Geneva talks are critical for the Iranian economy

Geneva talks are critical for the Iranian economy

Iran will take part in the P5+1 talks in Geneva later this week, in what could be a critical step in rapprochement between the U.S. and Iran. Central to the talks will be Iran’s willingness to cap its nuclear enrichment efforts and the U.S.’ willingness to reduce debilitating sanctions imposed on Iran.

The second round of talks in Geneva between the P5+1 (U.S, Britain, France, China and Russia plus Germany) and Iran is scheduled to take place from November 7-8. Initiated in mid-October, the talks are the first on the subject of Iran’s nuclear program since the election of Iranian President Hassan Rouhani. Following the promising October start, this week the negotiators are set to delve deeper into the technical and political details of the Iranian program.

The Geneva talks come on the heels of the annual opening of the UN General Assembly, during which newly elected president Rouhani offered an olive branch to the international community long accustomed to expecting bluster from the Iranians. Indeed, Rouhani took concrete steps to begin repairing the damage of Mahmoud Ahmadinejad’s eight-year presidency: acknowledging the Holocaust that Ahmadinejad long denied and reiterating Iran’s peaceful intentions in both its nuclear program and interactions with the world. President Obama, recognizing the change in tone and the political opening, telephoned Mr. Rouhani while he was in New York. The brief call marked the first direct conversation between the heads of state of the two countries since 1979.

Little has been said publicly about what the Iranian proposal offered at the October meeting in Geneva. The Iranian negotiator, Abbas Iraqchi, stated that while the two sides agreed to keep mum on the details, “The proposal that we have introduced has the capacity to make a breakthrough,” adding that it was “very comprehensive.”

Encouraging news on further conciliatory measures followed in the wake of the October talks. Among them was a report, later retracted, from the Iranian side that it had suspended enrichment of uranium to levels of 20 percent. The 20 percent enriched uranium is a particular issue, as the threshold of enrichment is beyond what is needed for a civilian nuclear program and just a short technical step away from developing weapons-grade uranium. Additionally, the chief U.S negotiator, Wendy Sherman, has appeared before the Senate Foreign Relations Committee to stave off implementation of more sanctions on Iran until the talks “gain traction.”

Regional implications of the apparent thawing of relations between Iran and the West were immediate. To counteract the positive reception Rouhani received in New York, the Israeli Prime Minister Benjamin Netanyahu went on a media offensive, beseeching the U.S and the world not to fall for the “wolf in sheep’s clothing.” Widely seen as a protest of U.S foreign policy in the region, the Saudis took the unprecedented measure of declining a rotating seat on the U.N Security Council, for which they had lobbied for two years.

Rouhani, who was the Iranian chief nuclear negotiator from 2003-5, has played a pivotal part in orchestrating the change in tone Iran has adopted on the nuclear program. But it is perhaps more true that his election represents a disaffection with the hardline administration of the prior eight years and a fear-based acquiescence on the part of the Republic’s elite to avert a popular revolt bigger than what was seen in June 2009. Yet, while Rouhani has stated that he has the full authority to engage the international community on the subject of the nuclear program, little ground will move without Ayatollah Khamenei’s express approval.

The sanctions imposed on Iran have sent its economy into a free fall. Unable to freely sell its abundant oil on the international markets, its revenues have plummeted by an estimated 50 percent. Both the government and private enterprises have been forced into a shadowy network of partnerships with scant few companies and banks willing to take the risk of hefty fines and ostracism for doing business with them. Oil has effectively been used as a means of bartering and in exchange the Iranian businesses are compelled to accept goods of inferior quality.

The Iranian public has been most deeply affected by the sanctions. Massive unemployment (while official figures are widely thought to be out of date, a figure of 20 percent is often cited), inflation as high as 45 percent and removal of subsidies on staples such as electricity and skyrocketing prices of foodstuffs paint a very dire picture of life in Iran under sanctions.

Whether the Geneva talks will produce enough momentum remains to be seen. The early signs are promising, but resentment and distrust run deep, especially between the U.S and Iran. How much each side is willing to give in concessions is key. The nuclear program has been painted as a matter of national pride for Iran, and the West stands to lose a great deal of political capital if the talks fizzle out. But it appears that the conditions are ripe for engagement: The Iranians have indicated that the status quo is untenable even for a theocracy and the West needs to revamp its engagement strategy for a region increasing in its extremism and militarism.

Categories: International, Security

About Author

Sanja Davidovic

Sanja is an international development professional whose research and writing focuses on issues of political economy of conflict, state building and security sector reform. She holds a Master of Science from the London School of Economics in International Development and Humanitarian Emergencies and a Bachelor of Arts in International Relations from Fairfield University.