Nephew: Lifting the Complex Sanctions Regime Will Take Time

Richard Nephew recently mentioned in an article regarding the nuclear agreement with Iran and its associated problems and challenges that Iran must address its economic issues, although the U.S. should also assist in this process. In an interview with Radio Farda, he emphasizes that Iran is facing a complex regime of sanctions that will take time to lift. Richard Nephew is a researcher and director of the Center on Global Energy Policy at Columbia University and also a researcher at the Brookings Institution. He previously served as the Deputy Coordinator for Sanctions Policy at the U.S. State Department and was a senior sanctions expert in the P5+1 negotiations with Iran. Mr. Nephew, in your June article, you wrote that while Iran needs to resolve its economic issues, you also emphasized that the U.S. should help in this process. What more can the U.S. do? First, I must say that I wrote that sanctions can be problematic, and I do not deny that they have left challenges for Iran that complicate its international trade. However, Iran's economic situation in terms of bureaucracy and regulations is somewhat its own responsibility, and this responsibility also pertains to some of the sanctions that have been imposed. You mentioned your concern about the proposal from American lawmakers to ban the use of the U.S. financial system and the dollar for Iran. Why do you assess this as a challenge? My concern relates to the impact of this issue on the use of the dollar as a reference currency in international exchanges. The U.S. dollar has become the primary currency because it is recognized as a stable, non-political, and reasonable currency. From this perspective, every time you impose a ban on its use, you undermine its value as a currency in international exchanges. In any case, there are advantages derived from using the dollar in international transactions, one of which is the use of sanctions. Therefore, my concern is that a misguided effort to prohibit the use of the dollar in trade related to Iran—even if it does not assist the proponents of sanctions—could undermine the use of the dollar in international exchanges, and this poses a threat to the U.S. economy and the centrality of the U.S. financial system in global trade. When I spoke with an economist in the U.S. before you, he said this could weaken the dollar to the point where the Chinese yuan could surpass it. Do you think the same? Yes, I agree with this perspective, although not because I am worried about China. Some in the U.S. say China controls the international economy. I do not think this is correct. With the U.S. economy at the center of the global economy and international exchanges, America has economic and political superiority. When we perform well in this area and take pride in being leaders in responsible banking and labor laws, it is because people want to do business here. When we diminish the attractiveness of the U.S. economy for international traders, we see its impact on the U.S. economy. This can be done in various ways, including through domestic political conflicts, which we have seen in recent years in disputes over the annual budget. You spoke about Iran's responsibility regarding its problems in returning to the global economy. Critics of your view say that banks and financial institutions have relationships with many countries that do not necessarily have a good track record in areas like human rights or financing terrorism. Do you think Iran is an exception in this regard, or is there no previous example like Iran that seeks to lift sanctions and become a normal player in the global economy? I believe these are two questions that are both important. Regarding Iran emerging from the shadow of sanctions, I must say that there have not been many countries that have managed to emerge from a heavy sanctions regime like Iran's without war. Perhaps Iraq is the closest example in terms of sanctions regimes, where the situation changed dramatically with the U.S. invasion and occupation of the country, which is very different from what we currently see regarding Iran. We have seen a piecemeal lifting of sanctions in Myanmar, for example. This indicates the complexity of the situation regarding Iran because this has not been done before. Lifting sanctions after a long period of imposition is a difficult task, especially when a vast array of sanctioning tools has been employed. Honestly, Iranian officials have said the same thing that Americans say in this regard, which is that patience is necessary because it has been a complex regime of sanctions and lifting it will take time. However, regarding other countries and the fact that they can also be criticized for human rights or support for terrorism, I must say that is true. There are many countries engaged in actions that the U.S. opposes and is concerned about. However, there are few countries that engage in such actions and with which we do not have diplomatic relations. Although John Kerry and Javad Zarif spent many hours together, we still do not have diplomatic relations. As a result, our ability to influence Iranian policymaking is much less than that of other countries. For example, if we look at how the U.S. uses reporting on human rights and how it has tried to engage with countries about this, Saudi Arabia is a good example, we see that it is not just sanctions that are useful and lead to change. In the case of Iran, this tool is used because we do not have diplomatic relations. You have been involved in negotiations and discussions with Iranians and have witnessed the relationships between the foreign ministers of Iran and the U.S. With the upcoming elections in the U.S., the likelihood of John Kerry not being in the position of Secretary of State is high. Do you think what started in the current U.S. administration's approach towards Iran will continue in the next administration? This will certainly happen if Hillary Clinton wins the presidential election. She played a key role in initiating the process that later deepened with John Kerry and Javad Zarif, and whoever her Secretary of State is will continue a discourse and relationship with Javad Zarif, and this will continue after Zarif as well. I cannot imagine that Zarif will remain Foreign Minister forever. However, if we face a Trump presidency, that will change the subject, and there are many reasons for concern about that. Ultimately, I do not say that this process will continue automatically and mechanically. Every president will have a Secretary of State who will establish some form of relationship with the Iranian Foreign Minister, but I think in the best-case scenario, this process will continue in a Clinton administration.