Iran Sheds Economic Sanctions Yoke as Nuclear Deal Ratified

The Importance of Iran’s Return to Markets
  • Islamic Republic to gain access to $50 billion in frozen cash
  • Foreign investors are keen for access to an untapped market

Iran has complied with the terms of an international agreement to curb its nuclear development program, allowing it to move out from under the yoke of crippling economic sanctions, the United Nations’ nuclear agency announced Saturday.

The International Atomic Energy Agency concluded that the Islamic Republic had curbed its ability to develop an atomic weapon as required under an accord with world powers. The U.S. and five other nations agreed in July’s accord to lift sanctions on Iran “simultaneously with the IAEA-verified implementation” of the deal.

“Iran has undertaken significant steps that many people doubted would ever come to pass,” clearing the way for sanctions to end, U.S. Secretary of State John Kerry said in Vienna late Saturday after Iran’s compliance with the agreement was certified. Still, he said the accord “doesn’t wipe away all of the concerns” of the international community, and “verification remains, as it always has been, the backbone of this agreement."

The UN’s clearance marks a milestone for President Barack Obama, who said this week that his policy of hard-nosed diplomacy backed by onerous penalties had succeeded in keeping the U.S. out of “another war.” Iran’s reaction was more muted, as the leadership balanced the benefits of regaining access to the global economy against the concessions made to satisfy the U.S. and other international critics of its nuclear program.

“I thank God for this blessing & bow to the greatness of the patient nation of Iran,” President Hassan Rouhani said in a Twitter message. “Congrats on this glorious victory.”

Saturday’s developments brought to fruition a deal struck last summer on the 18th day of last-ditch talks in Vienna, capped more than two years of wrangling between Iran and the U.S., China, Russia, Germany, France and the U.K.

‘Important Day’

“Relations between Iran and the IAEA now enter a new phase. It is an important day for the international community,” Yukiya Amano, director general of the agency, said in a statement. “This paves the way for the IAEA to begin verifying and monitoring Iran’s nuclear-related commitments.”

EU High Representative Federica Mogherini confirmed that sanctions had been lifted and said Iran will receive technical help for its nuclear program from world powers. The historic deal, both “strong and fair,” showed that diplomacy “can solve the most difficult issues,” she said.

Ahead of the announcement Iran freed four Iranian-Americans as part of a prisoner exchange with the U.S. that had been negotiated in secret for more than a year.

With some sanctions lifted, Iran is setting in motion a deal with Airbus Group SE to add 114 new and used jets for Iran Air, whose fleet averages an estimated 26.8 years of age, according to website Aircraft of that vintage are practically antiques by industry standards, and the more-modern Airbus planes will let Iran Air expand domestically and fly more overseas routes.

Iran is interested in Airbus wide-body planes including A350s and the A380 double-decker, too, along with Boeing Co. 737 narrow-bodies and twin-aisle 777s for long-haul flying, according to an Iranian official who asked not to be identified because the details are private.

Escalating Tensions

The IAEA assessment sets off a financial windfall for Iran that regional competitors Saudi Arabia and Israel, which bitterly opposed the deal, say will empower the theocracy in Tehran and further destabilize the Middle East. Tensions between mainly Shiite Muslim Iran and Sunni-ruled Saudi Arabia have escalated since the agreement was signed, helping fuel wars from Syria to Yemen where they back opposing sides.

“Israel will continue to monitor and warn about Iran’s dangerous activities and will do everything it can to protect its own security and defend itself,” Israeli Prime Minister Benjamin Netanyahu said in a statement released by his office in Jerusalem.

The re-engagement with Iran came almost 35 years to the day after the country freed the 52 American hostages held after the storming of the embassy in Tehran in 1979 -- an issue that still resonates in U.S. politics.

An Obama administration official told reporters Saturday on a conference call that the discussions over the freed U.S. prisoners weren’t linked to the nuclear discussions and that it was coincidental that both developments were completed Saturday. Meanwhile, the Republican presidential candidates denounced the government’s handling of the sanctions case as they welcomed the captives’ release.

As holder of the world’s fourth-largest reserves of crude and largest of natural gas, Iran gains immediate access to about $50 billion in frozen accounts overseas, funds the government says it will use to rebuild industries and infrastructure. It also opens the door to foreign investors who are keen to enter a relatively untapped market of 77 million people.

Most U.S. companies will be on the sidelines because the deal lifts only those sanctions imposed on Iran to punish it for its nuclear program. It doesn’t touch the sweeping ban on U.S. trade and investment with Iran put in place by the Clinton administration in 1995.

The Obama administration has pledged to continue enforcing sanctions against Iran related to its ballistic-missile program, support for terrorism and human-rights violations. Republicans and some Democrats in the U.S. Congress opposed the nuclear agreement and have vowed to press for fresh sanctions.

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