One year on, US obstacles blunt hopes from Iran deal

Iranian hardliners are taking advantage of the landmark accord’s slow start to discredit it as an American manipulation

US Secretary of State John Kerry (right) poses for a photo opportunity prior to a meeting with Iran's Foreign Minister Mohammad Javad Zarif (left) at the UN in New York, April 19, 2016. (AFP/Don Emmert)
US Secretary of State John Kerry (right) poses for a photo opportunity prior to a meeting with Iran's Foreign Minister Mohammad Javad Zarif (left) at the UN in New York, April 19, 2016. (AFP/Don Emmert)

TEHRAN, Iran (AFP) — A year ago, a landmark nuclear deal with world powers led jubilant Iranians to dream of an end to isolation and economic hardship, but critics say US obstacles have soured those hopes.

Despite many sanctions being lifted, the international banking system is still too nervous to work with Iran.

At the same time, President Hassan Rouhani faces criticism for over-hyping the economic benefits of the accord as well as fierce opposition from hardliners who reject closer ties with the West.

Many in the Islamic republic and beyond trace the problems back to Washington.

A statue depicting the US Statue of Liberty decorated with a Star of David on its head is set ablaze by Iranian protestors during a parade marking al-Quds (Jerusalem) Day in Tehran on July 1, 2016. (Atta Kenare/AFP)
A statue depicting the US Statue of Liberty decorated with a Star of David on its head is set ablaze by Iranian protestors during a parade marking al-Quds (Jerusalem) Day in Tehran on July 1, 2016.
(Atta Kenare/AFP)

“Iran has done its part. The blockage comes from the Americans — the Europeans should put more pressure on them,” said a European diplomat in Tehran, speaking on condition of anonymity.

“There are political leaders in the United States who make Iran out to be the devil and have not understood the goal of this accord,” he added.

The deal reached on July 14, 2015 saw the US, Britain, China, France, Germany and Russia agree to lift some international sanctions in exchange for guarantees that Iran would not pursue nuclear weapons.

But even after it took effect in January, the US maintained primary sanctions linked to Iran’s human rights record and ballistic missile testing — blocking Tehran from dollar transactions and leaving banks worried they could still be prosecuted for doing business with the country, despite repeated assurances from Washington that they will not.

Participants in the talks on the Iran nuclear deal pose for a group photo at the UN building in Vienna, Austria, on July 14, 2015. (Carlos Barria, Pool Photo via AP)
Participants in the talks on the Iran nuclear deal pose for a group photo at the UN building in Vienna, Austria, on July 14, 2015. (Carlos Barria, Pool Photo via AP)

Oil production has soared back almost to pre-sanctions levels, but Rouhani’s hopes of attracting $30-$50 billion in foreign investment each year increasingly look like wishful thinking.

Aside from a 400-million-euro ($441-million) joint venture announced last month between France’s Peugeot-Citroen and its old partner Iran Khodro, investments have been slow to materialize despite a rush of business delegations.

Planned sales of hundreds of Airbus and Boeing planes are stalled, with Republicans in Washington doing their utmost to derail the deals.

“The accord opened up the possibility (of working in Iran), but it’s still complicated to get concrete results due to financing problems,” said Romain Keraval, head of Business France’s Tehran office.

‘Intense fight for power’

Hardliners are having a field day with the meagre results, using the media to press home a narrative that the nuclear deal will not benefit ordinary citizens.

Iran’s Supreme Leader Ayatollah Ali Khamenei, who supported the deal in order to end sanctions, continues to emphasize a “resistance economy” aimed at boosting domestic production and warns against Western “infiltration” through the agreement.

Supreme Leader Ayatollah Ali Khamenei poses for a portrait prior to delivering his message for the Iranian New Year, Sunday, March 20, 2016. (Office of the Iranian Supreme Leader/AP)
Supreme Leader Ayatollah Ali Khamenei poses for a portrait prior to delivering his message for the Iranian New Year, Sunday, March 20, 2016. (Office of the Iranian Supreme Leader/AP)

“There is a very intense fight for power happening,” said the European diplomat.

“The hardliners are doing everything they can to impede Rouhani’s efforts to improve relations with the world. They see it as leading to more foreigners coming to Iran and ‘spoiling’ the country from within.”

Many see the continued US sanctions as proof that Washington never wanted a real reset in relations, and only saw the nuclear deal as another way to manipulate Iran.

President of Iran Hassan Rouhani (C) attends the 13th Organization of Islamic Cooperation (OIC) Summit at Istanbul Congress Center (ICC) on April 14, 2016 in Istanbul. (AFP PHOTO/SEBNEM COSKUN)
President of Iran Hassan Rouhani (C) attends the 13th Organization of Islamic Cooperation (OIC) Summit at Istanbul Congress Center (ICC) on April 14, 2016 in Istanbul. (AFP PHOTO/SEBNEM COSKUN)

“The US used this deal to put more pressure on us, trying to make us change our behavior in the Middle East or give up our ties with (Lebanese militia) Hezbollah,” said Amir Mohebbian, a Tehran-based political analyst with ties to politicians of all hues.

“History has taught us we should not trust the United States.”

Conservatives are at least taking heart from the chaos engulfing Western politics — from the divisive rise of Donald Trump in the US to Britain’s dramatic decision to leave the EU.

“They won’t be able to gather together against us as they did in the past, especially when we are showing them a new face of flexibility,” said Mohebbian.

‘A lot of work to do’

Rouhani faces a tough re-election bid next year, and with 11 percent of Iranians out of work, his advisers have been pleading for patience.

In this picture taken May 10, 2016, a book seller arranges US presidential candidate Hillary Clinton's book "Hard Choices" translated to Persian during Tehran's International Book Fair in Iran. (AP Photo/Vahid Salemi)
In this picture taken May 10, 2016, a book seller arranges US presidential candidate Hillary Clinton’s book “Hard Choices” translated to Persian during Tehran’s International Book Fair in Iran. (AP Photo/Vahid Salemi)

“Sanctions had become a very big obstacle in the path of Iran’s economy, but removing them was not by itself going to be the sole engine of economic growth,” said Said Leylaz, an analyst close to the president.

“We have a lot of work to do.”

But for all the challenges, analysts remain bullish on Iran’s longer-term prospects.

“Pent-up demand, a youthful population, a skilled workforce, and a strong hydrocarbon and consumer story all make Iran one of the most positive and relatively well-balanced economic growth stories in the Middle East over the next decade,” wrote BMI Research, a London-based consultancy.

A report it published on July 7 predicts an annual growth rate of 5-6 percent over that period.

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