There has been some news in the past few hours that the P5+1 and Iran have reached some type of breakthrough deal in their marathon negotiations over Iran’s nuclear energy program. Many do seem to be hopeful of what such an accord (if it is indeed finalized tomorrow morning in Lausanne, as it is supposedly intended to) will bring to Iran’s relations with the world, both politically and economically. This is not a political blog, so I’m not about to opine on the former, and it’s not really an economic blog, but I do discuss economic sanctions and business issues. So what will happen tomorrow if a deal is signed?
1. The sanctions will not be removed on Wednesday!
Remember, this is just a preliminary agreement that defines the contours of the final agreement, whose deadline is June 30, 2015. We will likely, however, get some insight as to what sanctions (UN and U.S.) will be repealed and which will be suspended, and on what timetable that may happen. There has been quite some debate on this. Iran wants certain permanent repeals, and as we know, this is not entirely possible as such actions in the case of unilateral U.S. sanctions need congressional approval in some cases.
2. The sanctions will not be removed in entirety on June 30.
It remains to be seen what course Iran’s relations with the rest of the world, particularly the west, will take after a final agreement is inked. Is this the first step towards detente and open relations? Or is it just a one-off deal? This remains to be seen, but if we are to be optimistic and think the first is the more likely, it is still critical to realize that this is just the first leg of a long marathon, not just for political relations and not just for sanctions. Now whether an opening follows the same speed at which U.S.-Iran relations at least now seem to be moving at remains to be seen. That said, as I have frequently commented (twice on Voice of America’s Persian service this week alone), any guesses now as to what will change, are, for at least the next few hours, guesses. But do not expect to see a Starbucks on every street corner in Tehran next month.
A solid guess is that Iran will want reprieve on its oil sales and on banking. Will Iran rejoin the SWIFT messaging system used for international payments? Will the Central Bank of Iran (CBI) be de-listed by the United States? Possibly. Will blocking regulations on a number of Iranian financial institutions be removed? Maybe.
There will surely be quite a bit of euphoria in the wake of a deal on Wednesday, assuming it happens. This euphoria is not undeserved. As such, it will be critical that anybody remotely interested in any type of activity with Iran constantly keep abreast of not only changes in the law, but the phasing in of those changes. This is still a hot topic for civil and criminal enforcement in the United States and a more positive atmosphere will not in and of itself change the law.