Negotiations to restore the Joint Comprehensive Plan of Action (JPCOA) are expected to resume in August following the inauguration of Iran’s new president, Ebrahim Raisi. The incoming administration will likely include figures who criticised current president Hassan Rouhani’s effort to normalise political and economic ties with the West. Nevertheless, the strategic value of the nuclear deal, and the need to reduce pressure on Iran’s stagnant economy, should compel the new administration to be pragmatic and make a bargain that enables the United States to re-enter the JCPOA. This step would see Washington remove the secondary sanctions imposed by Donald Trump, who thrust Iran’s economy into nearly three years of economic recession. In parallel, Iran would return to compliance with the controls placed on its nuclear programme by the JCPOA. 

As negotiators in Vienna continue to push for a diplomatic breakthrough, officials across European capitals are examining how to revive EU-Iran trade following the lifting of US secondary sanctions. There are clear steps that governments can already take to encourage this trade and address European business leaders’ caution about resuming trade with Iran. But, unlike in the lead-up to the sanctions relief introduced in January 2016, the experience of the Trump administration’s “maximum pressure” campaign has made firms wary of both the durability of the nuclear deal and the reliability of sanctions relief. Companies now have a clearer understanding that sanctions relief does not mean that all barriers are lifted to doing business in Iran – banking challenges in particular will persist even if secondary sanctions are removed.

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Read the full commentary at the European Council on Foreign Relations.