The White House worked hard to fence Iran off from the world. But in the wake of a nuclear deal, will the US end up fencing only itself off from Iran?
Iran might re-open for business soon, but don’t expect the Americans to be knocking on the door.
With the U.S. and Iranian negotiating parties expressing confidence in reaching a nuclear deal in the week ahead, the promise of a broad sanctions-easing on Tehran is inspiring hope among the business sector.
That hope, however, might not translate for U.S. companies, who stand to lose out in the race to Iran. Most observers expect the White House to retain large parts of the U.S. trade ban following a nuclear deal. That will prevent U.S. companies from engaging in any significant trade with or investment in Iran.
In contrast, Europe is already preparing for the day after a nuclear deal. Last month, the Europe-Iran Forum was held in London, where European firms met their Iranian counterparts to explore opportunities for doing business in Iran should a nuclear deal open the door. With a young, cosmopolitan, and highly-educated population, Iran is an attractive market. Expressing the bullishness of many, Charles Robertson, the chief global economist at Renaissance Capital, recently declared Iran “the biggest opportunity of the next 10 years.”
For U.S. firms, that will be a missed opportunity. Reports have indicated that, because of the tough slog the White House will have lifting U.S. sanctions, U.S. negotiators have asked their European counterparts to lift the EU sanctions on Iran at an early date should a deal be reached. That will lead to Europe entering Iran at a far earlier date than U.S. business. To the speedier go the spoils.
This does not need to be the case nor should it. Besides the real commercial opportunities that would be available to U.S. businesses in Iran, the White House also has real interests at stake in opening things up with Tehran.
First, the United States has long believed that commercial ties have a moderating influence on countries with which the U.S. has contentious relations. In fact, when the U.S. trade ban with Iran was first exacted in 1995, some U.S. commentators pointed out that this flew in the face of the prevailing wisdom in Washington. That wisdom suggested that extending business links to otherwise recalcitrant regimes was a potent version of American soft power that had the potential for high rewards at low costs.
Iran has, for too long, been the exception to this rule. In cutting off all trade relations with Tehran, the United States has done a favor to the most conservative elements of Iran, who most fear the West’s cultural invasion. Moreover, the track record of disengagement isn’t pretty. Nearly two decades of radio silence between the two countries has done little to address the concerns the U.S. has regarding Iran’s policies in the region. It is high time to abandon these failed policies and try something new, and a nuclear deal triggers that opportunity.
Second, the White House has an interest in making sure that any nuclear deal reached with Iran is sustainable. As tough as the present negotiations have been, a nuclear agreement will be a fragile thing for the foreseeable future, as opponents on both sides actively work to undermine it.
Sustaining this will require a certain level of ingenuity from the White House. Returning to the age-old hostilities between the two countries won’t work. That would only provide fuel to the fire for hardliners interested in killing a nuclear deal.
Instead, the Obama administration will need to figure out a way to de-escalate tensions with Iran. The best means of accomplishing this can be the slow development of trade ties — tailored in such a way as to militate against suspicion while also addressing each other’s interests and needs. Such trade ties can up the consequences of any perceived violation of a nuclear deal for both sides and thus increase each party’s interest in scrupulously toeing the line of an agreement.
Third, a nuclear deal opens up opportunities for both sides to chart a new course in U.S.-Iran relations. The path will be a difficult one. Hardliners in Washington and Tehran have a long-standing interest in making sure that contacts between the two countries are kept to a minimum.
But precisely because this is the case, the White House should open the door for business contacts between the U.S. and Iran, so that commercial ties can pave the way for political relations. Utilizing the private sector in this manner, the White House can ease the difficulties it will later have should it seek a broader opening with Tehran.
Whether the U.S. and Iran can reach a nuclear deal in the weeks ahead remains unclear. But if so, the White House should seize the opportunity to poke a crack in the wall that has long separated the two countries.
It would be ironic after all to see the United States, which fenced Iran off from the world for the better part of the past decade, to fence only itself off from Iran in the wake of a nuclear deal.
This article was originally published in Medium.