• World
    • Africa
    • Asia Pacific
    • Central & South Asia
    • Europe
    • Latin America & Caribbean
    • Middle East & North Africa
    • North America
  • Coronavirus
  • Politics
    • US Election
    • US politics
    • Joe Biden
    • Brexit
    • European Union
    • India
    • Arab world
  • Economics
    • Finance
    • Eurozone
    • International Trade
  • Business
    • Entrepreneurship
    • Startups
    • Technology
  • Culture
    • Entertainment
    • Music
    • Film
    • Books
    • Travel
  • Environment
    • Climate change
    • Smart cities
    • Green Economy
  • Global Change
    • Education
    • Refugee Crisis
    • International Aid
    • Human Rights
  • International Security
    • ISIS
    • War on Terror
    • North Korea
    • Nuclear Weapons
  • Science
    • Health
  • 360 °
  • The Interview
  • In-Depth
  • Insight
  • Quick Read
  • Video
  • Podcasts
  • Interactive
  • My Voice
  • About
  • FO Store
Sections
  • World
  • Coronavirus
  • Politics
  • Economics
  • Business
  • Culture
  • Sign Up
  • Login
  • Publish

Make Sense of the world

Unique insight from 2,000+ contributors in 80+ Countries

Close

The End of the Iran Nuclear Deal

By Gary Grappo • May 10, 2019
Iran, Iran news, news on Iran, Iran nuclear deal, JCPOA, Joint Comprehensive Plan of Action, Iran deal, Hassan Rouhani, Iranian, Iranian news

Hassan Rouhani in Tehran, Iran on 7/13/2017 © Saeediex / Shutterstock

Iran’s economy is set to plunge and the much strained JCPOA with it. But the Islamic Republic will likely remain defiant.

Iran’s announcement on May 8 that it will “partially” withdraw from the Joint Comprehensive Plan of Action (JCPOA) — aka the Iran nuclear deal concluded in 2015 between the Iranians and the P5+1 group — marks yet another step in the landmark accord’s slow death. The demise became inevitable a year ago when President Donald Trump pulled the US out of the agreement and re-imposed onerous sanctions on Iran and its economy.

In announcing his government’s action, President Hassan Rouhani said Iran will cease its sales of enriched uranium, meaning its stocks will begin to exceed set JCPOA limits. He also warned that if the other still-compliant signatories — clearly signaling the Europeans — don’t come up with a mechanism for Iran to recapture the economic benefits of the JCPOA in 60 days, then Tehran will resume production of highly-enriched uranium — likely above the 3.67% level permitted under the accord.

Desperate Gambit to Fight “King Dollar”

Throwing the future of the deal at the feet of the Europeans illustrates the desperation of Iran’s leadership and its economy. Iranian hardliners had always maintained that the JCPOA was a Western plot to undermine the Islamic Revolution, which was all but confirmed by the US withdrawal in 2018. Moderates are at whit’s end to prove them wrong. Bereft of options short of caving to the Americans, they are effectively beseeching, if not begging, the Europeans to save them and the JCPOA.

American sanctions have begun to bite deep into Iran’s economy with oil exports halved even before the May expiration of US waivers — from a high of 3.8 million barrels per day (bpd) at the start of 2018 to 1.1 million bpd by in March 2019. The waivers had been granted to major economic partners and allies of the US still importing Iranian oil, including China, India, South Korea, Japan, Italy, Turkey and others. With the expiration of those waivers, oil exports could now plummet by as much as another 50%. Losses to Iran already reach well into the tens of billions of dollars. Trump’s announcement also on May 8 to impose sanctions on Iran’s mining and minerals sectors, including copper, steel and others, will exact further pain on the country.

