The upcoming year will likely be pivotal for Iran, as it slowly reenters the international economy.
Having reached an agreement on its nuclear program in July 2015 with the P5+1 states (the US, the UK, France, Russia and China, plus Germany), Iran looks to emerge from years of tough economic sanctions.
As a resource-rich country of roughly 80 million people, it is increasingly attracting the attention of businesses and investors around the world.
The Joint Comprehensive Plan of Action entered into with P5+1 will on its “Implementation Day” provide Iran with needed sanctions relief, particularly United Nations Security Council resolutions and unilateral sanctions such as those of the European Union and the US, wrote Dubai-based weekly magazine Arabian Business.
The exact date of Implementation Day is unclear, although it is expected to be in early 2016. This could have a tremendously positive impact on the global economy, particularly in the Arab states.
Under the deal, the US will lift many restrictions on non-US businesses engaging Iran in key sectors such as oil, gas and banking. US companies will, under certain conditions, be able to sell Iran civilian aircraft and parts, and Americans will be able to import some Iranian luxury goods.
However, Implementation Day will not herald the end of all Iran sanctions. The US will continue to maintain comprehensive restrictions prohibiting its own nationals and companies from most commercial transactions with Iran. Indeed, Americans will remain barred from exporting most essential goods, investing there or even “facilitating” most Iran trade on behalf of non-US entities.
Numerous other challenges hinder Iran from reaching its massive economic potential. Like many of its peer states, Iran also suffers from ailments endemic to emerging and frontier markets—economic corruption, vague property rights and red tape, just to name a few.
Nonetheless, Iran’s changing landscape will be of heightened interest to the world in 2016 and Iran’s economic reintegration, irrespective of its pace, will arguably serve to benefit its Persian Gulf neighbors.
