Friday, January 20, 2017

Eye on Iran: After Iran's Nuclear Pact, State Firms Win Most Foreign Deals


   EYE ON IRAN
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When world powers agreed in 2015 to lift sanctions on Iran in return for curbs on its nuclear program, the deal's supporters in the United States, Europe and Tehran hoped renewed trade and investment could boost Iran's private sector and weaken the state's hold on the economy. But a Reuters review of business accords reached since then shows that the Iranian winners so far are mostly companies owned or controlled by the state, including Iran's Supreme Leader, Ayatollah Ali Khamenei. Of nearly 110 agreements worth at least $80 billion that have been struck since the deal was reached in July 2015, 90 have been with companies owned or controlled by Iranian state entities, the Reuters analysis shows... In Iran, Khamenei and other anti-Western hardliners have repeatedly criticized it because they are concerned it would open the door to Western involvement in Iran's economy... No matter what hardliners have said about the nuclear pact, though, the Reuters analysis shows that businesses which answer ultimately to the Supreme Leader stand to gain from it... The state dominates Iran's economy, so state-controlled firms were always likely to win most business after sanctions were lifted. Iranian officials estimate that the private sector makes up only 20 percent of Iran's economy. In Iran, "you make money if you're close to the centers of power," said Ali Ansari, an Iran scholar at the University of St. Andrews in Scotland. "The economy hasn't been restructured or reorganized. You're recycling wealth through the elite." ... Counter to the hopes of supporters of the nuclear accord, the initial wave of investment looks likely to further strengthen the power of the state, including Khamenei, whose power far surpasses Rouhani's.

The Royal Bank of Scotland has rebuffed efforts by the British government, a major shareholder, to coax the lender into facilitating trade with Iran as it seeks to avoid risky business, sources with knowledge of the discussions say. In recent months British officials have sought to boost business ties with Iran - a year on from the lifting of international sanctions - as Britain tries to forge new trade ties following June's vote to leave the European Union. The sources said Britain's finance ministry had tried to use the government's influence with RBS and to a lesser extent Lloyds, in which it holds a minority stake, to help speed up trade finance with Iran, including clearing services for Iranian banks in pounds... A Lloyds spokesman said it was a UK-focused retail and commercial bank, adding that it was "mindful that Iran remains a higher risk country with which to do business". "We therefore consider all requests on a case-by-case basis in order to protect the bank and our customers," the spokesman said... Major global lenders like HSBC which have large operations in Britain have reiterated they have no intention of doing any new business involving Iran, questioning why the United States has encouraged them to do so when U.S. financial firms are restricted.

A historic high-rise building in the heart of Iran's capital caught fire and later collapsed Thursday, killing at least 30 firefighters and leaving their stunned colleagues and bystanders weeping in the streets. The disaster at the 17-story Plasco building, inadvertently shown live on state television, came after authorities said they repeatedly warned tenants about blocking stairwells with fabric from cramped garment workshops on its upper floors. Firefighters, soldiers and other emergency responders dug through the debris into the night, looking for survivors. While it was not clear how many people were in the steel-and-concrete building, witnesses said many had slipped through a police cordon while the fire burned to go back inside for their belongings... Thursday's disaster stunned the city. Firefighters openly wept on the streets, holding each other for support. Dozens of people lined up to donate blood.

IRAN NUCLEAR DEAL

President-elect Donald Trump asked approximately 50 senior administration officials to stay in their roles, including a Treasury Department official who helped craft the Iran nuclear agreement. Trump asked Adam Szubin, acting undersecretary for terrorism and financial intelligence at the Treasury Department, and the other officials to continue in their roles to "ensure the continuity of government," incoming White House press secretary Sean Spicer said Thursday, according to The Hill. The Hill and Reuters quoted a Treasury officials as saying Szubin would run the department until Trump's team is in place and then would leave government.

SANCTIONS RELIEF

Since Iran agreed to curb its nuclear program, foreign companies have sealed at least nine deals with companies in which entities controlled by Supreme Leader Ayatollah Ali Khamenei, including Setad Ejraiye Farman-e Hazrat-e Emam, have large or majority stakes. Financial terms have not been disclosed on all. Here are those deals whose terms are public.

The Central Bank of Iran has published a report detailing the achievements of the country's nuclear accord with world powers in the banking and monetary sectors, as the country marks the first anniversary of the implementation of the landmark deal. The document indicates that since imports constitute a significant share of the country's balance of payments, banking sanctions had derailed the course of imports due to payment disruptions "in a way that the main mechanism of payments in foreign trade changed to payment orders from letters of credit", Dolat.ir reported... "After the implementation of JCPOA, access to the country's foreign exchange reserves was eased and a majority of the assets of the central bank outside the country were released," reads the report. "After the deal was implemented, more than $9.9 billion of the central bank's frozen oil money were released and repatriated from the UAE, Britain, India, Greece, Italy and Norway." The bank adds that after the adoption of the interim agreement, $12 billion of its blocked assets were freed from Japan, South Korea and India in the form of installments.

