{"id":12122,"date":"2018-05-12T07:05:08","date_gmt":"2018-05-12T07:05:08","guid":{"rendered":"http:\/\/www.lifeandnews.com\/articles\/?p=12122"},"modified":"2018-05-13T07:07:37","modified_gmt":"2018-05-13T07:07:37","slug":"how-the-us-withdrawal-from-the-iran-nuclear-deal-will-effect-irans-economy","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/how-the-us-withdrawal-from-the-iran-nuclear-deal-will-effect-irans-economy\/","title":{"rendered":"How the US withdrawal from the Iran nuclear deal will effect Iran’s economy"},"content":{"rendered":"

Negar Habibi<\/a>, King’s College London<\/a><\/em><\/span><\/p>\n

Donald Trump\u2019s decision<\/a> to unilaterally pull the US out of the Iran nuclear deal doesn\u2019t just have important political and security implications. Because sanctions are at the heart of the deal, it will also have a significant economic impact. Just how big this is depends on the response of the European signatories to the deal \u2013 the UK, France and Germany.<\/p>\n

The Iran deal did not have as big an effect on Iran\u2019s economy as it might have had. It was reached in November 2015, shortly before the start of the US electoral season and almost all the US presidential candidates took a harder line on Iran than Barack Obama<\/a>. So, although the deal removed major legal barriers to trade with Iran, many businesses were waiting for the outcome of the US elections before approaching the Iranian market. <\/p>\n

Some European businesses entered Iran following the nuclear deal, but the most disruptive banking restrictions effectively remained in place, as major European banks refused to work with Iran, especially once Donald Trump was elected<\/a>. As a result Iran did not receive the full economic benefits it expected from the deal, even before Trump\u2019s decision to withdraw.<\/p>\n

Despite this, the deal did have some major effects on Iran\u2019s economy<\/a>. It resulted in a doubling of Iran\u2019s oil exports, helped stabilise the foreign exchange market, created jobs and \u2013 most importantly \u2013 optimism to the overall trend of the economy. <\/p>\n

The US withdrawal will weaken all the deal\u2019s achievements but will not necessarily do away with them entirely. That depends on the rest of the world\u2019s response.<\/p>\n

If Europe ignores the US \u2026<\/h2>\n

Europe now has a major role in determining the fate of the Iran deal. It will be very difficult to maintain the deal without the US as many of the unilateral US sanctions, are secondary sanctions that penalise non-American firms for trading with Iran. From a purely economic point of view, Europe might not find it worthwhile to confront the US over Iran, as it will be costly to oppose the US secondary sanctions. <\/p>\n

But Europe has a lot to lose if the deal collapses from a security and political point of view. Trump\u2019s move has been a humiliating rejection of the advice of his European counterparts to keep it. Its collapse and the potential for tensions to escalate poses a major security threat<\/a> to the Middle East, which European leaders want to avoid. So, despite the economic costs, Europe might still decide to oppose the US, as Trump is effectively gambling Europe\u2019s security to please his voters.<\/p>\n