Post-JCPOA Iran Viewed Positively
Iran’s historic nuclear agreement with six world powers, dubbed as the Joint Comprehensive Plan of Action (JCPOA), was signed on July 14, 2015. Now one year has passed since the landmark deal was struck. The world’s geopolitics and economy have since changed drastically and accordingly the post-JCPOA developments changed views vis-à-vis Iran.
80% Oil Market Share Regained
Over the past one year, 18 heads of state and 40 foreign ministers have visited Iran. The presence of 58 senior officials from different countries in Iran indicates that the JCPOA changed Iran’s image across the globe. In addition to political and economic officials, foreign tourists flocked to Iran. The end of a decades-old dispute between Iran and global powers was a big achievement per se.
Never in the history of United Nations Security Council, had any resolution been terminated before being implemented. But the Iranian government’s diplomatic dexterity managed to have six sanctions resolutions annulled. Normally, Security Council resolutions were either respected by the targeted country or military action had been taken against that country. Never had a resolution been made ineffective only through dialogue.
Foreign delegates were bidding for travelling to Iran. They were in search of more agreements with Iran.
The signature of the JCPOA changed economic conditions in favor of Iran. Thanks to this agreement, Iran has been viewed again positively due to the agreement and its potential for win-win deals.
Iran’s economy grew by 0.7% since the deal was signed and is forecast to grow 3.7% in the next year. At present inflation rate is at 8%, which has declined 80% compared to that of 2013, and the Iranian currency stabilized, said Mark Dubowitz, executive director of the Foundation for Defense of Democracies, a think tank in Washington, D.C.
The benefits to Iran’s economy mean Iranians were spared an economic collapse, Dubowitz said as reported by USA Today.
Inflation has slowed down; foreign investment in Iran has gradually grown while capital growth has been curbed. Iran has moved towards renovation of its aging aviation fleet and taken measures for replacing low-quality cars with vehicles compliant with European, South Korean and Japanese standards. Russia finally started delivering S300 anti-missile system to Iran; while many airports across the globe again authorized Iranian aircraft refuel. Industrial renovation has started and many commodities whose purchase had been blocked due to sanctions could be now brought in. Industrial components and medications could be bought from foreign companies. Foreign tourists have been regularly demanding visa to travel to Iran.
They above-mentioned points are all some achievements of JCPOA which have benefited both Iran and its trading and industrial partners.
One of the most important achievements was a rapid increase in Iran’s oil production and its success in clawing back its lost share in markets. On the anniversary of the signature of JCPOA, Iran’s Ministry of Petroleum said in a statement that the country has managed to regain 80% of its share which had lost in oil market due to the sanctions. That is while many Iranian and foreign experts ruled out the possibility of such a rapid increase in Iran’s oil sales. The important issue was that Iran regained its share at a time the black gold was experiencing a sharp slump and other producers were close to eliminating Iran from the market for good.
Another achievement was the reversal of ban on shipping navigations. Iranian vessels and oil tankers were allowed to call at international ports as insurance cover for Iranian tankers were reestablished.
SWIFT
The most important achievement of JCPOA could have been the facilitation of international banking transactions between Iran and foreign bodies. As the sanctions were lifted, Iran was reconnected to SWIFT (Society for Worldwide Interbank Financial Telecommunication) which supplies secure messaging services and interface software to wholesale financial entities.
Thanks to JCPOA, conventional banking activities like opening letters of credit and issuing banking guarantees became possible. Business and banking delegations from a variety of countries started travelling to Tehran even before the nuclear deal was implemented in January. Improvement of Iran’s banking relations with other countries topped the agenda in these negotiations.
Over the past one year, Central Bank of Iran (CBI) has held 123 rounds of talks at the level of governor or vice-governor with foreign parties in an attempt to bring back the level of transactions to the pre-sanctions levels.
Valiollah Seif, governor of CBI, said Asian and European parties have shown willingness for further cooperation.
The Europeans have been more cautious about resuming cooperation with Iran because of complicated banking system and ambiguities regarding banking activity in Iran.
Meantime, One of Iran’s London-based banks joined the euro payment system, in what could be another breakthrough for the country to remove technical hurdles created as a result of multiple years of sanctions.
Persia International Bank joined euro payment system known as Target-II after undergoing complicated banking procedures. This was carried out through the German central bank - Deutsche Bundesbank. Persia International Bank which is based in the UK belongs to Bank Mellat and Bank Tejarat and as the first Iranian bank stationed in London with Iranian owners; it managed to join euro payment system known as Target-II after undergoing complicated legal procedures.
In the international payment cycle (euro zone), the central banks of the euro zone countries are members of Target-II network.
Iran started receiving its frozen money in tranches before the nuclear deal was finalized, but Seif says CBI’s accounts are unblocked in all countries with no restrictions.
This issue is important not only for Iran, but also for potential investors and economic partners. That can guarantee world energy supply security through clearing the way for foreign investment in Iran’s oil and gas sector.
Iran Capital Market towards Globalization
In the capital market, many expected fundamental changes at Tehran Stock Exchange (TSE). That happened in March 2016. Over recent months, TSE has registered records with some shareholders pocketing 200 to 300 percent margins. However, during New Year holidays which began on March 20, TSE all-share index experienced drops.
Thanks to JCPOA, TSE joined The International Organization of Securities Commissions (IOSCO) which is an association of organizations that regulate the world’s securities and futures markets. That cleared the way for Iran capital market to get access to the World Federation of Exchanges (WFE) and become more known across the globe. WFE based in London is the trade association of 63 publicly regulated stock, futures, and options exchanges. Its market operators are responsible for operating the key components of the financial world.