Iran’s recent missile tests strained the delicate relationship built through the Iran Nuclear Deal while questioning its effectiveness thus far. It was implemented on January 16th since Iran met certain requirements in disassembling its nuclear capabilities thereby lifting nuclear sanctions. However, due to the timing of these missile launches, many wonder whether Iran is testing the United States and the rest of the P5+1, China, Russia, United Kingdom, Germany, and France and if Iran will abide by the agreed to terms.
The agreement requires Iran to reduce 98% of its current uranium stockpile for 15 years thereby decreasing its capacity to build nuclear weapons from approximately 10 to less than 1. The deal blocks Iran’s supply chains to access the materials for nuclear weapons and it will reduce its centrifuges used to enrich uranium. Through these efforts, Iran’s “breakout time” to assemble a nuclear bomb will increase from two to three months to one year. Although this deal does not prevent the development of Iranian nuclear power plants, the International Atomic Energy Agency monitors these plants closely.
In return for these efforts, Iran will receive $100 billion of assets previously frozen and nuclear sanctions will be lifted such as those in the banking and oil industries. Other nonnuclear restrictions on Iran will remain. This will significantly improve Iran’s economy which is now projected to grow this year by 5 percent rather than its otherwise 0 percent. The agreement moves toward free trade in global markets and encourages Iran’s comparative advantage in oil. Iranian oil is flooding into the market and is shifting out the supply curve causing already falling prices to drop even more, significantly impacting oil exporting countries and producers, but causing further consumer surplus increases due to this fall in prices. The cost of trading with Iran is significantly decreasing the previous 15 percent increase in costs due to sanctions. However, Obama emphasized this agreement is based on “verification” and “not trust.” These sanctions will immediately “snapback” if Iran violates any part of this agreement thereby incentivizing it to comply.
The Iran Nuclear Deal was possible because of Obama’s desire to improve international relations and Iran’s moderate president’s, Hassan Rouhani elected in 2013, willingness to actively work with the United States to improve his people’s standard of living. However, there have been mixed reactions to the Iran Nuclear Deal since negotiations were announced and it is a contentious issue in the upcoming U.S. presidential election, but this agreement attempts to improve international relations and to potentially gain another ally against ISIS. This 109-page document has dramatically improved international relations as is exemplified by Iran’s recent release of American prisoners in exchange for some Iranian prisoners and the peaceful discussions regarding the American ship that accidently crossed into Iranian waters, which previously would have been an international incident. However, this agreement jeopardizes the United States’ relationship with two critical allies, Israel and Saudi Arabia, who feel threatened by Iran. Whether the benefits of this deal outweigh the costs of the injury to these critical alliances is yet to be seen, but it is clear that it further soured Obama’s relationship with Israel’s Prime Minister, Benjamin Netanyahu.
Although this agreement is not ideal because there were compromises, it has created a safer international environment as Iran’s nuclear programs are closely monitored and its development of nuclear weapons has regressed whereas, in the past, Iran’s nuclear capabilities were unknown. Iran economic development due to the lifting of sanctions opens up its economy to the rest of the world and increases growth and the wellbeing of its people. Critics argue this increase in prosperity may fund terrorist groups, but despite this and other concerns, it is clear this agreement is an important diplomatic effort. The United States’ lack of reaction to recent missile tests is due to this occurring outside of the scope of this agreement. However, if the United States does not react strongly to any breached nuclear regulations, then this agreement would have only been economically beneficial and would have not only injured international safety, but potentially destroyed the United States’ relationships with Israel and Saudi Arabia.