Time to Renew Commercial Diplomacy Between US and Iran

As the newly-installed Biden foreign policy team ponders its options on Iran, the clock for the next Iranian presidential elections in June, 2021, is ticking, posing as both an opportunity as well as a constraint on President Joe Biden’s planned re-embrace of the Iran nuclear accord.  Thus, whereas the ability of lame duck Iranian president, Hassan Rouhani, to strike a deal with the White House is diminished as we move closer to the June elections, on the other hand the mere possibility of moderate Rouhani’s replacement by a more hard-line president averse toward dialogue with the US should, logically speaking, prompt a greater sense of urgency in Washington to speed up the process for direct dialogue with Tehran.

    Since coming to office, President Biden has made certain overtures, such as relaxing the restrictions on the movement of Iranian diplomats at UN, and reiterating his campaign promise of returning the US to the Iran nuclear agreement in closer consultation with the European allies, while turning down Iran’s request to begin lifting the Trump-imposed sanctions, deemed in violation of the UN Security Council Resolution 2231, before Iran agrees to return to full compliance with the agreement.  Clearly, both sides need to make concrete steps in tandem in order to build confidence and to avoid the headache of ‘betrayed promises’ down the line.  In the absence of a mutually-agreed timeline for both US and Iran resuming full compliance with the terms of their respective obligations under the 2015 nuclear agreement, known as the Joint Comprehensive Plan of Action (JCPOA), it is doubtful that a diplomatic breakthrough is in the offing. 

    But, such a breakthrough can come about incrementally and in a variety of ways, such as reaching a new understanding on the current regional crises such as Yemen, as well as on the importance of commercial diplomacy.  After all, the JCPOA is in a certain sense a great deal more than a simple “non-proliferation” agreement and contains specific economic, financial, and commercial facets that, in turn, validate it as a multi-dimensional, and multilateral, nuclear-security-commercial agreement.  Unfortunately, the latter aspect has been buried under the predominant nuclear aspect, warranting a closer scrutiny, particularly since it highlights the need for a more vigorous commercial diplomacy between the two countries.

    Concerning the JCPOA’s economic and commercial components, a host of issues ranging from the suspension of international sanctions, normalization of Iran’s foreign trade, the resumption of Western import of Iran’s energy products, and the reconnection of Iran’s banking system with the world financial institutions, are covered both directly and indirectly.  As a result, the US under the Obama administration adjusted its Iran policies by issuing a number of executive orders in tandem with the JCPOA, issuing new commercial licenses, e.g., for Iran’s purchase of US civilian aircrafts, in addition to the efforts by the then Secretary of State John Kerry to persuade the European banks to normalize transactions with the Iranian financial institutions (with only modest success, given the banks’ apprehensions about the post-Obama changes in US policy, which turned out to be on the mark). 

    Of course, any hope that the landmark JCPOA could act as the springboard for a new chapter in US-Iran commercial diplomacy was nipped in the bud by President Trump’s hostile attitude toward it from the outset of his presidency, resulting in May, 2018 unilateral decision to exit the JCPOA and to hit Iran with the hammer of a “maximum pressure strategy.”  Hypothetically speaking, if US had continued to abide by its JCPOA obligations, then US would have (a) continued to be Iran’s new nuclear partner, in light of US’s JCPOA-based purchase of Iran’s heavy water (in 2016), as well as US’s initial participation in the planned redesigning of the Arak heavy water reactor,  (b) US’s foreign-based subsidiaries would have inked billions of dollars of trade deals with Iran, and (c) the $20 billion Boeing deal with Iran would have been implemented.  According to one conservative estimate, US companies have lost a minimum of $100 billion dollar economic opportunity as a result of the non-implementation of the JCPOA over the past 4 years.  

    Without doubt, one of the disadvantages of lack of strong commerce between two nations is that it weakens the ties of interdependence that, in turn, act as catalysts for diplomacy.  In the absence of shared economic interests, the vacuum of commercial diplomacy is inoperative as a major speed bump with respect to bilateral tensions, which often come to a boil more rapidly without the benefit of economic screens that reflect the disincentives and side-effects of tension and war on mutual economic interests.  Commercial ties bind nations and strengthen their tendency to resolve their disputes without resorting to war and conflict, albeit within the context of geopolitical and geostrategic realities.  

    Yet, one of the principal problems with US-Iran commercial diplomacy is that US is addicted to the politics of sanctions on Iran and the related use of economic variables as parts and parcels of its “politics of leverage” vis-a-vis Iran and, thus, requires a paradigmatic shift in its Iran approach, whereby the levers of commercial diplomacy could potentially set into motion a growing network of shared and parallel interests.  At the moment, however, there is very little sign that the Biden administration is pondering along these lines, i.e., a major conceptual handicap that limits the purview of the new administration’s Iran ‘re-thinking’.  Inadequate recipe for redesigning US’s Iran policy, insufficiently cognizant of the protean value of bilateral trade as an important barometer of bilateral diplomacy, makes a poor substitute for a prudent new Iran policy in Washington.  Biden may have good intentions, but if intentions are not fully backed by a smart diplomacy that integrates commercial diplomacy as a key component, then they are likely to reach a familiar dead end and ultimately backfire, whereas a brave new chapter in US-Iran diplomacy can be reasonably anticipated by threading the path of ‘paradigmatic shift’ aforementioned.

Kaveh L. Afrasiabi, Ph.D.
Kaveh L. Afrasiabi, Ph.D.
Afrasiabi is a political scientist and author of several books — on Iran, Islam, ecology, Middle East, UN reform, as well as poetry and fiction — and numerous articles in international newspapers and journals.