A punitive sanctions regime progressively imposed on Iran over the past decade could begin to lift as early as Monday, if the International Atomic Energy Agency confirms Tehran has met commitments to downsize its nuclear programme and submit to intrusive inspections.
Expectations have been high in Tehran and western capitals over Iran’s reintegration in the global economy, with European businessmen rushing to Tehran to propose deals.
An end to sanctions is set to give Iran prompt access to $50 billion (€46 billion) out of $100 billion frozen in external accounts and open the Iranian economy to foreign investment, particularly in the oil sector, where infrastructure has deteriorated.
President Hassan Rouhani, who has been largely responsible for the nuclear deal, expects the lifting or at least easing of sanctions to boost candidacies of his allies in next month's elections for parliament and the influential assembly of experts, the clerical council that selects the supreme leader, as well as strengthen his bid for re-election in 2017.
If a friendly parliament is elected and he wins the presidency, Mr Rouhani could effect urgently needed economic reforms.
Iranians are likely to receive early benefits from the release of frozen funds and rolling back of sanctions. Relief on banking could increase Iranian trade in oil and other commodities with traditional partners and create new openings. A leading regional producer of electricity, Iran could invest in the export of power beyond its current half-dozen customers.
Iranians could see early improvements in the health sector, which is a priority for the public. Although sanctions were not meant to impact on the import of medical supplies, they have in fact been severely restricted, leading to deaths from cancer and other diseases. Limitations could end quickly and encourage Iranian pharmaceutical companies to use post-sanctions availability of raw materials to revive local production.
European automotive and other firms seek to promote joint ventures, boosting employment opportunities for Iran’s workforce at a time when unemployment stands at 11 per cent and youth unemployment at 25 per cent.
The International Monetary Fund predicts Iran's growth rate could rise from 0 per cent in 2015 to 6-7 per cent this year.
The lack of investment over the past decade in the oil sector may, however, curb the additional amount of crude Iran can soon put on the market and the fall in the oil price from $100 to $30 a barrel is certain to disappoint Iranians seeking a major injection of funds from oil revenues.
Sanctions relief on commerce is likely to be partial. While Europe is set to end most restrictions imposed on banking, finance, insurance, transport, precious and other metals, transport and software, licences will still be needed. European banks and firms will have a large measure of freedom to deal with Iranian banks and financial institutions and Iran’s oil, automotive and shipping sectors, but will have to avoid falling foul of complex US laws and regulations to avoid heavy fines.
Restrictions on US dollar payments will remain in place, limiting US-Iranian trade in goods and services, although exemptions are to be granted for the US export of commercial airliners and spare parts and US imports of Iranian carpets, caviar and pistachios. Since trade with the US will remain restricted, Europe will have the chance to gain a major advantage.
While the Republican-controlled US Congress is seeking to scupper the nuclear deal by using any pretext to impose fresh sanctions on Iran, the White House and its European allies have pledged to resist any such move. If sanctions are not eased to a considerable extent, Iran could end IAEA monitoring and renew its nuclear programme, arguing bad faith on the part of the signatories of last July's historic agreement.
Under the agreement reached with the five UN Security Council members plus Germany, Iran was to cut its stockpile of enriched uranium to 300kg, reduce the number of centrifuges for purifying uranium from 19,000 to 6,100, and decommission the Arak heavy water reactor so it cannot produce plutonium, which could be used for nuclear weapons.
While reversing these actions would take time, Iran retains the material and expertise to succeed.