Live Trading News issued a report on Tuesday detailing these obstacles and mirroring a number of recent reports that have also highlighted the “key uncertainty” in Iran’s reentry into global oil and commodities markets. The latest report speculates that the major international banks will probably take at least five years before they are entirely comfortable reestablishing their relations with the Islamic Republic. And that presupposes that Iran’s nuclear deal with six world powers will remain in effect, sans any degradation in relations between Iran and the West.
On one hand, Live Trading News points out that the Iranian government and leading Iranian businesses are standing ready with a range of economic development projects that would serve to modernize the sanctions-damaged Iranian economy. But the implementation of these plans will require as much as 500 billion dollars in foreign investment, and thus the cooperation of leading international banks.
At the same time, Iranian Supreme Leader Ali Khamenei has arguably made the international climate more difficult for economic reconciliation, having delivered recent speeches accusing the US of aggressive policies in the form of continued enforcement of economic sanctions that remain on the books. And although Khamenei has made every effort to portray the US as being unilaterally responsible for aggression, this subordinates including the Iranian Revolutionary Guard Corps have strongly contributed to a distrustful environment through such activities as three tests of banned ballistic missiles earlier this month.
These and other provocations have left Western critics of the nuclear deal clamoring for new sanctions and associated enforcement measures. But even without having responded to that pressure, the US continues to feed Khamenei’s rhetoric through legal enforcement measures. This fact was highlighted on Tuesday by Ambiente Ja when it reported that a Turkish-Iranian dual citizen named Reza Zarrab had been arrested in Miami for his role in a years-long scheme to launder money to the Islamic Republic. Two others have been charged in the case but have not come within the reach of US law enforcement.
While there does not appear to be much serious criticism of this enforcement among Western policymakers, there is little doubt that Khamenei will strive to use it in his push for Iran to return to a “resistance economy” comprised of policies aimed at evading sanctions and developing domestic industries in absence of foreign investment. Such efforts put Khamenei at odds with the administration of President Hassan Rouhani, which spearheaded the Iran nuclear deal as part of a policy of strategic engagement with the West, ostensibly leading to improved economic outcomes.
On one hand, the latter policy arguably represents better prospects for the economic survival of the existing regime. But on the other hand, foreign investment may be seen as a challenge to existing Iranian institutions, including those owned or closely affiliated with the Iranian Revolutionary Guard Corps.
Critics of the Iranian regime such as the National Council of Resistance of Iran have estimated that the IRGC controls the majority of the Islamic Republic’s entire gross domestic product. A report published by Reuters on Tuesday seemed to lend some additional validity to these conclusions, quoting experts as saying that government institutions are the main objects and the primary would-be beneficiaries of Khamenei’s latest speeches espousing the virtues of a resistance economy.
On the occasion of the Iranian New Year celebration of Nowruz over the weekend, the supreme leader deemed the year ahead the “Year of the Resistance Economy.” Such remarks seem to preemptively dismiss the possibility of reconciliation and economic cooperation. In other words, if Khamenei’s commentary successfully influences government officials, it may encourage more provocations of the sort we saw earlier this month, in order to facilitate “resistance” in lieu of fulfilling the expectations derived from the nuclear deal.
To the extent that this concept of resistance is aimed at staving off foreign investment in favor of entrenched government institutions, it may also contribute to “resistance” against cooperation with entities other than the US, including Iran’s ostensible partners in OPEC. Those countries appear to have largely written off the prospect of Iranian participation in an oil production freeze. Therefore, they are scheduled to participate in a separate meeting with one another and Russia in mid-April, in order to extend the recent production decreases, even in absence of the desired participation from Iran.
However, there are now some indications that the “resistance” rhetoric may have impacts that extend beyond the Islamic Republic and include its allies and other players in the Middle East and North Africa. Specifically, Channel News Asia reported on Tuesday that Libya is now indicating that it has no plans to participate in the April 17 OPEC/Russia meeting but will instead focus on expanding its own oil output to recover from the roughly 800,000 barrel per day decrease that the country has experienced since its 2011 civil war.