by Amir Handjani18Amir Handjani is an energy attorney living and working in the U.A.E. and Washington D.C. He is also a senior advisor to Karv Communications, a strategic communications firm with a focus on corporate communications, crisis management, and public affairs.
The nuclear deal didn't fix the economy. That gives the U.S. lots of leverage on Tehran's Middle East meddling.
If there has been one consistent theme in Donald Trump’s foreign
policy since the early days of his campaign, it has been his insistence
that America has not benefited economically from the global order it
mostly protects. Yet when it comes to U.S. policy in the Middle East, he
has been wildly inconsistent. During the presidential race, he talked
about ripping up the nuclear deal reached between Iran and six world
powers. He walked that pledge back shortly after taking office. Nor has
he acted on his rhetoric of ramping up sanctions on Tehran.
here's a way the Trump administration could bring these foreign policy
contradictions in accord: By confronting conventional Washington wisdom
that isolating Iran is beneficial to America's strategic goals. Instead,
the U.S. could try building on the nuclear pact in a way that would
allow Tehran to gain more economic incentives by moderating, what
Washington has long regarded, as its destabilizing behavior in the
Over the last four decades, the U.S. has spent a
great deal of blood and treasure countering Iranian expansion in the
region. It has also maintained a robust sanctions program that most of
its European allies and Asian partners find cumbersome and counterproductive.
There is no denying Iran is pursuing a regional agenda often at odds
with U.S. interests. There is also no denying that years of isolation
and sanctions have now made reintegrating into the global economy one of
Tehran’s top goals.
In two weeks, President Hassan Rouhani will face voters in a
referendum on not only his presidency but also the nuclear deal. That
agreement was intended to usher in a new era of economic prosperity. The
results have been mixed at best. Iran's economic development is still
shackled by the numerous secondary sanctions enforced by the U.S.
Treasury's Office of Foreign Asset Control -- for human rights abuses,
state sponsorship of terrorism and its ballistic missile program.
be sure, Tehran’s economy has rebounded much faster than many
economists anticipated when nuclear sanctions were removed 18 months
ago. It has improved
from a negative growth of 6 percent in 2013 to 7 percent growth in
2016. The largest driver has been Iran’s ability to sell its oil and
petrochemicals back on the international market. Iran’s exports have
doubled in the last year. Inflation has also been tamed. Unofficially it
was hovering around 40 percent in 2013 but has now declined to about 8
percent. Even tourism jumped last year by 11 percent, as Europeans and Asians traveled in droves to see this exotic and historic corner of the world
The International Monetary Fund recently affirmed Iran’s economic recovery, but cautioned against major headwinds.
Unemployment stands at 14 percent and youth unemployment at a
staggering 31 percent. If anything, the signing of nuclear deal and the
removal of nuclear related sanctions brought many of the structural
issues that plague Iran’s economy to the forefront. Chief among them is
how much secondary U.S. sanctions will always hold it back from being an
While U.S. criticisms of Iran's behavior are not without
merit, it does not go unnoticed by Iranians that their neighbors, Saudi
Arabia and Turkey, engage in similar mischief. And yet both can go into
international credit markets and raise billions of dollars with ease.
Both have also received low marks on human rights. Saudi charities and
billionaires have provided seed funding for many of today's Jihadist
terrorist groups. Turkey has abetted Islamic State's oil smuggling and
is now bombing the U.S.'s Kurdish allies in Syria.
because the U.S. has not slapped broad-based sanctions on either
country, their economies fare better then Iran’s. Both are part of the
G-20 and the World Trade Organization.
That said, what incentive would the Trump administration have
to work with Iran on a roadmap that could end up removing secondary
sanctions? The answer lies with themes that Trump’s supporters
enthusiastically endorsed: A smarter foreign policy and not spending so
much treasure abroad when U.S. interests are not clearly defined.
From 1976 through 2010,
Princeton University Professor Roger Stern calculates, the U.S. spent
$8 trillion protecting the flow of oil from the Middle East. Add that to
that the money spent on two wars since 9/11. All that wealth has been
consumed by a region where the U.S. has only received around 10 percent
of its imported crude. It doesn’t take a savvy New York real-estate
tycoon to realize that the return on investment in the Persian Gulf
hasn’t been a success.
America’s partners in the region have a
vested interest in continuing the policy of isolating Iran and having
the U.S. foot the bill. If, however, Trump were to engage Iran in
substantive diplomacy and put the issues that matter most to the U.S. up
for bargaining -- particularly, Iran’s support for sectarian militias
and its ballistic missile program in exchange for removal of the
sanctions that prevent Tehran from accessing international financing and
investment -- he would be able to test the regime to see how far it
would go. If the negotiations lead nowhere, then the U.S. wouldn’t lose
anything. Sanctions and robust U.S. military presence in the Persian
Gulf are in place for the foreseeable future.
Those skeptical that Iran would negotiate in good faith should
consider how much Tehran has to gain from reaching such an accord. In
2016, Iran’s economy absorbed an estimated $9.5 billion in foreign
investment, a tiny fraction of the stated goal of attracting between $150 and $200 billion by 2020
to revitalize its antiquated energy infrastructure. Tehran knows that
so long as Washington maintains sanctions on large swaths of its economy
it won’t attract even a fraction of that. Already the energy giant
Total SA is waiting to see what the Trump administration will do this month when certain nuclear-related sanction waivers are up for renewal.
the last 40 years, the U.S. has made containment of Iran a foundation
of its policy in the Middle East. Politically, this has largely failed,
as Iran has more influence in the region today than it had under the
Shah. Economically, however, the U.S. has managed to keep Iran out of
the global economy. Without jobs and sustained economic growth, Iran’s
long term stability could be in doubt.
Both sides have ample
reason to expand their negotiations beyond the nuclear deal. If
anything, it makes good business sense. The alternative will be more
trillions of dollars wasted, and down the road, a possible a military
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners or Right Side of Left Coast