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Analysis: The impact of the Iran nuclear deal

Tehranis express hope the agreement's implementation Monday will ease their economic hardships.

Last updated: 20 Jan 2014 20:06
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Tehran, Iran - It took a long time for the Iran nuclear agreement to be negotiated and signed. Now it's going to take a lot of effort to keep the deal afloat.

The agreement comes into force on Monday but any delay by Iran on one side or the "P5+1" powers - the US, UK, France, China, Russia, and Germany - on the other could derail a deal a decade in the making.

Under the six-month deal, an  International Atomic Energy Agency inspection team will visit the Natanz and Fordow nuclear facilities to ensure Iran stops enriching uranium to 20 percent. In return, Iran will be granted modest relief from Western sanctions, and access to nearly $4.2bn of frozen assets in eight instalments.

The stakes are high for Iran. The United Nations, United States and European Union sanctions have cut into its economic lifeline - petroleum exports - and blocked its ability to make money internationally through the country's central bank. Iran's business community and government have struggled in recent years to address the biggest challenge the country has faced in years: How to stay afloat when the world is trying to sink you.

The world has put us under such enormous pressure, that by such a little thing we've become hopeful and see a good future. So, for a beginning, it's good - but, generally, not good enough.

- Agha Karimi, Tehran resident

Enter powerful businessmen such as Masoud Daneshmand. He is the managing director of a shipping line, a member of the Iran-United Arab Emirates Chamber of Commerce, and sits on the board of directors of Tehran's Chamber of Commerce. For the past two years, it has been the job of people such as him to find solutions to Iran's economic problems.

He said he hopes that business will be easier for Iran starting on Monday - even though he claims the deal's effects will be mostly psychological.

"Sanctions have mostly been imposed on our banking system, transport, insurance and on oil," said Daneshmand. "It means they have blocked Iran's access to SWIFT and international banking. We have no way to transfer money; transport companies have been banned from coming to Iran's ports, and insurance for goods and transportation also suffers. What is supposed to happen from January 20 has no effective impact on sanctions, but its psychological aspect should be considered."

Many ordinary Iranians agree with Daneshmand's analysis. Just before the deal came into effect, Tehran resident Agha Karimi explained: "There is a Persian proverb that says: 'Show one death and one will be content with fever.' That's where we are now. The world has put us under such enormous pressure, that by such a little thing we've become hopeful and see a good future," he said. "So, for a beginning, it's good - but, generally, not good enough."

Another Tehrani, Vahid Vahidi, is a bit more hopeful, although he said he doesn't think the deal will directly affect his own life.

"Of course by implementing this agreement, we can facilitate better interactions and relations with other countries, so surely it has a positive impact - for example on oil," he told Al Jazeera. "The domestic production sector may face challenges, but at least we might be able to use our resources again."

One reason the agreement may have little real impact on the lives of regular Iranians - who suffer from high inflation and a devalued currency - is the lack of a deal to lift sanctions on Iran's central bank. That means businesses big and small can't easily pay for imports or receive payment for exports.

This has led to business closures and job losses. It also means Iranians abroad have been banned from sending money home to their families, and prevents Iranians in Iran from sending money to their children studying abroad. Many have had to give up their studies because they have no longer had a way of paying for university.

The Geneva deal is supposed to free up $400m in tuition payments for Iranian students abroad, although details of exactly how that will work are unclear. Economists and businessmen agree that not much will change for most Iranians if the banking issue remains unaddressed.

If the other side does not comply, then in just one hour, Iran can restart everything again.

- Amir Mousavi, analyst

For now, Iran is using third-party brokers such as the United Arab Emirates to transfer money and to pay for goods and services, which is illegal under the embargo.

"The UAE - specifically Dubai - is one of our commercial partners," Daneshmand explained. "Why? Because it is a second business base for us … We export almost 97-98 percent of our goods to Dubai before they reach their final destination. It works the same for imports. But, during the past year, our financial interaction with Dubai has dropped $10bn."

The next six months mark a sensitive time of give and take - one that could end potentially in war if the agreement falls apart.

Because neither trusts each other, there is little concern that one side will be seen as giving too much in the deal, said analyst Amir Mousavi. Iran agreed to stop enriching to 20 percent on Monday at 8am, and the US should release the money at the exact same time, he said.

A senior US administration official, however, was recently quoted as saying the first payment of frozen funds to Tehran would happen on February 1.

"There is no danger but if the agreement is not implemented simultaneously by both sides, the agreement will be suspended. If [the US] doesn't fulfil their commitments and release Iran's frozen money abroad, Iran is ready to resume enriching uranium to 20 percent.

"Right now, International Atomic Energy Agency inspectors are in Iran to oversee that we halt activities at Arak and also that we halt 20 percent enrichment at Natanz and Fordow. If the other side does not comply, then in just one hour, Iran can restart everything again."

Follow Soraya Lennie on Twitter: @sorayalennie

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Al Jazeera
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