White House Sanctions Position Questioned as Currency Stabilization Boosts Iran Economy, Countries Scramble to Co-develop Energy

News reports Monday deepened concerns that both of the Obama administration’s central claims about sanctions relief provided to Iran under the Joint Plan of Action (JPA) – specifically, that the relief would be worth only $7 billion and that so-called “core sanctions” would still be effective – may prove difficult to sustain. Skeptics have long questioned both claims, arguing that the actual value of the relief is much higher and that the sanctions regime will be substantially eroded as companies and states scramble to rush back into Iranian markets.

Regarding the $7 billion figure, reports indicate that U.S. officials have already acknowledged that $20 billion worth of relief – a number originally worked out by Mark Dubowitz, the executive director of Foundation for Defense of Democracies (FDD) – is closer to the correct value. In calculating its $7 billion figure, the Obama administration appears to have neglected basic economic considerations, including multiplier effects and the benefits of currency stabilization.

The Washington Post on Monday published analysis describing renewed UAE-Iranian trade ties, noting that ‘a rebound in the value of Iran’s currency, the rial, is returning the flow of goods to pre-sanctions levels.’ The Post noted the changes that have occurred since the inauguration of President Hassan Rouhani over the summer:

Since Rouhani became president in August, the rial has stabilized at a rate about 15 percent stronger than the day he was elected, returning some of the spending power of Iranian consumers that had been decimated by the weakened currency.

Regarding the robustness of the overall sanctions regime, skeptics had almost immediately worried that eroding the psychology of sanctions – under which corporations and states stayed on the sidelines to steer clear of sanctions violations – would trigger a feeding frenzy during which no one would want to be the last to reenter Iran.

Reuters yesterday revealed that Qatar is positioning itself to help Iran advance its energy sector ‘amid signs that western sanctions might ease after [Iran] signed a deal in November.’ Evaluating the story, Dubowitz commented that the “[m]arket is shifting from fear to greed.”

[Photo: The latest news / YouTube ]