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Iran nuclear deal

Sanctions relief for Iran could come this week

Oren Dorell
USA TODAY
Iran on Monday announced it removed and destroyed the core of its heavy water nuclear facility near Arak, seen here on Jan. 15, 2011.

Iran has met all the requirements under its nuclear deal with world powers to gain relief from international sanctions beginning as early as this week. Yet that long-awaited moment may prove to be a bit of a political and economic letdown for the Islamic Republic.

The price of oil has dropped so much since the nuclear negotiations began several years ago that estimated annual revenues from exports by the oil-rich country will be less than half original expectations. And it is still unclear what the U.S. Treasury will allow foreign banks and businesses to do in their dealings with Iran without running afoul of U.S. sanctions that will remain on the books.

One certainty: an estimated $56 billion to $100 billion cash infusion from frozen assets that comes with sanctions relief. It may be used to purchase military equipment and benefit companies controlled by Iran’s conservative Islamic Revolutionary Guard Corps, not middle-class Iranians who the White House had hoped would feel empowered by the deal to push Iran to become a more cooperative member of the world community.

“The drop of oil prices from $100 a barrel to $30 a barrel overwhelms any benefits from the deal,” said Patrick Clawson, director of research at the Washington Institute for Near East Policy.

Iran is expected to increase its oil output by $6 billion a year at current prices, far less than hoped for, Clawson said.

Iranian President Hassan Rouhani, who pushed for the nuclear deal and is considered a moderate force in Iran, hoped sanctions relief coupled with increased oil exports would help his followers win parliamentary elections next month, said Ali Alfoneh, an expert on the Iranian leadership at the Foundation for Defense of Democracies, a Washington think tank.

But with no immediate impact on Iran’s economy likely as a result of the accord reached last summer, “he has difficulties telling the Iranian public he solved Iranian issues by getting the nuclear deal with the United States,” Alfoneh said.

Iran announced Monday that it had removed the core of its Arak nuclear reactor and filled it with concrete, as required under the agreement. If true, that would be the last of several steps Iran had to complete, including the dismantling of machines that process nuclear fuel and shipment of uranium stockpiles, to gain relief from United Nations and European Union sanctions.

That will happen when Yukia Amano, the director general of the International Atomic Energy Agency, signs off on Iran’s progress, probably this week.

On Wednesday Iranian officials issued mixed messages on the progress at Arak reactor.

Iran’s Deputy Foreign Minister Abbas Araqchi said the work would be done by Saturday and predicted Amano's report would come soon after, according to Iran's Tasnim News Agency. Behrouz Kamalvandi, spokesman for the Atomic Energy Organization of Iran, said that only the initial steps had been taken for removing the core of the Arak Reactor and filling it with concrete. The measures have not been finalized but they may be in next few days, and implementation day will likely happen next week, the Iranian Students' News Agency reported.

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Most U.S. sanctions will remain until Iran takes additional steps to implement the deal, so international investors, foreign subsidiaries of U.S. companies and foreign banks are waiting for guidance from the Treasury Department on what they will be allowed to do in Iran without breaking U.S. law, Clawson said.

In the nuclear agreement, “the U.S. committed itself to lift a very small portion of sanctions and then issued grand statements about facilitating trade,” he said. “The greatest risk (for businesses) is a serious misconnect between what the U.S. government plans to do and what people around the world think the U.S. government plans to do.”

Complicating matters is an ongoing debate between Republican and Democratic leaders of Congress and the White House over whether recent ballistic missile tests by Iran constitute a violation that warrants new sanctions.

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Sen. Chris Coons, D-Del., a member of the Senate Foreign Relations Committee, told reporters Monday he is urging President Obama to press ahead with new sanctions. “I am concerned with the hesitation to move forward with the ballistic missile-related designations,” Coons said. “I’m going to continue to raise this issue, to push and to insist on rigorous enforcement this year.”

Obama said Monday he would veto any new sanctions imposed by Congress.

Clawson said the impasse risks sending a message to Iran “that it could do anything it wants without repercussions.”

Lifting holds on the billions of dollars of Iranian cash frozen in foreign banks is likely to boost sectors of Iran’s economy that are most worrisome to the United States and its allies, Alfoneh said.

Much of that money is likely to be used on large infrastructure projects that will put thousands of Iranians to work, he said. But there’s a catch: The Revolutionary Guards control at least a third of Iran’s economy, including construction and engineering firms that would handle large infrastructure projects, he said. According to the U.S. State Department, the Guards conduct Iran's overseas military operations, including support for terrorist groups.

“The private sector is so small they can’t take upon their shoulders the task of employing a lot of people,” Alfoneh said. “It’s going to be the Revolutionary Guards who are going to hire people and whose people will benefit, not the Iranian middle class who Rouhani wants to empower."

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