TERRORISM

Secluded in his hideaway in Pakistan, Osama bin Laden suspected Iranian officials might implant tracking devices in his sons, according to a document released Thursday in a batch of materials seized in a 2011 raid that killed the al-Qaida leader. "If they inject you with a shot, this shot might be loaded with a tiny chip," bin Laden wrote in an undated letter to his sons, Uthman and Mohammed, who were being allowed to leave Iran. "The syringe size may be normal, but the needle is expected to be larger than normal size. The chip size may be as long as a seed of grain but very thin and smooth." In its final hours, the Obama administration released the last of three installments of documents belonging bin Laden that were collected during the raid on his compound in Abbottabad, Pakistan.

OPINION & ANALYSIS

While Tehran is saber-rattling and threatening our allies in the region, the response from Washington, unfortunately, has remained muted. Time and again, the Obama administration has ignored the comprehensive nature of the Iranian threat and soft-pedaled non-nuclear sanctions seemingly out of fear that Iran would walk away from the nuclear deal. As a result, and much to the worry of America's traditional allies, Iran's leaders have become more emboldened and its footprint continues to grow across the region. In the past, we have spoken publicly about the flaws of the Joint Comprehensive Plan of Action (JCPOA), which in the end has not halted but only delayed Iran's path to a bomb-and at the considerable price of abandoning Western leverage against Iran. To respond effectively, the Donald Trump administration should not rip up the deal on day one-that would make U.S. actions and not destabilizing and threatening Iranian behaviors the issue. We need to isolate Iran, not ourselves. But we must raise the costs of continued Iranian intransigence, and to that end, the incoming Trump administration should adopt a more expansive strategy towards Tehran: namely by addressing those vital issues beyond the scope of the agreement, specifically Iran's chronic regional meddling.

The North American International Auto Show - the premier industry assembly for auto aficionados and manufacturers - is in full swing this month in Detroit. Six thousand miles away, a far different auto show involving many of the same manufacturers is unfolding in Iran. For the Iranian regime, the auto industry is more than a massive source of revenue for the Islamic Revolutionary Guard Corps (IRGC), a terrorist organization sanctioned by the United States and the international community. It also provides the country's rulers with access to advanced foreign technologies and dual-use products for its military and security forces through foreign business agreements. Some of the same companies proudly showing off their dazzling, shiny wares at the auto show in Detroit, including Fiat-Chrysler and Daimler, are in the middle of negotiating deals in Iran that are being brokered with Iranian counterparts closely linked to the IRGC.

One of the foremost foreign policy challenges for the Trump administration will be defining its approach toward Iran and the JCPOA-the momentous nuclear deal-and devising a comprehensive policy in this regard, taking into account the serious flaws in the deal itself, as well as Iran's troubling behavior following the deal's announcement and implementation. The impulse to scrap the deal-as Trump promised on the campaign trail-is understandable, but at this point renouncing the deal would be a lose-lose proposition. Iran has already pocketed over $100 billion in sanctions relief, and the decision would cause friction with the other P5+1 states. Iran would presumably be free to resume its program with no restrictions, because all UN Security Council Resolutions demanding suspension of uranium enrichment activities have been replaced by Resolution 2231, which endorses the JCPOA. In addition, all ills emanating from the flawed nuclear deal would thereafter be attributed to this decision rather than to the very real issues surrounding the deal and its implementation. Demanding renegotiation of the deal is also perilous. Even assuming that consensus among the P5+1 could be reached on this, which is doubtful, renegotiation would take years, and what leverage would the international powers have to work with to pressure Iran, after having lifted the sanctions? Indeed, at this point, making the best of the bad situation that has been created with the JCPOA would counsel against both renouncement and renegotiation of the deal. However, much can be achieved simply by changing the U.S. approach to the deal and to Iran, and by altering the rhetoric.






Eye on Iran is a periodic news summary from United Against Nuclear Iran (UANI) a program of the American Coalition Against Nuclear Iran, Inc., a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code. Eye on Iran is not intended as a comprehensive media clips summary but rather a selection of media elements with discreet analysis in a PDA friendly format. For more information please email press@uani.com.

United Against Nuclear Iran (UANI) is a non-partisan, broad-based coalition that is united in a commitment to prevent Iran from fulfilling its ambition to become a regional super-power possessing nuclear weapons.  UANI is an issue-based coalition in which each coalition member will have its own interests as well as the collective goal of advancing an Iran free of nuclear weapons.

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