Iran’s leadership realizes the futility of fighting “king dollar,” the all-powerful currency in which most of the world’s financial and trade transactions take place. The facts are incontrovertible. The US dollar makes up nearly 62% of all known central bank foreign exchange reserves, making it the de facto global currency. According to SWIFT, the payment services company, in 2018, the dollar accounted for 90% of global trade based on the value of letters of credit issued, up from 81% three years earlier. (Even the European Union pays for 80% of its energy imports in dollars.) Any nation, financial institution or company doing business in dollars or with the US risks an effective death sentence in defying American sanctions.

But Iran’s gambit of dumping the problem on the Europeans effectively amounts to blackmail: You fix this or we’re gone. Read: we are helpless and you must help us or else. Yet the Europeans have already sought financial work-arounds to US sanctions — China made a futile attempt as well — but to little effect. Supplanting the dollar, which has been the global currency since the end of World War II, may be possible, but it would take extraordinary efforts and much time. Iran’s economy, now in a steep nosedive — from negative 3.9% last year to an estimated minus 6% in 2019 — doesn’t have time.

Iran’s Own Doing

The European signatories of the JCPOA — Britain, France, Germany and the EU — quickly rejected Iran’s hapless “ultimatum.” First, Europe recognizes the Islamic Republic’s vain attempt to drive a wider wedge between themselves and the US. Europe’s economic and strategic ties to the US, frayed though they may be in the era of Donald Trump, are simply too strong. Second, despite the Trump administration’s ill-considered withdrawal from the agreement, many of its justifications for doing so ring true.

Iran’s continued testing of intermediate-range ballistic missiles, backing for terrorist organizations like Hezbollah and Hamas, support for the brutal Syrian regime and the Houthi rebels in Yemen, interference in the internal affairs of regional nations like Iraq and Lebanon, threatening harangues against Israel and Saudi Arabia, and abysmal human rights record are all self-inflicted wounds, which the Europeans recognize and cannot fix. Only Iran’s ruling clique of clerics and toady henchmen, the Islamic Revolutionary Guard Corps, can right these and other wrongs.

Trump’s decisions — driven by hardliner Secretary of State Mike Pompeo and uber-hardliner National Security Adviser John Bolton — unfortunately play right into the hands of those same Iranian hardliners who complained all along of the JCPOA sell-out to the West. They and their master, the supreme leader, Ayatollah Ali Khamenei, have no intention of reversing the course of the revolution. They would rather see the economy tank first and with it the enormous potential and aspirations of the Middle East’s most capable population.

Exit JCPOA but Not the Islamic Revolution

Nevertheless, the capacity of Iranians for suffering, undergirded by Shia Islam’s martyr ethos, will suffer through this, just as they did for the 35 years prior to the JCPOA. And just as it did during that time, the leadership will blame all the woes of its own theocratic mismanagement and corruption on the “Great Satan,” aka the US. It will likely work again, sadly.

Iran may hold on to the JCPOA till 2020 in a false hope of change in US policy following the presidential election. But President Trump’s defeat is not assured — certainly not in the glow of America’s vibrant economy and low unemployment rate, two drivers in any election. Moreover, even a winning Democratic candidate would be loath to re-enter the JCPOA without changes. Such a candidate  would wisely seek to avoid the division sparked by Barack Obama’s acceptance of the accord in the face of fierce resistance not only from the Republicans, but also many Democrats. A Democratic president would insist on Iran meeting conditions substantially higher than the current JCPOA stipulates before signing back on.

The JCPOA was always about the US and Iran. Including the other global economic powers was a solid strategy. But, in the end, it was always about the US and the long reach of its economic power embodied in the dollar. So, without the US, the JCPOA withers. Iran and the rest of the world revert to the pre-comprehensive sanctions period preceding 2007. History repeats itself and Iranians ultimately pay the price. The Islamic Revolution, crippled as it may be, blunders on.

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

Share Story
Categories360° Analysis, American News, Donald Trump News, International Security, Iran News, Middle East & North Africa, Middle East News, Opinion, US news, World Leaders News, World News TagsHassan Rouhani, Iran, Iran Deal, Iran news, Iran nuclear deal, Iranian, Iranian news, JCPOA, Joint Comprehensive Plan of Action, News on Iran
Join our network of more than 2,000 contributors to publish your perspective, share your story and shape the global conversation. Become a Fair Observer and help us make sense of the world.

