The West’s wariness of Iran, the continuation of the sanctions and the possibility of their renewal, as well as the imposition of sanctions on Russia, objectively put these two countries in a situation where it is in their interests to maintain and strengthen their cooperation.
A year has passed since the JCPOA took effect, which raised hopes for rapid growth of the Iranian economy and the expansion of Iran’s foreign economic relations. Now is a good time to step back and take stock of how things have changed in Iran and its relations with the world.
The lifting of sanctions related to the Iranian nuclear program reversed the negative economic trend in the country. According to forecasts, GDP growth will exceed 4.5 percent in 2016. Foreign direct investment in Iran is gradually growing. However, there is no boom to speak of. The reasons for this are many, both internal and external. The low price of oil, which, among other things, limits the strength of Iran's currency, remains a constraining factor. However, sanctions, mainly US sanctions remain the primary factor behind foreign companies limiting their dealing with Iran to merely signing contracts to do business in Iran. The energy sanctions are particularly painful to Iran as they extend to companies investing in Iran's oil and gas projects. The sanctions associated with Iran’s "support for terrorism" (primarily Hezbollah) and work on ballistic missiles have remained in place. The position of Congress, the election of Donald Trump who spoke about possibly revising the JCPOA which adds uncertainty to the new administration’s Iranian policy, the continued ban on financial transactions via US banks – all of this not only keeps US companies from doing business in Iran, but also companies from other countries, especially the EU. The United States has been slow to issue permits for implementing the already signed agreements. For example, an agreement signed by Boeing was suspended, and the deliveries of Airbus to Iran took a long time. Notably, US-made parts are used in Airbus aircraft.
The extension of the sanctions by Congress for another 10 years on December 15, 2016, and the unexpected renewal by Barack Obama of the sanctions against several countries, including Iran (due to the terrorist threat) just before moving out of the White House, are a sign that the White House may abandon its policy of rapprochement with Iran.
Of course, the recent decisions by Congress and President Obama were negatively received in Iran, especially in the context of the upcoming presidential election in May 2017. The supreme leader and president of Iran made quite expected statements, saying that it is unacceptable for the United States to continue its sanctions policy given Iran's full compliance with the JCPOA.
Due to the difficult economic situation, domestic politics in Iran remains tense. The death of Akbar Hashemi Rafsanjani, who supported Iran’s economic and political liberalization, and who, in fact, helped get Hassan Rouhani elected, can strengthen radical forces and the IRGC who are opposed to the significant restrictions imposed by the JCPOA. They see the Rouhani government’s focus on attracting foreign capital as an objective threat to the IRGC’s economic power, and the lifting of the sanctions as primarily a way to speed up the expansion of the defense industry.
At a recent meeting of the six world powers that negotiated the Iran deal, the Iranian foreign minister pointed out that his country views the December decision of Congress as reflecting the lack of commitment of the US government to live up to its end of the deal. Obama's renewal of terrorism-related sanctions shortly after the meeting can be considered a response to this remark. It was emphasized that the lifting of sanctions concerned only the nuclear program, where Iran is in compliance. However, in his speeches, Supreme Leader Ali Khamenei has repeatedly mentioned the possibility of Iran breaking the terms of the JCPOA, if Western countries fail to fulfill their obligations with regard to lifting the sanctions. The likelihood that this threat will be acted on increases with changing alignment of ruling groups, i.e., power shifting back to conservative forces. In order to maintain their position in the government, the supporters of Hassan Rouhani, i.e. the liberal-pragmatic wing of the political establishment, will have to largely remain neutral in its relations with the supreme leader, which could slow down reforms. So far, the government has been successful in making deals with the administration leader and the Majlis on critical socioeconomic programs. Approved by the Majlis (and pending approval by the Supervisory Board in late January), the Sixth Five-Year Plan allows the government to raise up to $15 billion in foreign direct investment per year, excluding participation (up to $20 billion) in joint ventures. So it can be said that the strategy for expanding relations with the international market continues.
Of course, the gradual recovery of Iran’s economy and the restoration of ties with the West increased its role in the region. However, this led to a deepening conflict with the countries of the Middle East, particularly Saudi Arabia and most of the GCC countries which see Iran as their main competitor for influence in the region. Even though Iran has joined the decision to reduce oil production, it failed to iron out other disagreements. Due to the roles of these countries in Yemen and Syria, these disagreements are being increasingly viewed in that region and the West as a Shia-Sunni conflict, although Iran has officially denied that religion is the underlying cause.
From Iran’s standpoint, fighting DAESH as a source of terrorism and global danger is the key problem in that region and the world. However, by supporting the government of Bashar al-Assad as the legitimate authority capable of, in Iran’s view, protecting the most vulnerable part of the Muslim Shia world against DAESH terror, Iran enters into conflict with the countries that see the Assad regime as a dictatorship and seek to destroy it. The way out of the situation may be not Iran's refusal to support the Syrian government forces, but rather reaching an agreement with the leading countries of the world to achieve a settlement in Syria.
Much will depend on how Russia and the United States can work together. Iran and Russia's positions in support of the legitimate Syrian government and, most importantly, preserving Syria’s territorial integrity are identical. When it comes to relations between Russia and Iran with the West, such similar positions, as well as their coordination of actions in Syria, may be viewed by the West as a reason to impose sanctions on both Russia and Iran (sanctions against terrorism).
The West’s wariness of Iran, the continuation of the sanctions and the possibility of their renewal, as well as the imposition of sanctions on Russia, objectively put these two countries in a situation where it is in their interests to maintain and strengthen their cooperation.
