We're not easing sanctions on Iran

Here’s why.

To begin with, the relief package in this interim deal is economically insignificant to Iran. The lion’s share of the relief comes from granting Iran access, in installments, to $4.2 billion of its own revenues currently trapped outside Iran. In addition, U.S. sanctions on Iran’s petrochemical exports and its auto industry will be temporarily suspended.

We estimate that this additional trade could generate about $1.5 billion in revenue over the next six months—but only if Iran is able to find customers to buy its cars and petrochemical products. This will be difficult: There are long-standing problems with Iran’s auto sector, and petrochemical importers prefer long-term contracts, which aren’t possible given the six-month duration of the deal.

The Joint Plan also suspends sanctions on Iran’s ability to buy and sell gold. But because remaining prohibitions preclude Iran from using either its foreign reserves or its own currency to buy gold, this provision is of limited value. Any gold Iran purchases would be offset by the hard currency it would spend to buy it.