News : Sanctions

Iran: Rouhani Seeks Western Money, Builds Power Against Western Interests

By INU staff

INU - The LA Times on Monday reported that significant discussions were ongoing regarding the prospect of extending the nuclear negotiations between Iran and the P5+1 for a second time. It is acknowledged that such an extension would be difficult to implement, but opposition to it has reportedly softened in recent weeks, even among certain Israeli policymakers who fear that the alternative is a rushed agreement that provides too many concessions to Iran.

Iran has maintained excessively high demands in these talks, making the achievement of a deal quite difficult, and by some accounts leading Western negotiators to give up major portions of their original bargaining position. Some expect that Iran will nonetheless make its own concessions at the last minute, once it has gained as strong a position as it can. But others accuse the Islamic Republic of trying to merely draw out the process, even on the understanding that a deal will not be accepted if it requires restrictions to the Iranian nuclear program.

Drawing out the process allows Iran to benefit from limited sanctions relief that was slated to accompany the talks, and a second extension may further improve Iran’s economic situation. Under the original terms of the interim agreement, Iran received 4.2 billion dollars in assets that had been frozen in foreign banks. The four month extension that was agreed to in June brought with it the promise of another 2.8 billion dollars in unfrozen assets. Chances are good that a second extension would provide Iran with yet another cash windfall.

Western Investment

In addition to improving Iran’s economic outlook, these extensions and asset releases may increase the attractiveness of the Iranian market and make investors increasingly confident that that market will be opened to them. Critics of the talks have already expressed serious concern that this has weakened international support for continued sanctions, in turn making it more difficult for them to be re-instated if no final deal is signed.

Whether to push for this outcome or simply as an expression of its own confidence that a deal will be reached, the administration of Hassan Rouhani has been making major efforts to endear itself to European investors and consumers. Two recent European conferences brought Iranian and European businesses into direct communication, and Iranian media has announced extremely ambitious development projects such as an expansion of the Khomeini International Airport, portraying these as opportunities for successful foreign investment.

Further signifying this trend, Iran’s state-affiliated Tasnim News Agency on Monday carried comments by Rouhani insisting that the end of sanctions would be good not only for Iran, but especially for the European Union. Speaking at a meeting with the Belgian ambassador to Tehran, Rouhani also boldly declared that the “cruel sanctions” were based on “flimsy excuses.” However, the United Nations International Atomic Energy Agency has reported that Iran has repeatedly failed to fully cooperate with the months-long probe into the past military dimensions of Iran’s nuclear program, which foreign intelligence agencies previously uncovered evidence of.

Still, some foreign investors and wealthy consumers evidently are not concerned with these rationales for international sanctions or else they accept Iran’s own declarations of its innocence. In any event, Rouhani’s outreach to Europe has shown some signs of success, with the possibility of more of the same in the near future. It was reported last week that the first-ever private European train was permitted into Iran as part of this outreach, bringing with it dozens of wealthy tourists.

Such tourists are reportedly responsible for bringing 6 billion dollars in revenue to Iran as a result of a 35 percent increase in tourism this year. Twelve more trips between Budapest and Tehran are said to be scheduled for next year, though it is unclear how these plans will be affected by either the success or failure of a nuclear deal.