READ MORE IN THIS 360° SERIES

Post-Iran Nuclear Deal: What’s Going On?
By Atul Singh • Aug 05, 2019
Trump’s Tropes About Iran Do Not Replace Facts
By Peter Isackson • Jul 29, 2019
Iran's Spy Scandal Exposes the Regime's Insecurity
By Irina Tsukerman • Jul 25, 2019
On Iran, It’s Trump vs. Trump
By John Feffer • Jul 17, 2019
Let’s Compare Iran’s Threat to a Few Others
By Peter Isackson • Jun 25, 2019
It's Time the World Wakes Up to Iran’s Threat
By Raman Ghavami • Jun 21, 2019
Iran Has Learned How to Play Trump
By Ian McCredie • Jun 19, 2019
For Iran, Options Are Few and Prospects Are Grim
By Gary Grappo • Jun 18, 2019
A War with US Will Destroy Iran’s Reformist Movement
By Maryam Nouri • Jun 04, 2019
The Mecca Summits: Is Something Going On?
By Gary Grappo • Jun 01, 2019
The US Policy against Iran Is Strategically Illogical
By Justin McCauley • May 14, 2019

Post navigation

Previous PostPrevious How Deep Democracy Makes Health Services Healthier
Next PostNext Benjamin Netanyahu’s Struggle with Time
Subscribe
Register for $9.99 per month and become a member today.
Publish
Join our community of more than 2,500 contributors to publish your perspective, share your narrative and shape the global discourse.
Donate
We bring you perspectives from around the world. Help us to inform and educate. Your donation is tax-deductible.

Explore

  • About
  • Authors
  • FO Store
  • FAQs
  • Republish
  • Privacy Policy
  • Terms of Use
  • Contact

Regions

  • Africa
  • Asia Pacific
  • Central & South Asia
  • Europe
  • Latin America & Caribbean
  • Middle East & North Africa
  • North America

Topics

  • Politics
  • Economics
  • Business
  • Culture
  • Environment
  • Global Change
  • International Security
  • Science

Sections

  • 360°
  • The Interview
  • In-Depth
  • Insight
  • Quick Read
  • Video
  • Podcasts
  • Interactive
  • My Voice

Daily Dispatch


© Fair Observer All rights reserved
We Need Your Consent
We use cookies to give you the best possible experience. Learn more about how we use cookies or edit your cookie preferences. Privacy Policy. My Options I Accept
Privacy & Cookies Policy

Edit Cookie Preferences

The Fair Observer website uses digital cookies so it can collect statistics on how many visitors come to the site, what content is viewed and for how long, and the general location of the computer network of the visitor. These statistics are collected and processed using the Google Analytics service. Fair Observer uses these aggregate statistics from website visits to help improve the content of the website and to provide regular reports to our current and future donors and funding organizations. The type of digital cookie information collected during your visit and any derived data cannot be used or combined with other information to personally identify you. Fair Observer does not use personal data collected from its website for advertising purposes or to market to you.

As a convenience to you, Fair Observer provides buttons that link to popular social media sites, called social sharing buttons, to help you share Fair Observer content and your comments and opinions about it on these social media sites. These social sharing buttons are provided by and are part of these social media sites. They may collect and use personal data as described in their respective policies. Fair Observer does not receive personal data from your use of these social sharing buttons. It is not necessary that you use these buttons to read Fair Observer content or to share on social media.

 
Necessary
Always Enabled

These cookies essential for the website to function.

Analytics

These cookies track our website’s performance and also help us to continuously improve the experience we provide to you.

Performance
Uncategorized

This cookie consists of the word “yes” to enable us to remember your acceptance of the site cookie notification, and prevents it from displaying to you in future.

Preferences
Save & Accept