The lifting of the injunction against Iraq breathes life into the nation’s economy devastated by constraints on its oil production/selling and banking industries. According to the World Bank, removal of economic prohibitions will enhance economic progress in Iran which includes $15 billion in terms of yearly oil revenues.
Moreover, the country’s economy can increase to a maximum of more than $3 billion in a few years. The Iranian government is given another opportunity to conceive and implement a policy agenda that will allow continuous economic advancement. Terminating the sanctions will bring down trade expenditures brought about by the need for attracting buyers agreeable to avoid the sanctioned government. The local currency is also expected to strengthen after a nuclear accord is firmed up.
Identifying Additional Benefits
Iran benefits from the lifted embargo as the country’s more than $100 billion worth of assets have been frozen for some time.
Nonetheless, the biggest beneficiary will be Iran’s oil industry. Many years of inadequate investment and lack of modern equipment have affected crude production to a large extent. More than 35 years ago, production reached a record six million barrels daily. Since then, Iran struggled to attain a level near this.
Iranian banks will also be winners because these institutions can have access once more to the global money transfer network of SWIFT. Officials of SWIFT were directed to terminate its communications services related to the countries financial institutions after the European Union Council implemented sanctions in March of 2012. This disrupted the capability of these banks to conduct regular business and process transactions. The readmittance of Iran to the SWIFT system brings about multiple opportunities for world banking and finance. In the same manner, there will be additional prospects that will originate from Iran’s access to the international payment system. This is the expected outcome since financial transactions influence all kinds of industry.
No More Trade Restrictions
Conclusion of the nuclear deal’s stipulations will free Iran from trade restrictions of the United States along with European Union penalties that froze assets of the Iranian central bank and private businessmen connected to the nuclear program. This also prohibited interaction with Iran’s banking system and prevented EU member-nations from buying or transporting Iranian oil products.
Incidentally, the embargo caused oil exports to decline by two-thirds from 2011 until 2013. This resulted in losses (billions of US dollars) in terms of potential revenue every month. The Gross Domestic Product (GDP) of Iran also fell while inflation increased by over 40 percent. It became very expensive for local citizens to buy even necessities like food, gas and clothes. Meanwhile, foreign investors departed while unemployment soared. Other countries like China and India which were indebted to Iran were barred from paying their dues.
The lifting of prohibitions will enable Iran to recover more than $100 billion worth of frozen oil profits. Iran will also get the chance to export oil globally once again. Iran’s economy will hopefully expand by five eight percent annually from this point. The other significant beneficiaries will most likely be the energy and transportation sectors.
Admittedly, it is not only Iran that stands to benefit from this recent development. There will be many parties that will feel the positive consequences. More than this, the country can become a legitimate part of the international community once more. Energy investments are expected to rise and remain a focus in the coming years especially if oil prices recover. This should be a lesson for the government of Iran. Any sanctions by the international group of nations can only cause problems to its country and people.