As the Joint Comprehensive Plan of Action (JCPOA) enters its third year of implementation, an atmosphere of uncertainty has slowed the pace of post-sanctions trade and investment. In Tehran, government figures have sought to lay blame for Iran’s faltering economic recovery on a concerted American campaign to undermine the agreement and dissuade investment. In a September interview on the sidelines of the United Nations General Assembly, Iranian Foreign Minister Mohammad Javad Zarif pointed to the atmosphere of uncertainty as a part of US President Donald Trump’s strategy to undermine the deal. He said, “I think he has made a policy of being unpredictable, and now he's turning that into being unreliable as well. He has violated the letter, spirit, everything of the deal.”
Another view has been promulgated in Washington — one that points emphatically at risks endemic to Iran’s economy, particularly in regard to the economic activities of the Islamic Revolutionary Guard Corps (IRGC). Since President Trump decertified the Iran nuclear deal in October, American officials and advocacy groups have been even more vocal about these risks.
In October, at a briefing alongside Saudi Minister of Foreign Affairs Adel al-Jubeir in Riyadh, US Secretary of State Rex Tillerson declared that “both of our countries believe that those who conduct business with the [IRGC], any of their entities — European companies or other companies around the globe — really do so at great risk.” Just last week, Sigal Mandelker, treasury undersecretary for Terrorism and Financial Intelligence, stated the following in her testimony to the Senate Committee on Banking, Housing and Urban Affairs: “In our engagements both here in the United States and abroad, we have made clear that companies doing business in Iran face substantial risks of transacting with the IRGC or IRGC-linked entities.”
The discussion of risk as an essential characteristic of Iran’s economy is part of a strategy to deflect US responsibility for Iran’s faltering reintegration into the global economy. The groundwork for this strategy was set by advocacy organizations such as the Foundation for Defense of Democracies (FDD) and United Against Nuclear Iran (UANI), which have long published materials and organized events to ostensibly warn companies of the risks inherent in conducting business in Iran. The FDD has published guides on the “Risks of Doing Business in Iran,” and UANI operates a whole website devoted to Iran Business Risk.
But when asked to describe the risks they face in the Iranian market, business leaders point to different priorities than those presented by the advocacy groups. A recent survey of over 60 senior executives sought to quantify the sentiments around risk and the slow movement of multinational companies in Iran. When asked to evaluate the pace of trade and investment in Iran, 83% of respondents concur that companies “are moving slower than they could” to engage in the Iranian market. However, the survey results refute the idea that the slowdown is due to internal risks.
Multinational businesses boast significant capacity to manage risks such as money laundering, corruption and threats to personnel and assets. Many companies have decades of experience working in Iran or in similar economies around the world. When asked what is the “primary obstacle facing your market rollout in Iran,” 32% of survey respondents indicate sanctions compliance, while 20% point to “managing political and reputational risk.” A further 21% point to “access to financing.” These are all external challenges. Put succinctly by one senior executive, “Iran’s internal issues, from corruption to mismanagement, are not more or less complicated than any other frontier market. What’s different is the Damocles sword of sanctions hanging over the market.”
Over the last year, executives such as Total CEO Patrick Pouyanne, Airbus sales chief John Leahy and Siemens CEO Joe Kaeser have deftly signaled that the obstacles they face in executing their landmark post-sanctions deals in Iran stem primarily from the threat of sanctions snapback and the attendant hesitation of international banks to facilitate Iran trade and investment. Only snapback would stop these companies from entering the Iranian market. There are certainly serious internal risks, but these are manageable.
In response to this chorus, Iran deal opponents have pivoted to a new claim, suggesting that thwarting foreign investment is actually an intended effect of the Trump administration’s Iran policy. In a recent Twitter thread, Richard Goldberg, a senior adviser to the FDD, responded to the findings of the aforementioned survey by claiming that the slowdown in business was an intentional consequence of decertification. As such, he believes that the “[White House] and Congress should stop listening to Euro [sic] diplomats and start reading the tea leaves from international business managers.”
This is a facile and selective reading of the survey data, ignoring that 63% of executives believe that the nuclear deal is somewhat likely to survive even if the United States pulls out and that 54% of senior executives indicated that “assuming Iran remains committed to the nuclear deal,” blocking regulations, which would protect companies from US penalties, would positively affect the “decision to invest in Iran.” Moreover, 31% of executives note that their companies did not “cease trading with Iran in the period between 2006 and 2015,” when sanctions were at their most severe. With support from the European, Chinese and Russian governments, a core group of multinational companies active in Iran can be expected to remain resolute, even in the face of snapback. A staggering 91% of executives still believe their company can be commercially successful in Iran.
But aside from the cherry-picking of statistics, the pivot to the new claim sees Iran deal opponents walk directly into the bind that their “business risk” strategy had so long sought to avoid. By conceding that the express purpose of decertification is to dissuade business with Iran, and by boasting that the policy is having its intended effect, figures like Goldberg are making it patently clear that if the nuclear deal collapses, the United States will be at fault.
Of course, the collapse of the deal is likely the true ambition of the advocacy groups that have so long trumpeted Iran’s “business risks.” But Congress has been wary of having the collapse of the nuclear deal — and its geopolitical ramifications — seen as an American failure. Given that the success of the deal seems increasingly predicated on the delivery of economic dividends — and given that these dividends are now admittedly and openly being blocked by the Executive Branch — Congress will need to contend with the fact that uncertainty around the deal is not an unintended consequence of the president’s posturing, but rather the intended outcome of a harmful policy, just as Foreign Minister Zarif has warned.