Iran, Trump, and the nuclear deal in 2017

Arrival of a new American president on January 20th brings more questions than answers as to the JCPOA’s future and Iran’s relations with the world
By Farhad Alavi
Mon 09 Jan 2017 12:23 PM

Donald Trump’s victory in this year’s US presidential election surprised many of us.

How, I wondered, will Trump’s presidency impact my work as a Washington, DC lawyer advising companies around the globe on US trade and business laws, particularly given that much of my practice relates to compliance with sanctions on Iran?

The more relevant question for readers, however, is how will Mr Trump’s victory affect the Iran nuclear deal and more importantly, Iran’s relationship with the Gulf Cooperation Council (GCC) states and the broader Middle East & North Africa (MENA) region in 2017 and beyond?

Much has been said about the Joint Comprehensive Plan of Action (JCPOA), commonly referred to as the nuclear deal, implemented in January by Iran and the “P5+1” nations – the United States, United Kingdom, France, Russia, China, and Germany.  Considered imperfect by even its most ardent advocates, it has changed many dynamics globally, importantly in the Middle East and particularly the GCC.

My trips to the UAE this year reinforced my view that what we see in Dubai is in some ways a snapshot of the broader global perspective on the JCPOA – renewed interest in Iran, and to paraphrase President Obama, cautious optimism.

While opinions vary, many JCPOA supporters and opponents alike misunderstand this complex deal.  Misstatements, rhetoric, and rumours abound.  It is decidedly difficult to credibly analyse the JCPOA and predict Mr Trump’s policy without first understanding the deal’s context and framework.

The JCPOA is not a “grand bargain” ending 37 years of US-Iran estrangement, nor does it gift Iran billions of dollars for signing a deal.  It instead represents a narrow agreement aimed at constraining Iran’s nuclear ambitions in exchange for limited relief from punishing sanctions that cost Iran dearly, limiting its oil exports and ability to repatriate oil revenue while severely confining its ability to do business internationally, even with regional trade partners like the United Arab Emirates.

Almost one year after “Implementation Day,” the imminent Iranian economic miracle many expected never happened. 

The United States maintains its unilateral embargo. The repeal of United Nations Security Council resolutions and waiver of US sanctions penalising third country businesses dealing in certain sectors of Iran’s economy failed to create a gold rush.

Nor did the JCPOA fix Iran’s pressing domestic problems that have hindered development of this large country whose massive economic potential remains unfulfilled.  Iran continues to suffer from high unemployment and corruption, and most major global banks remain unwilling to do business with it.  Not an emerging economic powerhouse quite yet.

What did happen was that Iran became somewhat less isolated and made some noteworthy economic gains.  Increased oil exports, new energy contracts, more foreign business delegations, and commercial aircraft purchases all speak to this.

The world is now better able to monitor a significantly curtailed Iranian nuclear program.  However modest, these gains may shield Iran and the P5+1 from the recently heated rhetoric and allow them to proceed with a détente that, while flawed, has at least calmed some tensions.

What does this mean for Dubai?  Even if President Trump suddenly repeals all the sanctions, Iran would surely continue to rely heavily on Dubai’s superior logistics and banking infrastructure.  Even under scenarios more realistic than a full lifting of the embargo, Dubai will likely remain a major global gateway for Iran.

During the campaign Mr Trump indicated that he will apply his business acumen to negotiate a better Iran deal.  Will he revise the JCPOA? Will anti-Iran Congressmen become emboldened to enact aggressive new sanctions now that they have a more sympathetic ear in the White House? Will Trump’s “America first” attitude cause to widen the range of business US persons can lawfully do with Iran? The answer to all these questions may be yes.

Mr Trump’s moves are hard to predict, so what we can predict is unpredictability.

While he will be surrounded by advisors significantly more hawkish on Iran than those counselling his predecessor, the new president’s policies will likely combine tough talk and posturing with realism and practicality. This is consistent with post-election shifts in Mr. Trump’s statements on other issues. 

Furthermore, Iran is already absent from the incoming administration’s policy priorities for its first 100 days. More likely than not, the status quo will hobble along, arguably a net positive for Iran’s neighbours.

Iran’s position in 2017 will not rest solely with the Trump administration, however.  Iran’s leaders will have to make critical decisions that may also affect the region.  Will the country prioritise its economic welfare or its ideology?  Should Iran choose the latter, Mr. Trump may have a significantly easier time isolating it.

The arrival of a new American president on January 20th brings more questions than answers as to the JCPOA’s future and Iran’s relations with the world.  There is clarity however on what we hope for – a peaceful coexistence of both the United States and the GCC with Iran.


*Farhad Alavi is Managing Partner of Akrivis Law Group, PLLC in Washington, DC and Adjunct Professor of Islamic Finance at Georgetown University Law Center. His practice covers international trade, anti-corruption and tax compliance as well as business transactions. He travels to the UAE frequently, where he represents clients in a variety of sectors.

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Last Updated: Sat 28 Jan 2017 12:29 PM GST

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