Will Sanctions Relief Make A Difference In The Lives Of Ordinary Iranians?

It's been a rough few years.

In Iran, advocates of the nuclear deal have staked their reputations on sanctions relief making life easier for the Iranian people.

Iranian President Hassan Rouhani was elected in 2013 on a promise that he would improve relations with Western countries and boost the flagging economy. He appears to have delivered on the first half with the historic deal Tehran and six world powers agreed on last week. Now, the president and his allies want Iranians to feel the economic benefits of the deal, and fast. Iranian voters go to the polls in just seven months to vote in parliamentary elections, which Rouhani hopes will bolster his moderate allies ahead of presidential elections the following year, analysts say.

Yet in reality, it’s unlikely that sanctions will be lifted for months, let alone translated into tangible economic benefits -- and that’s even without potential delay or derailment by opponents of the deal in Washington, Tehran and Tel Aviv.

Under the deal, United Nations, European and U.S. sanctions imposed over Iran’s nuclear program will be lifted on "implementation day," when the International Atomic Energy Agency verifies Iran has complied with nuclear restrictions. Analysts anticipate this will take at least six months -- and these preparations are unlikely to begin until after the deal has cleared hurdles in the U.S. Congress and Tehran’s parliament in the next few months. 

If sanctions relief does kick in, Iran will get access to around $100 billion in frozen assets and be able to export oil. The deal would also lift restrictions on foreign companies' ability to invest in Iran and restore the country's access to the international banking system, although analysts say it may take years for Iran to reap the benefits of these measures.

Not all sanctions will disappear. U.S. sanctions prohibiting Americans from doing business with Iranian companies, imposed during years of enmity between the two countries, will not automatically be lifted under the nuclear deal. And the international sanctions could “snap back” at any time if the deal is broken, under provisions the U.S. demanded.

 Yet, companies around the world are champing at the bit to get access to Iran, spying opportunities in the country, which has a young and well-educated population as well as extensive oil and natural gas resources. Meanwhile, Iranians are hopeful that international and domestic investment will end years of economic hardship. Opponents of the deal warn that Iran could use these financial resources to support its allies in the region, from militants in Lebanon and Gaza, to Syrian President Bashar Assad.

As the merits of the deal are debated around the world, The WorldPost looks at some of the tangible ways sanctions relief could make a difference to the lives of ordinary Iranians:

Get People Back To Work

Iran’s economy plunged into recession in 2012, a result of both international sanctions and economic mismanagement. The economy has started to lift under Rouhani’s economic reforms and a 2013 interim nuclear deal that provided limited sanctions relief, but inflation, unemployment and poverty levels remain high. Official figures put unemployment around 10 percent, but the World Bank says the true figure could be as high as 20 percent.

Among Iran’s large youth population, unemployment is at 24 percent. More than half of the population is under 30 years old, and this post-revolution generation is chronically underemployed despite high university enrollment rates.  

“This is a very highly educated group of people who don’t have jobs,” Ambassador William Luers, a former diplomat and head of The Iran Project, said.

<span>An Iranian temporary manual worker waits for work in Tehran on March 11, 2008.&nbsp;</span>
An Iranian temporary manual worker waits for work in Tehran on March 11, 2008. 


There are several ways sanctions relief could help. The Iranian government could use its windfall to invest in job-creating industries, while access to foreign investment and the global banking system could spur local business. If foreign businesses are willing and able to set up operations in Iran, that could add more jobs over the longer term. 

“One of the biggest demands on Rouhani going forward will be job growth, particularly for the unemployed youth,” Ellie Geranmayeh, a policy fellow at the European Council on Foreign Relations, said.

Bring Iranians Back to Iran

Sanctions relief could also help slow or reverse the exodus of well-educated Iranians from the country. Around 150,000 Iranians with university degrees leave the country each year, according to the World Bank.

“Iran has been suffering from a very high brain drain problem ― this deal could help slow that down and encourage smart Iranians to stay and invest at home,” Geranmayeh said.

In the short term, the symbolic power of the deal might be enough to keep Iranians from leaving.

“The biggest immediate relief [from sanctions] will be a psychological shift amongst the majority youth population in Iran bringing with it confidence in the economy and its future,” Geranmayeh points out.

