Why Suspension Is Not Sufficient

Lawyer at Central Bank of Iran
Why Suspension Is Not SufficientWhy Suspension Is Not Sufficient

The Joint Plan of Action (JPOA) agreed between Iran and the P5+1 (China, France, Russia, the UK, US and Germany) in November 2013, stipulates, among other things, that the parties continue negotiations to reach a final comprehensive agreement to ensure the peaceful nature of Iran’s nuclear program.

After implementation of the latter agreement, Iran would be regarded as an ordinary nuclear state. The content of the comprehensive agreement has been subject of many discussions and speculations. Among other things, three issues are of vital importance in formulating the comprehensive deal. First, the nature and extent of the temporary restrictions on Iran’s nuclear activities in the process of confidence building should be well-defined. Second, the mode and extent of lifting the sanctions imposed on Iran in relation to its nuclear activities should be indicated. And finally, the term and termination process of the comprehensive agreement should be clearly outlined.

Soon after the conclusion of the JPOA, some proposals were floated in the US and elsewhere that the six powers should not consent to the permanent lifting of sanctions against Iran. The main justification behind these proposals was that the US and its allies suffered a huge cost imposing the unilateral sanctions and convincing other countries to follow suit.

It was argued that re-imposing the sanctions after their initial removal would be extremely difficult if not impossible, and might put the P5+1 in an irreversible position. Proponents of this argument suggested that the P5+1 should insist on the "suspension" of the sanctions for a relatively long period, rather than lifting them permanently.

According to this proposal, during the implementation phase of the comprehensive agreement, Iran’s nuclear activities should be strictly monitored by international inspectors and in case of breach of the terms and conditions of the agreement; the suspended sanctions would  immediately take effect.

Some commentators have gone a bit further and want suspension of the sanctions to be renewable every six months, the extension of which would be dependent upon Iran’s compliance with the requirements of the final agreement. This compliance would be affirmed by international inspectors and in the absence of such an affirmation, the sanctions would be automatically restored.

Supporters of this formula try to justify it by asserting that according to JPOA, Iran would be regarded as an ordinary nuclear state only when the comprehensive agreement is fully implemented. This implies that before the implementation of the comprehensive agreement Iran is not entitled to be free from sanctions and other restrictive measures.

Although vigorous efforts would be made by the P5+1 to convince Iran to agree to such a deal, it is highly unlikely that these efforts would be successful. Iran would arguably insist on the permanent lifting of the sanctions rather than their temporary suspension. It would not be possible for Tehran to consent to suspension of sanctions at least for three reasons. First, temporary suspension would mean persistent turbulence in its internal market and certainly undermine Iran’s main economic policy goal e.g. price stability.

Recent shocks in Iran’s market, subsequent to the listing of new nationals and entities or the imposition of new sanctions or even rumors about the failure of negotiations, has thought Iranian policymakers lessons about the management of expectations in the market, and it is evident that the fear of renewed sanctions would impede such management.

Secondly, Iran is looking for medium and long term cooperation with foreign counterparts to attract foreign investment in its infrastructure projects, and it is obvious that such cooperation simply would be incompatible with short-term suspension of sanctions. Recent easing of the sanctions according to JPOA has made Iran fairly capable to respond to the demands of the market in terms of trade finance, but what is really needed now is project finance which demands long-range stability and reduction of political risks.

Last, but not the least, the recent political turmoil, namely the tensions between Russia and the US-led west, plus the violence of extremist groups in the region, which arguably could not be controlled without Iran’s cooperation, has seemingly augmented Tehran's bargaining power. Hence, it could be argued that even the contractual balance of the JPOA has changed in favor of Iran and it is no longer realistic to consider the suspension of sanctions as the only negotiable item on the table.