As Iran and world powers resumed negotiations last week to curb Tehran's nuclear program, the United States will try to limit Iran’s nuclear infrastructure from centrifuges to enrichments facilities. Iran will push back. Much has been written about the economic benefit Iran will get if it agrees to compromise. Less attention, however, has been paid to the economic benefits the United States will reap from a nuclear deal.
The Shah of Iran dreamed of turning Iran into the Japan of West Asia. But war, revolution, radicalism and sanctions shattered those dreams. If Tehran agrees to a nuclear compromise, it can get out of the economic "penalty box," with clear long-term benefits for its economy. Iran could emerge as a “mini” China or India. Its tremendous economic potential can finally be tapped.
Seventy percent of Iran’s population is below the age of 35. Polling in Iran is difficult but a 2009 poll conducted by World Public Opinion held that 51 percent of Iranians hold a favorable view of America. This could translate into tremendous economic advantage for American companies should they be allowed to conduct business in Iran. The sanctions imposed on Iran’s energy sector have prevented US oil companies, the world leaders in cutting edge technology for oil and gas extraction from entering a market that holds the second largest oil and gas reserves in the world.
Recently, the new Iranian oil minister has signaled to western oil companies that Iran was prepared to do away with its buy-back contracts in an effort to attract foreign investment and increase recovery rates of existing oil fields. A more balanced fiscal regime that allows oil companies to book reserves under a production sharing agreements would make it compelling for exploration and production giants like Exxon Mobile and Chevron to enter the Iranian market.
The manufacturing belt of the Midwest and the Pacific Northwest which boast such American companies like Boeing and Caterpillar will be huge recipients of purchase orders coming from Iran. An Iran that is able to buy American goods and services directly from American companies and could eventually become the US largest trading partner in the Middle East. A population of 80 million people who would like nothing more than to purchase Apple and Microsoft products unimpeded. An Iran that sees the benefit of American trade and prosperity, that raises the standard of living for its people, could have far different foreign policy a decade from now than it does today.
Over the last 35 years successive administrations from Jimmy Carter to Barack Obama have sanctioned most American companies from participating in commercial activity in Iran. Over the last 4 years the Europeans have joined in on crippling banking sanctions that have made it very difficult for Iranian end users to pay for EU goods and services. This has been a boon for Indian, Russian and Chinese firms that have managed to flood the Iranian market with cheap and inferior goods. Iranians, if given a choice between American heavy industry and consumer products would chose them over their Russian or Asian counterparts.
Engaging Iran economically could be as beneficial for the United States economy and manufacturing base as it would be for the Iranian consumer. Over time sustained economic investment and trade can overcome years of distrust and enmity.
Handjani is an energy lawyer and Mideast expert living and working in the U.A.E. and New York.