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The recent conclusion of Iran’s nuclear deal has allowed the United States and its partners to dictate the size and stockpile of the Iran’s fissile material as well as its means of production. However, there are loopholes in the deal that would allow Iran to still have the power to decide on how the deal will turn out. It appears that some of the provisions of the agreement are based on “trust,” contrary to what US and its partners say of their intention to hold a vigorous and even invasive verification regime over Iran.

For instance, section 52 of the agreement’s first annex under “other aspects of enrichment” states:

section 52

This section can be interpreted to mean that Iran will submit its fuel cycle intentions to the International Atomic Energy Agency or IAEA. The IAEA will then use “voluntary commitments” as its guideline in the formulation of Iran’s obligations under the Additional Protocol of the Non-Proliferation Treaty. The said treaty is a series of legally binding, country-specific protection on nuclear development. With Iran as a member of the AP, it is now covered by the international law. So legally, even if there’s the voluntary aspect, the commitment becomes more serious upon ratification of the AP. But where’s the timeline of ratification in the agreement? None.

With regard the implementation, the annex speaks of an open-ended timescale, which begs the question if Iran with an AP not legally binding is sustainable for a long time. As such, the deal might have the endure the risk of combining provisional as well as binding adherence to internationally legal norms, while weakening any country’s incentive for ratification.

Another section of deal that shouts of Iran having more control is that of “managed access”, which is sensitive to military sites. This means that Iran can refer to access disputes to itself and the other countries in the eight-member joint committee after 14 days. However, Iran is only obligated to comply in 25 days. But the term “managed access” hinges on good faith, again something that the US and its partners vehemently deny.

The third “problematic” area in the agreement refers to Iran’s past military work, which is crucial to seeing this deal work. Iran has to reveal its nuclear-procurement networks; otherwise, inspectors won’t know what to monitor. If monitoring is not done properly, then inspection baseline could not get established. The disclosure was settled in favor of Iran, as manifested by the use of its local language.

In totality, the deal’s success really depends on whether the Iranian government can be trusted with the some of the privileges recognized in the agreement.

What does the nuclear deal have to do with the global economy?

There’s only one word for that – oil. The said deal could open up Iran’s crude oil reserves for the rest of the world. If sanctions imposed by the US and Europe are eased, then Iran can ramp up its production and exports. What would ensue is a new dawn of low oil prices as there’s dug up oil floating in tankers off the coast of Iran just waiting to be shipped out.

Of course, it can’t all good news because this won’t happen immediately. In fact, you might have to wait at least six months before you see any significant oil impact resulting from the said nuclear deal. Plus there’s the fact that EU and the US won’t lift their sanctions until 2016.

But once the sanctions are finally lifted, then EU can start selling 30-40 million barrels of oil, which would push down oil prices. That’s the theory of demand and supply at work! Then it would take a few years for Iran to produce oil as much as it did before the sanctions took effect. Yes, Iran has 158 billion barrels of crude oil as it has the fourth largest reserves worldwide. But the sanctions drove away investors; thus, production fell.

However, once it picks up on production again, it could put a significant downward pressure on global oil prices, freeing up money that would be spent on other things. But from now until then, nothing’s guaranteed yet. We just have to sit back and see how the deal will work.

One final thought, is that Iran still trades its oil in non-US currency. This is a big thorn in the side of the US and threatens the USD world reserve currency. The BRICS nations are pushing forward to make the USD irrelevant and Iran still has a big piece of this picture. Stay tuned.