<span>A woman&nbsp;looks at the books at a book store in Tehran on December 30, 2013</span>
A woman looks at the books at a book store in Tehran on December 30, 2013

Later on, the sanctions could provide huge opportunities for returning Iranians. “This is the biggest market to open since the opening up of the Soviet Union,” Trita Parsi, president of the National Iranian American Council, told The WorldPost. “If you speak Farsi, and understand Western culture and speak English, you could make a lot of money in Iran.”

Bring Down Prices

While inflation more than halved under Rouhani’s government, it still hovers around 15 percent, making it extremely difficult for many Iranians to afford basic goods. The deal could strengthen Iran’s rial currency and bring down the cost of imported goods. It could also disrupt the black market economy, which has flourished under sanctions, making some people rich at the expense of others. Income inequality is on the rise.

“You see more high-class cars driving around Tehran at the same time as the standard of living has declined,” Luers said. The question, he said, is whether those running the black market “will be the channel through which foreign investment begins to flow, or will there be more diversified private sector.”

Analysts say Iran’s elite, including the military wing and the Iranian Revolutionary Guard Corps, an economic powerhouse, prospered under sanctions because they didn’t have to compete with foreign goods and were able to capitalize on illicit trade. According to Parsi, some in the IRGC are wary of the nuclear deal, while others see fresh economic opportunities.

“Now they are in control of a small pie,” he said. “They could lose some of this but the pie is now huge.”

Allow Iranians To Rejoin The International Banking System

International sanctions have cut Iran off from the global banking system, making the everyday transactions that rely on the international transfer of funds ― from using the iTunes store to paying for school tuition and visa applications ― almost impossible.

<span>An Iranian couple sit on the bank of Zayandeh-roud river in the historic city of Isfahan, Iran on April 21, 2015.&nbsp;
An Iranian couple sit on the bank of Zayandeh-roud river in the historic city of Isfahan, Iran on April 21, 2015. 

International banks, wary of huge fines leveled for breaching the sanctions, have been reluctant to grant any custom to Iran, even for things not covered by the sanctions. For example, after two massive earthquakes hit the country’s Tabriz region in 2012, the U.S. Treasury eased some restrictions to allow aid to enter the country. But Parsi said he couldn’t find a bank willing to transfer money his group had raised to help victims. “One bank official told us the fastest way was to put money in a suitcase and take it into Iran,” he said. “De facto, everything was sanctioned.”

The deal should technically make it easier for Iranians to send and receive payments when it opens access to European and other non-U.S. banks. Iran should be able to rejoin the interbank information network called Swift, which underpins vast amounts of international transactions. Yet, many international banks remain hesitant to deal with Iran, preferring to wait until sanctions relief becomes clearer and they can be sure not to run afoul of the rules.

End Medical Shortages

The same obstacles have made it harder for certain medicines and medical supplies to enter Iran, even though drugs themselves were not sanctioned. Drugs that can’t be produced domestically became harder to get hold of, and black market prices skyrocketed. “I can’t even count how many of my own customers and customers of my colleagues died of cancer because we didn’t have the drugs they needed,” one pharmacy owner told The Guardian

<span>An Iranian&nbsp;man&nbsp;receives treatment at the dialysis ward at the Helal Iran Clinic in Tehran on March 11, 2015.<
An Iranian man receives treatment at the dialysis ward at the Helal Iran Clinic in Tehran on March 11, 2015.

“Iran needs a vehicle for purchasing medicines,” Luers said, describing his unsuccessful efforts to find a bank to transfer funds to Iran to purchase medical supplies in 2013. The full humanitarian cost of these medical shortages is hard to quantify, Luers said, but added, “I have enough information to know there was a problem.”

Under the 2013 interim deal, world powers agreed to help facilitate the purchase of medical supplies and other humanitarian goods. Many Iranians now to hope the broader sanctions relief will make more life-saving treatment available to the sick.

Make Air Travel Safer

Iran has one of the worst airline safety records in the world. Under the sanctions regime, Iranian airlines haven’t been able to purchase Western-made planes or obtain new parts to upgrade their aging fleet.

The nuclear deal will allows U.S. companies to export only one thing to Iran ― civilian airplanes and their components. Iranian officials say they plan to spend around $20 billion on 400 aircraft over the next 10 years.

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