U.S. lifts sanctions; Iran comes in from the cold

Primary sanctions that bar U.S citizens and companies from business with Iran will remain.

January 17, 2016 09:50 am | Updated November 17, 2021 03:13 am IST - WASHINGTON:

U.S. Secretary of State John Kerry with Iranian Foreign Minister Mohammad Javad Zarif on Saturday after the IAEA verified that the Islamic Republic has met all conditions under the nuclear deal in Vienna.

U.S. Secretary of State John Kerry with Iranian Foreign Minister Mohammad Javad Zarif on Saturday after the IAEA verified that the Islamic Republic has met all conditions under the nuclear deal in Vienna.

The United States on Saturday removed a wide range of sanctions against Iran after International Atomic Energy Agency (IAEA) confirmed that Tehran has met its commitments to roll back its nuclear programme, under an agreement with China, France, Russia, the United Kingdom, the U.S and Germany on July 14, 2015.

Minutes after Secretary of State John Kerry, after a meeting with Iranian Foreign Minister Javad Zarif, announced in Vienna that the deal has come into force, a White House official described the development as “historic” and an “inflection point in Iran’s relations with the world since concerns developed about the peaceful nature of its nuclear programme.”

Entire world is safer: Kerry

“Today... the United States, our friends and allies in the Middle East, and the entire world are safer because the threat of the nuclear weapon has been reduced,” Mr. Kerry said.

The U.S has only removed secondary sanctions that restrict the dealings of other countries with Iran. Primary sanctions that bar U.S citizens and companies from business with Iran will remain.

Iran stands to benefit immensely

However, the removal of restrictions on its oil, petrochemicals, banking, natural gas and port sectors will hugely benefit Iran and allow it to reenter the global market. As an instant relief, Iran will be able to access the huge amount of cash it has accumulated overseas from restricted oil sales during the sanctions.

Most of this money is sitting in China, India, Japan, South Korea and Turkey.

$100-150 billion for Iran

Commentators have estimated a windfall of $100-150 billion for Iran, but a U.S treasury official, briefing on condition of anonymity said the removal of sanctions will unlock only an estimated $50 billion. “Iran is likely to continue to keep it abroad to keep its own currency stable,” the official said.

Chabahar port, IPI gas pipeline

The removal of sanctions will tremendously help India’s plans in Iran, which are many and include the Chabahar port, an Indian Oil petrochemical plant and the proposed Iran–Pakistan–India (IPI) gas pipeline.

India’s oil imports from Iran have been restricted by the sanctions and the recent forward movement on Chabahar port was accommodated within the exemption granted for projects exclusively serving commerce with Afghanistan.

“With the lifting of the sanctions, the scope of India-Iranian cooperation, including the scope of the Chabahar port, can be expanded,” an Indian diplomat said.

U.S. has to keep anti-Iran allies happy

The Obama administration officials were upbeat on Saturday about the “diplomatic success” with a country with which it has no diplomatic relations. “Iran has made unprecedented concessions,” a senior official said.

But the administration has the tough task ahead, of keeping anti-Iran allies in West Asia such as Saudi Arabia and Israel happy and countering domestic criticism by the Republicans that it is going soft on Iran.

Jon B. Alterman, Director, Middle East Programme, at the Centre for Strategic and International Studies in Washington, said: “U.S allies in the region fear that the U.S. focus on the nuclear threat distracts the United States from the array of other threats that Iran poses to the region. The U.S will have to reassure Saudi and UAE and others that that is not the case.”

Long way to go for normal U.S.-Iran diplomacy

Mr. Alterman also believes that the possibility of U.S and Iran entering into normal diplomatic relations is “very far off.” “There are still many reasons each side is distrustful of the other.” He said, Iran wanted to be treated like a normal country, while other countries want Iran to behave like a normal country. “This is a step in that direction but the onus is on Iran to prove that its behavior fits into international norms. That is still a long journey.”

For the consumption of allies in the region and foes at home, the Obama administration insists that the deal is only about stopping Iran’s nuclear ambitions.

No relationship perspective: Kirby

“The Iran deal was never about defining or improving our relationship with Iran. It was about cutting off their pathways to a nuclear bomb, and it will do that. So nobody is looking at this from a relationship perspective,” State Department spokesperson John Kirby said hours before the implementation of the deal. The U.S has also made it clear that it continues to treat Iran as a state-sponsor of terrorism, and punitive actions prescribed for promoting terrorism, human rights violations and missile tests will continue. A U.S official said on Saturday that new sanctions for a ballistic missile test by Iran recently “will be forthcoming at an appropriate time.”

Resolving other issues

At the same time, administration and U.S allies in West Asia are aware of the potential this holds for the U.S in dealing with a host of other issues in the region. “The nuclear talks have opened up the possibility of resolving other issues also. We now have established strong diplomatic channels. The Secretary and Iranian Foreign Minister worked closely on the release of U.S sailors earlier this week, and we used the same channels to secure the release of U.S prisoners from Iran,” one of the officials who briefed on background said.

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