July 22, 2015 | Quote

Iran Scored a Major Under-the-Radar Economic Victory in the Nuclear Deal

Last week's historic nuclear deal between a US-led group of countries and Iran is intended to impose a combination of stockpile limitations and intensive monitoring that keeps the country one year away from producing a single nuclear weapon for a period of at least 10 years.

But this achievement came at the price of having to dismantle a global sanctions regime intended to maintain the international community's leverage over Tehran.

Not every aspect of the sanctions regime is equally painful for Iran, something that gave the US and its partners a certain flexibility during negotiations.

UN sanctions authorizations have been superseded by the Security Council's endorsement of the deal on Monday. But US sanctions, which have global reach and far more intense legal sting, won't be lifted until Implementation Day, the agreement's phrasing for the point at which Iran is deemed to be in compliance with its requirements under the agreement.

But the most important part of the sanctions regime offers no such leeway. As Mark Dubowitz and Jonathan Schanzer of the Foundation for Defense of Democracies explained in a piece published Sunday in Foreign Policy, Iran's main sanctions-related negotiating objective wasn't the ability to transfer its $150 billion in frozen assets into convertible currencies, or even access to lucrative European and Asian markets. Instead, it's the ability to use the global financial transfer mechanisms established and maintained in the Society for Worldwide Interbank Financial Telecommunication, or SWIFT.

As Schanzer told Business Insider the day that the deal was announced, SWIFT access “was the brass ring for the Iranians. They're in financial pain that they can't rectify if they're cut off from the formal financial sector.”

Dubowitz and Schanzer are concerned that SWIFT access — the key to reintegrating Iran into the global economy — is enabled on the front-end of the deal's lifetime. Iran would would become eligible for using the system on Implementation Day, at the same time most other nuclear-related sanctions are suspended.

This is a critical asymmetry in the nuclear deal's implementation: Iran will immediately achieve its top sanctions-relief priority. Meanwhile, the US and its partners may have to wait for decades in order to know whether the deal's provisions are enough to prevent Iran from going nuclear.

“While SWIFT snapbacks remain a theoretical tool of coercion,” Dubowitz and Schanzer write, “Tehran could trump that with threats of nuclear escalation, a move that is backed by the language of the agreement.”


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