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Tensions between U.S. and Iran

The 2015 Joint Comprehensive Plan of Action (JCPOA) was seen as a positive step forward for Iran, as it was meant to lift sanctions related to its nuclear program and thus allow the Iranian economy to have the potential for growth. Yet, as the Trump administration has made its debut, tensions with Iran have risen.

This means that the Iranian economy may not see the benefits that were first envisioned. Companies in the West see the potential of tapping into Iran, with its large oil and gas reserves and second largest population in the Middle East. But Iran’s ballistic missile test earlier this year have been seen as a provocative act by the Trump administration.

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Riad Kahwaji, photo Majalla

 

“If we stay on the same track we are on today, and Iran keeping doing these same provocative tests of missiles, firing missiles at ships, yes, we are going to be headed to more escalation,” said Riad Kahwaji, founder of Inegma.

Companies have noticed the economic potential of Iran, but are hesitant to invest and risk their trade and market share within the U.S. While several companies have signed deals with Iran, Kahwaji noted that he expects they will be “hitting their brakes and slowing down” in anticipation of an escalation. He noted that the initial rush into Iran by various companies will be impacted by the new positions of the Trump administration.

While companies were hoping to take advantage of this opening to do business with Iran due to the JCPOA, rising tensions may have them declining to move forward, which appears to be a case of history repeating itself. Past attempts by Iran to open up have also struggled under U.S. sanctions. With limited progress so far, it could have an impact on the elections in Iran that are scheduled for May.

“The larger companies or those organizations who undoubtedly have a U.S. footprint or a lot of trade with the U.S. will take a check please,” said Craig McLay, a managing partner at Tamarind Associates.

Additionally, Iran is one of the countries listed on President Trump’s travel ban, which is another big move by the U.S., in addition to sanctions by the Trump administration and legislation for even more sanctions being debated in the House and Senate.

“Imposition of new sanctions by the U.S. is based on fabricated and illegitimate pretexts and amount to an action against international regulations,” said Iran’s foreign ministry in a statement.

Boeing signed an $8 billion deal to sell 80 jets to Iran Air after various sanctions were lifted by the JCPOA, and was not on the list of 15 Iran-sanctioned companies. Several companies on Iran’s list do not have business relations with Iran at all.

“The sanctions from the Iranian side don’t really have any practical importance to them,” said

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Robin Mills, photo Arabian Oil and Gas

 

Robin Mills, CEO of Qamar Energy and an expert on Middle East energy and investment. “These U.S. defense companies obviously don’t have any assets or activities in Iran. It’s just trying to score political points.”

But the rising tensions and President Trump’s own criticisms of the 2015 nuclear deal could impact even Boeing’s deal with Iran.

Further complicating relations is the bill introduced by Congress to investigate whether Iran Air supports the Islamic Revolutionary Guard Corps (IRGC) or any other foreign terrorist organizations. If such links were found, this would prevent Iran Air from receiving new aircraft or U.S.-made parts and effectively freeze the Boeing deal.

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