Will Western Firms Really Race Into Iran After a Nuclear Deal?
A new report finds Western money wouldn't flood into Iran if a nuclear deal is made.
Critics of President Barack Obama's administration's possible Iran nuclear deal like former Israeli Strategic Affairs Minister Yuval Steinitz and Sen. Tom Cotton (R-Ark.) argue it would give Tehran some $40 billion in sanctions relief. Obama says that’s not the case and maintains Tehran would only be rewarded with economic benefits if it complies with the terms of the agreement over time.
Critics of President Barack Obama’s administration’s possible Iran nuclear deal like former Israeli Strategic Affairs Minister Yuval Steinitz and Sen. Tom Cotton (R-Ark.) argue it would give Tehran some $40 billion in sanctions relief. Obama says that’s not the case and maintains Tehran would only be rewarded with economic benefits if it complies with the terms of the agreement over time.
Ahead of a June 30 deadline to get the deal done, a new report backs the White House’s claims.
A Center for a New American Security report released Tuesday argues it could take months, if not years, for Western companies and institutional investors like Goldman Sachs and Deutsche Bank to invest in Iran’s economy. There’s a simple reason: It’s not worth the risk.
“The maintenance of some sanctions on Iran, even in a best-case scenario for nuclear diplomacy, and the threat of re-imposing tough economic sanctions if Iran circumvents the deal will serve concomitantly to temper what would otherwise be enthusiastic and potentially ubiquitous investment into Iran,” the report found. CNAS is a nonpartisan organization, but an array of its employees hold, or used to hold, senior positions in the Obama administration.
In a Tuesday morning interview with Foreign Policy, one of the report’s authors, former Treasury Department official Elizabeth Rosenberg, said any multinational that does business in the United States and Europe is likely to stay away from investing in Iran until Tehran shows its commitment to dismantling its nuclear program. If it doesn’t, the United States and its P5+1 negotiating partners have promised so-called “snap-back” sanctions that would reimpose economic penalties — and make it vastly harder for Western firms to operate in the country.
“The significant theme here is it’s not going to be this tsunami of money pouring into Iran,” Rosenberg, who is a senior fellow at CNAS, said. She coauthored the report with Sara Vakhshouri, president of SVB Energy International.
Instead, she said it’s likely that companies from the Gulf States and Southeast Asia, who don’t have much exposure to U.S. or European markets, would invest in Tehran. But without the presence of large, Western investors, the amount of money Gulf and Asian companies commit is likely to be modest.
Still, Rosenberg said she doesn’t think the lack of an immediate arrival of euros and dollars would compel Tehran to break the terms of the agreement.
“There will be a lot of incentives to comply. They won’t walk away because they don’t get a windfall in the initial days and weeks after a deal,” she said.
“But if that’s a theme over time, there may be a credibility problem.”
Photo credit: Fabrice Coffrini/Getty Images
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