions played a role in the outcome.

“I give sanctions credit for the election of Rouhani," he said. "And then I give the sanctions further credit for the fact that he went to the negotiating table - and we have this interim agreement.”

“Does it solve all the problems?" he asked. "Absolutely not, but it’s the first substantial agreement we could say in 20 years. It is quite remarkable. So yes, the sanctions have moved the diplomatic dialogue forward quite a bit.”

Accord eases some sanctions

Hufbauer said the interim agreement provides the lifting for six months of some sanctions if Iran abides by the terms of the accord.

“Iran will have released to it four and a half billion dollars of money that was frozen before," he said. "So it has four and a half billion dollars more than it had yesterday as soon as it performs its side of the bargain.”

“There will be a permission to repair Iranian aircraft for safety reasons - just for safety reasons, safety repairs," Hufbauer said. "There will be permission for non-U.S. companies to engage in the automobile industry, to sell autos and to engage in the industry in Iran.”

Andre de Nesnera

Andre de Nesnera is senior analyst at the Voice of America, where he has reported on international affairs for more than three decades. Now serving in Washington D.C., he was previously senior European correspondent based in London, established VOA’s Geneva bureau in 1984 and in 1989 was the first VOA correspondent permanently accredited in the Soviet Union.

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