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Trump presidency threat to nuclear deal

Trump presidency threat to nuclear deal

Western policy could undermine moderates in Iran

by Norman Lamont in London

Mon 19 Dec 2016

There are many known unknowns about President-elect Donald Trump. Few are as important as his view on the Iran nuclear deal.

To many, the deal seemed worth having in its own right. The International Atomic Energy Agency has confirmed that Iran has complied with all the conditions specified in the agreement, modifying its reactors, shipping enriched uranium out of the country and reducing the number of centrifuges it operates.

The consequences are that the world is a safer place, the threat of nuclear proliferation is much diminished and, while it was not expected that Tehran would become the West’s best friend overnight, the deal held out the prospect of improving relations.

Since the agreement provided for the lifting of many sanctions against Iran, the economic consequences of the deal were also extremely important.

Iran is often described as the last great emerging market. It has a young and tech-savvy population of nearly 80m. It has the second largest oil reserves in the world and fourth largest gas reserves. It has a much more diversified economy than other oil producers. There is a long tradition of entrepreneurship and respect for business.

Technical education is also of a high standard. The chairman of the electrical engineering department at Stanford University described the corresponding department of Sharif University of Technology in Tehran as the ‘best in the world’.

Some businesses have been able to make major strides. Shell recently reached an agreement to explore for oil and gas in Iran. The country’s national airline has finalised a multibillion dollar deal with Boeing for 80 aircraft, a forebear of a prospective $25bn Airbus deal.

Nonetheless, doubts continue to abound about the opening of Iran’s economy. While a small number of corporations are looking beyond the US sanctions regime, American multinationals and financial institutions remain at risk of rebuke.

During his campaign, Trump made many damning indictments of the Iran agreement, calling it a ‘dumb’ deal and threatening to tear it up. However, as in many areas, he is not always consistent. He is reported to have said that if Iran were a ‘stock’ it would be a ‘buy’ as it was going up five times. On another occasion, he remarked that he had made his money by enforcing deals and that he would make sure that Iran stuck by the nuclear agreement.

Since the American election, Iran has reacted with restraint, simply observing that they expect the US to abide by the agreement. Unfortunately, some Iranians have become increasingly disillusioned with the absence of concrete benefits. As they see it, they have complied with the agreement fully but the West, and especially the US, has not.

In the absence of proper international banking relationships, the agreement, in the opinion of many Iranians, has not brought benefits to the population. This threatens to undermine the political position of moderate President Hassan Rouhani. Hardliners preparing for the presidential election in 2017 are accusing him of having done a ‘poor deal’. Supreme Leader Ayatollah Khamenei has repeatedly confirmed his distrust of the US and his lack of surprise at how the deal has turned out.

This is a difficult state of affairs. The agreement has not been fully implemented by the West – and the incoming US president may tear it up. If that does happen, it will provoke tremendous bitterness in Iran and undermine the modernisers who want to build better international relations. It will reinforce the perception that the West cannot be trusted and will usher in yet more volatility in the Middle East.

Lord Lamont is Chairman of the British Iranian Chamber of Commerce and the Prime Minister’s Trade Envoy to Iran.

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