Chinese government and business leaders held meetings with Iranian officials in early 2016 following the implementation of the JCPOA. On January 23, 2016, both countries pledged to increase bilateral trade to $600 billion in the coming decade. China’s President Xi Jinping was the first foreign leader to visit Iran after international sanctions were lifted.
Iranian President Hassan Rouhani visited Italy in the week following implementation day, for, as Italian Foreign Minister Paolo Gentiloni put it, “a comprehensive relaunch of a strategic alliance” (Washington Post, February 2, 2016). Deals signed between the Iranian and Italian government on January 25, 2015, amounted to approximately 17 billion Euros, according to the Italian Industry Minister.
President Rouhani spent three days in Italy, before travelling to France for the second part of his January 2016 European trip. French automaker Peugeot signed a deal with Iranian automaker Iran Khodro, pledging to produce 200,000 cars per year at a plant near Tehran which they will also upgrade. When the car manufacturer was forced to close business with Iran in 2012 it suffered major losses, as Iran was Peugeot’s second largest market. As an apology for leaving the Iranian market abruptly due to sanctions, Peugeot waived $89 million in outstanding Iranian debts, pledged to provide $28 million in free car parts, and also confirmed they will be providing a free production line for the Peugeot 207 model, worth $12 million. Peugeot was the first Western auto manufacturer to jump back into business with Iran, and the first vehicles are expected to roll off the production line in 2017.
Airbus announced a deal with Iran Airlines during Rouhani’s trip, agreeing to sell 118 aircrafts to the state-run airline. The total value of the deals signed by French and Iranian entities amounted to an estimated $16 billion.
Frozen Assets Released
Iranian Vice President Mohammad Bagher Nobakht said on state-run television that $100 billion in global Iranian frozen assets had been released, on February 2, 2016. The majority of these funds were released from banks operating in China, India, and Turkey. Nobakht also claimed that Iran was taking steps to rejoin the Belgium-based SWIFT international banking network. Later that week, on February 9, 2016, Nobakht stated that the money will not come to Iran and, instead, will still be kept in the foreign bank accounts, to avoid domestic inflation. This money will be handled the same as Iranian oil revenues in foreign institutions, according to the Vice President. Less than 10% of this money, $7 billion, belongs to the Iranian government, which they will receive and invest in infrastructure and development projects. The remaining money is owned by the National Development Fund of Iran ($50 billion), state-controlled oil companies and banks ($6 billion), and the Iranian Central Bank ($38 billion). The Iranian government’s goal is to achieve a GDP growth rate of 8% annually by 2020, according to Nobakht.
Although specifics such as the timing and quantity of the purchase were not immediately announced, Iranian Defense Minister Hossein Dehghan published comments on the Defense Ministry website on February 10, 2016, confirming that Iran will sign contracts with Russia to purchase Sukhoi-30 fighter jets. Iran would also be involved in the production of the aircraft, according to Dehghan. The Sukhoi-30 fighter jet is equivalent to the American made F-15E fighter bomber jet. Dehghan also claimed that Iran would begin taking delivery of the Russian S-300 missile system within the coming months. During a visit to Russia on February 17, 2016, Dehghan claimed that the S-300 missile system would be delivered to Iran later that week. The U.S. State Department contended however, that the sale of this missile system without Security Council approval would be a direct violation of a UN arms embargo still in place for the next five years against Iran.
While negotiating the JCPOA, agreed to in July 2015, the P5+1 kept in place a ban on conventional arms sales to Iran without prior UN Security Council approval. Iran originally announced that Russia had delivered the first components of the S-300 missile system during the weekend of April 9, 2016, but Iranian officials recalled their statements in the following days. The missile portion of the system was delivered in mid-July 2016, according to Russian news agencies. The Iranian military deployed this missile system to central Iran to protect its Fordow nuclear facility in August 2016.
Iranian citizens marked the anniversary of the 1979 Islamic Revolution on February 11, 2016, with chants of “death to America,” and “death to Israel.” President Rouhani spoke at a massive rally drawing thousands of participants, and pledged that Iran would never bow to the influence of the West.
On February 29, 2016, the Financial Action Task Force (FATF) released their first public statement on Iran since sanctions relief went into effect. The FATF sets international standards for countering money laundering and terror finance activities, and has issued statements pertaining to Iran in February, June, and October of each year since 2008. Despite the lifting of sanctions by the international community and the implementation of the JCPOA, the FATF did not revise their February 2016 statement. The statement by the task force, which includes 37 member states, called on Iran to address its discrepancies with the organization, and urged its members to warn their banks about the risks of doing business with Iran. Iran is still considered a high-risk jurisdiction to do business in by the FATF.
U.S.-based jet manufacturer Boeing inked a $17.6 billion deal to sell airliners to Iran in mid-June 2016, but the deal was scrapped in early July after U.S. House members rejected it in a vote of 239-185.
Iran announced in August 2016 that it was moving forward with plans to build two new nuclear power plants under the parameters of the JCPOA, which will cost approximately $10 million. State Department officials clarified that this type of construction does not violate the agreement, stating, “the [nuclear deal] does not prevent Iran from pursuing new light-water reactors... Any new nuclear reactors in Iran will be subject to its safeguards obligations” (Washington Free Beacon, August 12, 2016).
A dual British-Iranian citizen who was involved in the banking-related aspects of the nuclear negotiations was arrested in Iran under charges of espionage in late August 2016. The charges against the alleged “spy,” identified as Abdolrasoul Dorri Esfahani, contend that he bypassed official channels and divulged sensitive information directly to the U.S. negotiators.
The National Iranian Oil Company reported in September 2016 that their exports of crude oil to India in August more than tripled from the previous year’s numbers, to 576,000 bpd. Iranian crude oil exports to China grew 48%, to 749,000 bpd during the same month, and crude oil exports to China for the year were up 7%. Japanese imports of Iranian crude oil in 2016 rose 45% compared to 2015, and South Korean imports more than doubled.
The United States Treasury Department published a new set of guidelines for doing business with Iran on October 7, 2016, that eased financial sanctions and loosened monetary restrictions on the nation. Sanctions on the Iranian military’s IRGC remained in place, as did restrictions pertaining to Iranian access to the U.S. financial system and banking institutions.
Total, an energy company based in France, became the first Western energy company to sign a deal with the Iranian government following the implementation of the JCPOA. The agreement, signed on November 8, 2016, provides for “Phase 11,” development of the South Pars gas condensate field, the largest gas field in the world. France’s Total already had a hand in developing the South Pars, spearheading phases 1 and 2 of the field’s development in the early 2000’s. The field, which covers 3,700 square miles, is shared between Iran and Qatar.
Chinese state oil company CPNC and French energy company Total announced a 20-year, $2 billion deal with the Iranian Petropars group in June 2017, with the goal of further developing the South Pars gas field. This agreement marked the first major Western investment in Iran following the ease of sanctions in February 2016. The Iranian Petropars group will own a 19.9% stake in the project, while CPNC will hold 30% and Total will retain a majority of 50.1%.
On July 4, 2017, German automaker Volkswagen announced that they would begin to export and sell their Tiguan and Passat vehicles to Iran in August 2017. Volkswagen will work with local auto firm Mammut Khodro to sell their cars in the country.