The United States and Iran: A Climate of Change

Tara argues that the economic and political reasons for a comprehensive rapprochement with Iran continue to mount. As the Middle East continues to prove more challenging Iran should be encouraged to be part of the solution rather than part of the problem. 

Back in 2012, the uprisings of the Arab Spring presented an opportunity to use the oil wealth of the region to reinvest in the future prosperity and wellbeing of the Arab people.  Fast forward to the present and it becomes apparent that we have missed the boat for change and the region’s transition to democracy has been derailed- at least for now. 

Iran remains the exception along the Middle East’s fossil fuel rich landscape with a functioning state where the central regime may still enjoy a monopoly of power, infrastructure well in-tact and the overall population overwhelmingly educated and unarmed. The 2009 Iranian Green movement was certainly an exertion of democratic will that resonated closely with many people across the globe.

While the relationship between Iran and the United States remains tense it has embarked on a cautious road to resolution and recovery. A deal with Iran is vital for the stability of the wider Middle East and sanctions proponents argue that the cost of diplomacy has successfully outweighed the cost of a military intervention. However with the final day of Iran’s nuclear negotiations, November 24th, just eight weeks away large differences remain unresolved over the future of the country’s uranium enrichment program and how much of it Iran will be allowed to retain.

To many expatriates, who applaud the pragmatic approach of President Hassan Rouhani, Iran should be given the chance to show it can be part of the solution, not part of the problem. To them, the western approach of keeping Iran at arm’s length, both on matters of nuclear power agreements and incomplete alliances against ISIS, may lead to anything but a peaceful and unarmed Middle East.

The impetus for changing the dynamics of the two nation’s love-hate relationship is strengthened when considering the substantial economic costs of Iranian sanctions to the US economy.  During the period from 1995 to 2012 the United States government lost $135 to $175 billion per year in potential export revenues to Iran. Simply put: in the absence of sanctions the Iranian investment potential could have subsidized the government’s budget gap from rising US youth unemployment rates, currently adding up to $25 billion a year in uncollected taxes and increased safety net expenditures. For the manufacturing and industrial sector the continuation of US-Iran trade volumes would have led to 60,000 additional job opportunities. Arguably the effect is much higher as US sanctions have inflated oil prices to record levels, depressed the Iranian economy to a 6% GDP deficit in 2013 and fully restricted the sale of petroleum products.

The political and economic reasons for bringing Tehran in from the cold are mounting and Barack Obama will need to shift the political discourse towards inviting Iran to the decision-making table as a pivotal ally in an explosive region rather than a suspicious fri-enemy. Arguably while the two nations share many imperatives beyond combating Isis, such as the fight against drug trafficking in neighboring Afghanistan, the interest in rekindling the relationship remains apprehensive. No doubt Iran’s lifeline support for a butchering Assad regime, its deteriorating human rights record as well as Israel’s fears that a rehabilitated Islamic Republic could diminish western affections all play their part in making a happy ending an unlikely scenario. However a marriage between the two nations would encourage Iran to conform more often to international norms and provide Europe and the US with a dowry worth up to $118 billion in oil and gas investments while Russian gas flows dwindle. It’s time for both partners to be bold, take a leap of faith and agree to a coalition of the willing.

Tara Shirvani photo

Dr. Tara Shirvani currently works for the Climate Change Policy Unit of the World Bank Group. She holds a MPhil degree in Engineering for Sustainable Development from the University of Cambridge and a DPhil degree in Fuel Technology from the University of Oxford. Tara Shirvani has several featured articles in The Economist, The Times of London and New Statesman magazine on a variety of topics ranging from alternative fuels to the Arab Spring movement.

The views expressed in this article are solely those of the author and do not express the views of the World Bank, its Board of Executive Directors or the Governments they represent.  



About

Dr. Tara Shirvani, Iranian with Austrian nationality, currently works for the Energy and Transport Unit of the World Bank Group. She holds a MPhil degree in Engineering for Sustainable Development from the University of Cambridge and a DPhil degree in Fuel Technology from the University of Oxford. Tara previously worked at the Climate Policy Unit of the World Bank, the United Nations office in Iran, Citigroup and Deutsche Bank. In 2012, she was recognized as a “Global Shaper” by the World Economic Forum. Dr. Shirvani has several featured articles in The Economist, The Times of London and New Statesman magazine on a variety of topics ranging from Alternative Fuels to the Arab Spring. Her public speaking engagements include keynotes at Durham University, University of Oxford and Harvard Business School.


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