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Iran nuclear deal: Five effects of lifting sanctions

2016-01-19 04:56:55

By Kasra Naji BBC Persian

Economic sanctions on Iran have been lifted after it agreed to roll back the

scope of its nuclear activities. What does this mean for Iran and the rest of

the world?

A major crisis has been resolved, for the time being

Image copyright AFP

Iran says the crisis was unnecessary, insisting it never wanted a nuclear bomb.

But the P5+1 group of powers - the US, China, Russia, UK, France and Germany -

argue that the world is now safer.

The alternative would have been a military attack on Iran's nuclear facilities

- something that could have triggered a regional war, possibly drawing in the

big powers.

Critics, including Israeli Prime Minister Benjamin Netanyahu, argue that the

agreement prepares Iran to become a nuclear power in 15 year. They say lifting

sanctions will make Iran an economic powerhouse and will bolster its ability to

wage war in the region and cause mischief. Mr Netanyahu has issued a statement

saying Israel is watching Iran's adherence to the agreement.

Iran's Gulf Arab neighbours are worried

Image copyright AFP

For Iran, the nuclear agreement's so-called "implementation day" ended more

than 10 years of crippling sanctions and international isolation.

The deal enables Tehran to become an active member of the international

community once again.

Inevitably, this strengthens Iran's position in a region where most Arab

countries are deeply concerned at what they perceive as Iranian Shia

expansionism.

Sunni-ruled Gulf states view the nuclear agreement and the lifting of sanctions

as a threat and a sign that the West is getting closer to Tehran at their

expense. They fear Iran could become more daring in its interventions in the

conflicts in Iraq, Syria and Yemen.

The US and other Western powers are keen to enlist Iran's help in the fight

against so-called Islamic State (IS) and in the efforts to put an end to the

Syrian conflict. But Saudi Arabia and its Gulf allies are not convinced Iran

can be part of either solution.

Their stock markets fell sharply after sanctions were lifted, even though a

third of Iran's imports come from the United Arab Emirates (UAE).

Iran will see an economic rebound

Image copyright AFP

The lifting of sanctions has opened the Iranian economy - one of the last great

untapped emerging markets - to international trade and investment.

Iran can now return to the oil market, and is expected to start exporting an

estimated 300,000 barrels per day immediately. This, in an already oversupplied

market, will contribute to the falling price of petrol for consumers across the

world.

Iran will also have access to more than $100bn ( 70bn) of money that was frozen

overseas. However, it can only spend about $30-50bn, as the rest is thought to

be been locked into previous commitments.

The money may be used to import goods and services to renovate and modernise

many of Iran's economic sectors. Already, Tehran is in talks to buy Airbus

passenger aircraft by the dozens. The lifting of banking sanctions also means

Iran is reconnected to the world financial network.

Critics of the deal say Iran will have more money to buy arms and bankroll its

client militias locked in wars in the region.

Iran-US relations are unlikely to improve

Image copyright AP

Almost four years of direct secret and open talks between Iran and the US -

which have no diplomatic relations - helped bring about the nuclear deal.

The US and Iran have now removed the most important source of tension between

them. But huge problems remain.

President Barack Obama has spoken about challenges ahead: Iran is a

destabilising factor in the region, threatens Israel, violates human rights at

home, and supports terrorism abroad.

Iran's Supreme Leader, Ayatollah Ali Khamenei, is equally suspicious of US

actions in the region and its intentions in Iran. He has made it clear that the

nuclear agreement is not going to be allowed to open the way for engagement

with the US on other issues. And the hardliners around him, including the

commanders of the Revolutionary Guards, feel humiliated by the deal. They will

no doubt take every opportunity to hit back, with the US responding to their

every move.

Rouhani gets a boost ahead of key elections

Image copyright AP

Iranian President Hassan Rouhani described the day the sanctions were lifted as

a "golden page" in his country's history and something that could transform its

economy.

Mr Rouhani can claim credit for transforming the outlook for Iranians. He was

elected on the promise of ending sanctions and has kept it, to the

consternation of his hardline rivals.

A hardline newspaper, Vatan-e-Emruz, criticised the nuclear deal as "burying

Iran's achievement in cement" - a reference to the removal of the core of the

Arak heavy-water reactor and the filling of the cavity with cement last week.

The newspaper was also very clear that Mr Rouhani wanted the sanctions lifted

in time for February's parliamentary elections.

The polls will be the first test of whether the hardliners can turn the tide in

their favour. The president remains vulnerable. Even though the sanctions are

gone, Iranians are unlikely to see any immediate benefit before a real

turnaround in the economy, which even at best estimates may be a year or two

away. High consumer prices are unlikely to come down that fast.