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If Trump Refuses to Certify Iran Deal, New Sanctions May Give U.S. Bargaining Power to Renegotiate

The nuclear deal between the P5+1+EU and Iran, formally known as the Joint Comprehensive Plan of Action (JCPOA), is the culmination of 20 months of negotiations designed to limit Iran’s ability to develop nuclear weapons for over the next decade in return for the lifting of economic sanctions. Decertifying the deal does not mean pulling out of the agreement. If President Trump refuses to certify by the October 15th deadline, Congress could reimpose sanctions. It is believed that this will give the White House a chance to negotiate a better deal.

The nuclear deal was reached in 2015 by President Obama’s administration and the governments of Russia, China, Britain, France and Germany. The agreement prohibits the U.S. from reimposing the original sanctions on Iran’s nuclear program, but does not rule out sanctions on Iranian entities responsible for terrorism, missile development, regional aggression, corruption and human rights violations.

Since Iran does not want to give up the extraordinary economic benefits delivered by the nuclear deal, such sanctions may exert the pressure needed to bring Iran back to the negotiating table.

During the first full year after the nuclear deal went into effect, income from oil and natural gas exports increased by $24 billion, or 70 percent, for Iran. The International Monetary Fund projects that energy exports will experience continued growth over the next five years, which will provide Tehran with $174 billion more of oil revenue than it would have earned if sanctions remained in place.

According to the International Monetary Fund, oil exports increased from 1.4 million barrels per day to 2.4 million in the first full year after the nuclear deal took effect, and oil drives the Iranian economy. This surge in exports translates into impressive overall growth of 6.6 percent. Contrasting this, Iran’s economy reportedly shrank by 1.8 percent prior to the implementation of the nuclear deal, and by 6.6 percent in 2012. The World Bank reported similar findings. Both organizations project Iranian economic growth to be near 4 percent this year, and stay above 4 percent for the next several years.

According to World Bank figures, the economic benefits that followed implementation of the nuclear deal also included lower Iranian inflation, which peaked near 35 percent in 2013 yet has now fallen to single digits. Additionally, Iran’s currency has stabilized after the beginning of the negotiations that led to the nuclear deal.

Iran has received extraordinary economic benefits from the nuclear agreement, so new sanctions may give the US bargaining power to negotiate a better deal.

 

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