How a U.S.-Iran Deal Helps Red States
Republican districts stand to benefit most from the economic windfall that a revived JCPOA would bring.
Three months into his term, U.S. President Joe Biden’s promise to reenter the Iran nuclear deal remains unfulfilled. Since he’s concerned about Republican opposition in Congress, Biden hasn’t made a swift return to the 2015 deal, known as the Joint Comprehensive Plan of Action (JCPOA), and has instead sought to assuage hawkish Republicans by squeezing Iran for future concessions before Washington reenters the agreement.
Yet Biden’s reasoning is flawed. It makes sense to neutralize GOP opposition to the nuclear deal, but that won’t be achieved by trying to out-hawk Republicans. There is a smarter way: Biden can boost the economies of red states and districts by using U.S. primary sanctions relief to elicit Iranian concessions.
Biden wants to reenter the JCPOA but worries the United States lacks the leverage to compel Iran to renegotiate key deadlines within the agreement, which puts Washington in a time crunch. Most critically, the JCPOA would require Biden to push Congress to lift key sanctions legislation on Iran in return for Tehran’s ratification of the Additional Protocol, an addendum that vastly expands the inspections regime of nuclear programs, in 2023. Biden’s team fears that such an endeavor will use tremendous political capital and make Democrats vulnerable in the 2024 presidential election.
Biden’s concern is legitimate. Pushing the deadline back a few years would not only reduce the domestic political risk associated with the deal, but it would also increase the likelihood of getting Congress’s approval. But the Biden administration has gone about this the wrong way. It calculated that Iran would only be amenable to such changes to the JCPOA if Washington recreated the perceived circumstances of 2013, when the nuclear negotiations began in earnest: In short, it’s looking to deal with a politically isolated Iran that’s unanimously blamed for nuclear impasse and kneecapped by crippling U.S. sanctions.
So instead of turning to diplomacy, Biden began a blame game to depict Iran as responsible for the JCPOA crisis, played for time to let former U.S. President Donald Trump’s sanctions further cripple Iran’s economy, and even refused to reverse Trump’s blocking of coronavirus aid to Iran. The high-stakes gamble predictably failed, just like Trump’s pressure strategy before it—which Biden aptly deemed a “self-inflicted disaster.”
As it turns out, Biden’s fear of declining U.S. coercive leverage is not unfounded. There are signs the Iranian economy has turned the corner on sanctions. Oil exports to China have reportedly returned to pre-Trump levels, while Iran’s economy has come out of a recession following two consecutive quarters of growth, according to Iran’s Central Bank. Now that it’s survived Trump’s maximum pressure without giving an inch, Tehran is more confident it can withstand any pressure Biden might impose on it. And with good reason—especially since it’s unlikely that Biden will inflict as much harm as his predecessor did for the simple reason that no responsible administration would follow Trump’s example and obsess about Iran at the expense of Washington’s many other international priorities.
Instead of adopting a hawkish position that effectively continues Trump’s failed sanctions policy, the Biden team should expand the pie with Iran. Biden should give more constituencies a stake in the JCPOA’s survival by bringing more economic benefits to the American people and, with them, more Republicans. This strategy would pass National Security Advisor Jake Sullivan’s test for a foreign policy for the United States’ middle class that makes “life better, easier, safer for families across this country.”
Admittedly, the JCPOA was not designed to help U.S. workers. Although it lifted sanctions on Iran, it did not touch primary sanctions or the laws that prohibit U.S. companies from trading or investing in Iran. It only lifted secondary sanctions targeting foreign companies. As a result, Chinese and European companies entered the Iranian market while U.S. companies couldn’t. This was by Washington’s own design: Former U.S. President Barack Obama wanted to sell the JCPOA strictly as a security agreement and didn’t want to enlist the support of the business community lest the administration was accused of favoring the deal for economic reasons.
This meant, though, that once Obama left the White House, the business community had no incentives to stick up for the agreement since it had brought them no tangible benefits. (Boeing was the sole exception as its sales of civilian aircraft were written into the JCPOA.)
Biden can change this. Lifting primary sanctions—most of which can be undone through executive orders, which don’t require congressional approval—would likely make Iran more flexible on the JCPOA’s timelines and restrictions. It would also make European Union companies more comfortable in trading with Iran since under Trump’s maximum pressure regime, virtually all of them left or reduced their engagement with Iran out of fear of being locked out of the U.S. market. Tehran has likely since realized that the only way to make EU companies feel safe from U.S. sanctions is for them to engage in the very same trade as U.S. companies themselves do.
At the same time, the financial benefits of enlarging the JCPOA by lifting primary sanctions have the potential to break Republicans’ opposition to the deal by bringing economic trade benefits with Iran to Republican states and districts.
Few in Washington appreciate how costly sanctions on Iran have been for U.S. firms. A study my colleagues and I conducted in 2016 revealed that between 1995 and 2014, the United States sacrificed at least $203 billion and as much as $272 billion in potential export revenue to Iran. Much of that trade would have benefitted red states.
Consider, for instance, some of Iran’s imports. Corn is Iran’s main agricultural import, and it imported $2.11 billion-worth of corn in 2018. Although the United States is the largest producer of corn in the world, it doesn’t sell a single bushel of corn to Iran. The country’s corn is primarily produced in Republican-controlled states—Nebraska, Indiana, Kansas, and South Dakota. And though the United States’ top producer of corn, Illinois, is majority Democrat, its corn production takes place in its Republican districts. The corn industry accounts for 54 percent of Illinois’ total agricultural production and employs nearly 1 million people in the state.
Iran’s second largest agricultural import is rice, another one of the United States’ leading agricultural exports. Again, the primary producers of rice in the country are, with the exception of California, the Republican states of Arkansas, Louisiana, Mississippi, Missouri, and Texas.
Furthermore, if Trump hadn’t abandoned the JCPOA, Boeing would have sold 80 civilian aircraft to Iran in a deal worth more than $20 billion that would have supported nearly 100,000 jobs in the U.S. manufacturing sector. One of Boeing’s main commercial aircraft manufacturing plants is located in North Charleston, South Carolina—a district represented by a Republican congresswoman.
The list goes on. According to Iranian economist Bijan Khajehpour, the potential of the Iranian market for U.S. businesses is greater than that of Turkey. “U.S. exports to Turkey were $14.2 billion in 2019, so if one adds the potential of the petroleum sector, without sanctions, the U.S. could export more than $15 billion of goods and services to Iran,” he said. This would make Iran a top 20 export market for the United States—a bigger consumer of U.S. exports than, for instance, Israel, Spain, and Ireland.
The JCPOA is and remains primarily a nonproliferation agreement that was clinched to advance U.S. security. But given the fast-changing political winds in Washington, if the deal is to survive and endure, it cannot rely solely on the support of the arms control community or peace activists. It needs to be anchored in red states too. And bringing them into the equation is the game changer Biden needs to make Tehran say yes.