The process of global denuclearization requires the effort made by both countries and international community. However, that could be an abstract notion when the U.S. announced its withdrawal of Iran nuclear deal and restoration of sanctions against this country. That decision has caused unimaginably far-reaching implications.

For many decades, the nuclear programs by Iran and North Korea have been among the most burning and thorniest issues on the international agenda concerning denuclearization. As far as Iran is concerned, after a lot of rounds of intense, complex negotiation which had lasted for more than a decade and been thought to collapse sometimes, relevant parties, including Iran and 5 permanent members of the UN Security Council and Germany (P5+1) were resolved to reach an agreement on the Joint Comprehensive Plan of Action (JCPOA), also known as Iran nuclear deal, on July 14^th 2015. Accordingly, on July 15^th 2015, the United Nations (UN) Security Council passed the Resolution 2231 which made JCPOA an important part of the international law. On the same day, the European Council on Foreign Relations voted to pass the Deal. Over 90 states and many international organizations supported this important Deal. Many countries, especially EU member states considered this a major step and achievement in the process of denuclearizing Iran.

The U.S. withdraws from JCPOA and restores its sanctions against Iran

According to the US law, that Deal is an optional political commitment; therefore, it has not been ratified by the U.S. Congress yet. When running for election, Donald Trump strongly opposed the JCPOA and said that it had been a “terrible deal”. He made the nuclear issue of Iran an important commitment in the U.S. foreign policy, believing that JCPOA had too many shortcomings and couldn’t ensure national security and safety of the US citizens. In fact, the US President and the Republicans have criticized and regarded it as an insane deal for many times. Besides, America and Israel specially condemned Iran for many international issues in the North Africa – Middle East as after the inception of the “Arab Spring”, Iran became a very major player in the region, had great impacts on a lot of issues and adopted a hostile policy against America and particularly Israel.

US President Donald Trump announcing the US withdrawal from the JCPOA (photo: BBC)

As a result, after many warnings, on May 8^th 2018, US President Donald Trump decided to withdraw America from Iran nuclear deal and announced a series of sanctions against this country in two phases. Accordingly, since August 7^th 2018, America has resumed sanctions   which prohibit Iran’s Government from trading in and using US dollar as well as gold and other precious materials, particularly aluminium, steel, coal and raw materials used in processing industry, from conducting Rial-related transaction, and the sanctions against car industry and governmental debt-related transactions. At the same time, it has put top officials of Iran into the blacklist, such as the Governor of the Central Bank of Iran and many leaders of banks and large organizations for the reason of supporting terrorism in the region. From November 5^th 2018, sanctions will be expanded to other fields, such as shipbuilding, shipping, energy, seaport operation, petroleum-related transaction and transaction between foreign finance organizations and Central Bank of Iran; America will also restore the blacklist of hundreds of persons, organizations, ships and aircraft of Iran.

This is an important step that has been predicted before. The restoration of US economic sanctions against Iran has deeply impacted on this country’s economy, politics and military as well as many other countries around the globe.

Implications from the US restoration of sanctions against Iran

Iran is seen as “Germany” in the Middle East and possesses great economic potential, a market of about 80 million consumers, a well-educated population, and rich natural resources, particularly petroleum and precious materials. Iran is also the last emerging large market which will be open to the world outside. After the signing of the JCPOA, Iran’s economic growth rate was 12.6% in 2016. European top industrial groups were in a rush for signing contracts worth tens of billions USD, such as Total, Peugeot, Airbus, Atom, Siemens, etc. For Iran’s aviation industry alone, according to Boeing, Iran would have to spend about 100 billion USD on acquiring aircraft and spare parts of all types. It was a great opportunity for enterprises from America and around the world. However, that opportunity existed in a very short time. Since the restoration of US sanctions against Iran, it has made heavy impacts on Iran’s economy and many other countries in the region and the world.

First, Iran’s Rial has been devalued considerably. Within 1 moth only after the US restoration of sanctions, the exchange rate of this currency was decreased to 130,000 Rial/1USD regardless of efforts to closely manage the foreign exchange market by the Central Bank of Iran. Over the past 6 months, Rial currency has been devalued up to more than 100%. The devalued currency and the sanctions against Iran’s trade in gold and precious metals will continue to greatly impact on Iran’s foreign-exchange reserves, exchange rates and trade balance. Therefore, in the foreseeable future, after the second phase of the US sanction policy, Iran will possibly fall into a currency crisis.

Iran’s aviation industry has been also impacted greatly by the US sanctions. According to the report of Iran’s aviation industry, over the past 25 years, there have been 17 aircraft accidents killing about 1,500 people. One of the reasons is that America has prohibited Boeing Company from selling aircraft and spare parts to Iran’s aviation companies. That has seriously impacted on Iran’s fleet of aircraft. About one third of 117 civilian aircraft of Iran have encountered technical issues or accidents due to a dearth of spare parts. More seriously, sanctions to be imposed in the future will continue to cause Iran’s aviation companies more difficulties. Many other fields, such car industry, shipbuilding, and shipping will also experience the similar issues.

It could be said that Iran’s rapid economic growth after the signing of JCPOA has ended. In the future, particularly in medium and long terms, Iran’s growth prospect will be poor while the unemployment rate will increase again, particularly among young people. The inflation rate is increasing as the price of goods imported to Iran is rising sharply. The shortage of electricity and clean water due to the poor investment in infrastructure has also seriously impacted on the people’s life.

Globally, in spite of the fact that top leaders of the European Union, such as French President Emmanuel Macron, Chancellor of Germany Angela Merkel, and Prime Minister of the United Kingdom Theresa May have strived to persuade America not to withdraw from the JCPOA or restore sanctions against Iran, they have all failed. Those sanctions have led to a deep disagreement between America and its allies and partners, especially EU member states and seriously undermined their faith in America. The reason is that many big European corporations and companies have got stuck as they couldn’t predict changes in the US decisions.

As far as North Africa – Middle East, the confrontation between America and Iran has been greatly impacting on “flashpoints” in this region and the world. Typically, Iran has had to increase its defensive operations which would have effects on several regional countries. More dangerously, Iran is accelerating the development of its navy and strengthening its control over the Persian Gulf and the Strait of Hormuz, which will cause the geopolitical tension in this region and unpredictable implications unless relevant parties adopt effective solutions. It is worth noting that the US sanctions have forced Iran to considerably adjust its relations with major powers, such as Russia and especially China. That has greatly impacted on the oil price all over the world. It is predicted that when America imposes new sanctions in November, the crude oil price will be increased more, thereby seriously impacting on the economy of many countries in the world. However, that will have less impact on the US strategy in other regions, including Asia-Pacific region.

It is thought that the JCPOA is the fruit of efforts made by President Obama’s Administration and the international community to deal with Iran’s nuclear program – one of the thorniest issues in the international relations. However, it is a pity that the deal collapsed when President Donald Trump decided to withdraw America from the JCPOA and restore economic sanctions against Iran, which have made the situation much more complex and led to unpredictable implications.

According to experts, in the upcoming time, it is predicted that Iran will withdraw from the JCPOA and that historic deal will possibly collapse completely. The European Union will hardly give any guarantee to Iran without the cooperation of the US. Even if Iran returns to negotiation, it will certainly ask for more than previous commitments. Things that matter are whether America’s recent commitments to global denuclearization, particularly to North Korea are reliable and when a nuclear-free world comes true. An indefinite future is awaiting the Middle East and many countries in the world.

Dr Tran Viet Thai, Diplomatic Academy of Vietnam