Iran looks to post-sanction economics as nuclear deal signed

Iran’s president promised a flood of investment as Iranians celebrated the lifting of sanctions that have left the country outside the global economy for more than a decade.

Hours after the landmark nuclear agreement came into force, giving Tehran access to tens of billions of dollars in unfrozen assets, Hassan Rouhani said he hoped Iran would attract up to $50 billion (€46 billion) worth of international investment and finance in the coming year.

“The government’s main policy after the nuclear deal is to attract foreign investment, expand non-oil exports and make optimum use of [unfrozen] foreign exchange reserves,” Mr Rouhani told parliament as he submitted his budget for the next Iranian year, which begins on March 20th. “A stable and swift economic growth needs hefty foreign investment.”

The lifting of sanctions comes as oil prices are at historic lows and Mr Rouhani did not specify where the investment would come from. Iranian analysts say it is likely to include sectors such as oil, gas and transport.

The implementation of the nuclear agreement on Saturday in Vienna was a historic moment in Iran, which has been reeling from a decade of international sanctions. Many of the oil and banking sanctions that hit the economy particularly hard since 2011 were lifted when UN inspectors confirmed that Tehran had dismantled significant elements of its nuclear programme. Some US sanctions remain in place, however.

Terrorism and ballistics

Barack Obama, US president, said yesterday the nuclear deal was a sign "of what is possible with strong American diplomacy". But he added the US would continue to enforce the non-nuclear sanctions that remain on Iran, including for issues such as support for terrorism and ballistic missiles. The US treasury yesterday imposed sanctions on 11 companies and individuals connected to Iran's ballistic missile programme.

The nuclear deal’s implementation led to a flurry of announcements by Iranian officials, governments and companies around the world.

Pakistan announced it would immediately renew a joint gas pipeline project with Tehran, while the EU announced it would send a "technical assessment mission" to Iran next month to revive energy ties with the country, Opec's second-biggest producer before sanctions.

After nearly a decade of isolation, Iran has a deal with six world powers to wind back progress towards building a nuclear bomb in exchange for a reversal of economic sanctions

Binyamin Netanyahu, the Israeli leader, warned his country would "continue to monitor all of Iran's international violations" of the nuclear agreement and "deal with" any threat from its regional arch-enemy.

Valiollah Seif, Iran’s central bank governor, said $32.6 billion-worth of frozen assets would be unlocked. The US also said it had resolved a long-standing dispute with Iran over an arms deal dating back to the 1970s.

But there are no expectations of a quick economic recovery in Iran after a decade of populist policies and years of crippling sanctions. – (Copyright The Financial Times Limited 2016)