Iran Has Significantly Damaged Its Position with Missile Tests and Hostile Statements

More than four months after the implementation of the nuclear agreement between Iran and six world powers, Iran's Foreign Minister says the U.S. government must act more actively to reassure other countries about trading with Tehran. Mohammad Javad Zarif, who is in New York, made these remarks a day after meeting with his American counterpart. Last week, the head of Iran's Central Bank also spoke in Washington about the challenges Iran faces in returning to the global economy. Regarding these challenges, I spoke with Richard Nephew, the senior U.S. negotiator on sanctions. Mr. Nephew, who previously served as the Deputy Coordinator for Sanctions at the U.S. State Department, is now at the Center on Global Energy Policy at Columbia University. As someone who was present at the negotiations and specifically played a role in sanctions, do you evaluate the current situation as unexpected? There is confusion in Iran regarding the lifting of sanctions, and international companies are hesitating to invest. Did you foresee this situation? I am not surprised at all; this situation was predictable, and I had predicted it. The issue is that Iran is trying to revive its relationship with the international community, and according to the conditions outlined in the nuclear agreement, it has that right, and the U.S. supports it. However, this does not mean that international companies and institutions and banks will view Iran's return with enthusiasm and excitement. I think there is a lot of anxiety about the 'snapback' of sanctions or that Iran will be accused of violating its commitments under the JCPOA. On the other hand, Iran is still pursuing actions such as missile tests, human rights violations, and support for terrorism, which raises concerns in the international community, creating a complicated situation for any company that wants to trade with this country. Last week, the head of Iran's Central Bank asked the U.S. to work harder to assure international institutions about trading with Iran so that they can be confident in trading with Iran. Do you think this is a legitimate request? Not only is this request not excessive, but it is something that the U.S. government is actively working on. I know that my former colleagues at the Treasury Department have had multiple meetings with banks in Europe, Japan, and elsewhere to do exactly what Mr. Seif has mentioned. Adam Zubin, the Acting Under Secretary of the Treasury, has spoken very clearly about this, stating that Iran should be able to benefit from the lifting of sanctions and that banks can engage in financial transactions with this country, and in fact, the cost of this has been that he has not received confirmation from Congress for his new position. The main problem here is that even if banks can have economic relations with Iran, serious restrictions still remain, and this applies not only to Iran but to any other country as well. No bank wants to enter into a transaction that supports terrorism. And any bank, whether Iranian, Qatari, or Japanese, will face sanctions if such an action is proven. Every statement made by the Treasury [Department] has coincided with missile tests by Iran or, for example, hostile statements against Saudi Arabia. Regardless of whether these actions are right or wrong, the issue is that if you are an international bank, you do not see this situation as stable, and there are not many banks willing to get involved in such a situation. The problem is that the approach of the international community's economic sector is that Iran probably has more banks than anywhere else that are active in supporting terrorism or other illegal matters. As a result, the issue is not that the message has not reached these international institutions; I believe the message has been loud and clear to the audience. The issue is that these institutions are anxious when facing Iran and are not sure that the agreement will be implemented properly, and no magical words from the Treasury will solve this. I have spoken with analysts who are active in this area. One suggestion was that, for example, the Treasury should issue a new public statement instead of these closed-door meetings and reassure once again that these international institutions can engage in trade with Iran. I think this has happened. Statements have been made, and a statement has been issued, and it is on the Treasury's website. More than a hundred pages of explanations about frequently asked questions have been published. I think the problem right now is not a lack of guidance and statements. These are important, but the issue right now is that banks do not want to take steps, and the extent to which the U.S. government can intervene in this area is limited. The government cannot tell banks that they must do this. That is illegal. Or create incentives for them, which is also not possible. And only Iran can convince banks that this risk is worth it and that there are benefits they can gain from trading with Iran. Over time, this will happen. I think Iran has significantly damaged its position in this regard. Every statement made by the Treasury [Department] has coincided with missile tests by Iran or, for example, hostile statements against Saudi Arabia. Regardless of whether these actions are right or wrong, the issue is that if you are an international bank, you do not see this situation as stable, and there are not many banks willing to get involved in such a situation. I think part of the problem is that expectations in Iran were exaggerated, and the Rouhani government, when it wanted to sell this agreement domestically, went beyond realities and rationality. The problem is that this perception was created that everything would be great after the agreement, and when this did not happen, feelings of despair arose. Right now, the hot season of the presidential election in the U.S. is underway. Do you think this situation, regardless of whether the next government is Democratic or Republican, will affect this uncertain approach? You see, if you had asked this a few months ago, I would have said this would have an impact, but it would be minimal. Over the past months, I have spoken with many banks around the world, and now I do not agree with my previous opinion. I think there are many banks that are very anxious about the U.S. elections. They are worried about a candidate who says he will tear up the nuclear agreement on the first day of his presidency. And I think this will influence the behavior of banks. This issue will be resolved with time because the U.S. elections do not last forever. In November, we will understand who the next president is, and at that time, the impact of the next government on this process will be somewhat controlled. You and your former colleagues worked for months and years to achieve the nuclear agreement. Do you think if Iran does not gain the benefits it sought from the nuclear agreement, this agreement will be at risk? Yes. Iran, if it does not achieve the benefits it should have gained, will not adhere to its commitments under the JCPOA. And that is why I am worried and say Iran must properly receive these benefits that it has gained by compromising on its nuclear program. But I think part of the problem is that expectations in Iran were exaggerated, and the Rouhani government, when it wanted to sell this agreement domestically, went beyond realities and rationality. The problem is that this perception was created that everything would be great after the agreement, and when this did not happen, feelings of despair arose. Part of this problem, which has led to increased criticism in Iran, is that some thought the agreement would open doors much sooner or that for political reasons, they would benefit from the gap that has arisen between expectations. This has created a dangerous situation, but ultimately, if there is some patience within Iran and we witness transparency from the U.S. government, with more time, we can see a change in the current situation.