IRAN

Sanctions Lifted: Historic Iran Nuclear Deal Goes Into Effect

The agreement will allow the Islamic Republic to rejoin the international economy

IRAN
REUTERS
Jan 16, 2016 at 4:35 PM ET

The United Nations’ nuclear watchdog certified Saturday that Iran is complying with terms to reduce its nuclear program, signaling the implementation of a landmark nuclear deal as well as the end of many crippling economic sanctions for the Islamic Republic.

As expected, the International Atomic Energy Agency’s (IAEA) report confirmed that Iran had completed the necessary steps to start the implementation of July’s Joint Comprehensive Plan of Action struck with the U.S. and other nations, allowing the historic deal to go ahead.

“A lot of work has gone into getting us here, and implementation of this agreement will require a similar effort,” IAEA Director General Yukiya Amano said in a video statement. “For our part, we are ready to get on with the job.”

The deal was implemented the same day the U.S. and Iran conducted a prisoner swap, in which Iran freed four Iranian-Americans, including Washington Post journalist Jason Rezaian, in exchange for seven Iranians being held in American jails.

Prior to the official announcement, Iranian Foreign Minister Mohammad Javad Zarif posted cautiously optimistic messages about “Implementation Day” to Twitter.

Iranian President Hassan Rouhani lauded the agreement shortly after the announcement.

Secretary of State John Kerry praised Iran for its efforts and confirmed that nuclear-related sanctions would be immediately lifted.

“Iran has undertaken significant steps that many—and I do mean many—people doubted would ever come to pass. And that should be recognized, even though the full measure of this achievement can only be realized by assuring continued full compliance in the coming years,” he said at a press conference in Vienna.

Iran, which has always said its nuclear program is peaceful, had to significantly decrease its number of centrifuges and disable a reactor near Arak as part of the plan. The IAEA has also implemented a high-tech monitoring system to help ensure Iran fulfills its commitments.

However, the deal paves the way for Iran to access several billions of dollars in previously frozen assets and gives the country the opportunity to export oil internationally.

Critics of the agreement, including many prominent Republicans in the United States, have claimed that the United States is essentially writing the Islamic Republic a check for $150 billion while putting American national security interests in jeopardy. However, experts on Iran have questioned the validity of this figure while stressing the fact the U.S. is only allowing Iran access to funds that already belong to the country.

Robert Einhorn, a senior fellow at the Brookings Institute, told Vocativ that it’s unclear how much money is frozen, though he reckons it’s closer to $100 billion, mostly in restricted oil revenues.

“The proceeds from the sales had to be deposited in local banks,” he said. “Almost half of the $100 billion is already obligated and not available — about $50 billion will be discretionary.”

Einhorn said that he didn’t know where the $150 billion figure came from, adding that current oil prices will have no bearing on how much Iran collects.

“These purchases were already made,” he said. “The proceeds were already deposited in local accounts.”

Alex Vatanka of the Middle East Institute pegged the figure at closer to $30 billion—the number he said was cited by Iran’s central bank—though he added that the Chinese alone have roughly $20 billion alone in Iranian funds.

“It used to be 100 billion, and it suddenly it jumped to 150 billion,” he said. “It’s possible to get an estimate, but how do you quantify frozen assets?”

Vatanka said a possibly more important outgrowth is Iran’s ability to rejoin the global economy in a meaningful way, adding that Iran’s vast oil and gas reserves are “hard to beat” for investors and have huge potential.

“You have the whole process of Iran gaining lost market shares in oil markets. That’s one of the areas they have really felt the pain from the sanctions,” he said, adding that China, as well as countries like India and South Korea, are eager to access the Iranian market again.

Domestically, Vatanka said the deal’s implementation could be a major political victory for President Hassan Rouhani against hardline Iranians ahead of next month’s elections in parliament and the Assembly of Experts. He said the hardline Farsi media has vehemently criticized Rouhani for the lack of progress on the accord, but with its implementation, they’ll have a harder time attacking him.

Amid all these sweeping changes, however, everyday Iranians have stayed cautiously optimistic. Though they are excited about diplomatic breakthroughs, Vatanka said, they realize soon that it doesn’t really change much on the ground for them.

“Among ordinary Iranians I talk to, there is a sense of joy,” he said. “But that tends to go away pretty fast because the deals signed don’t necessarily result in direct flights between New York and Tehran.”