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The state of Iran's economy one year after landmark deal over disputed nuclear programme

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The state of Iran's economy one year after landmark deal over disputed nuclear programme

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It has been one year since Iran, the US and five other world powers reached a landmark deal over Iran’s disputed nuclear programme.

It was the result of more than 20 rounds of talks over more than a decade. In the words of one politician the deal has made the world a safer place.

“Fundamentally I think the world can take pride in the fact that this multilateral complicated negotiation has produced a result that makes the region less volatile and makes the world itself safer in terms of nuclear proliferation,” opined John Kerry, US Secretary of State.

The framework deal was hammered out in Geneva and concluded in Vienna. It was forged in exchange for curbs in Iran’s nuclear programme. Subsequently the United Nations lifted all nuclear-related sanctions against the country. By signing the agreement President Hassan Rouhani hoped for Iran’s economic recovery.

Foreign investors remain reluctant. But the main hurdle is the banks and financing. While the deal lifted EU and UN sanctions on Iran’s banking and energy sector, unilateral US sanctions on the Iranian economy still remain.

They forbid US companies doing business with Tehran. Iranian banks and foreign banks that are processing Iran-related transactions are not allowed to deal in US dollars.

While Tehran tried to conclude billion dollar contracts with Boeing and Airbus, it is unclear how such transactions get financed. Although Iran ordered 118 Airbus-planes, they haven’t been delivered because Iran doesn’t have bank credit.

Over the past 10 years, BNP Paribas, HSBC and Deutsche Bank have paid billions of dollars in fines for Iran-related activity.

Foreign banks fear the US sanctions still in place. The moderate Iranian government has appealed to the US to stick to its promises.

But Washington is divided. A year ago doing business with Iran was backed by most congressional Democrats while every Republican lawmaker was opposed to the deal.

Some of them have repeatedly introduced legislation that the Obama administration see as efforts to undermine the international agreement.

“At any time under any circumstances, should the world powers that signed the deal refuse to keep their commitments, we are completely ready and have the nuclear capability to roll back our nuclear programme to a desirable stage in a short period of time,” said Hassan Rouhani, Iranian President.

Without foreign investment and the support of international banks, the Iranian people will begin to view the deal as one-sided. That could strengthen hardliners who have close ties to former President Mahmud Ahmadinejad a year ahead of Presidential elections in 2017.

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