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The Deal With Iran


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President Trump sent shockwaves through geopolitical circles after he announced he would not recertify the 2015 Iran nuclear deal. This isn’t bringing the accord to a full stop—it’s just putting the ball in Congress’ court for a potential sanctions redux.

Quick refresher: the agreement sought to curb Iran’s nuclear program (by limiting its uranium stockpile and establishing U.N. monitoring protocols) in exchange for lifting certain economic sanctions on the country of 80 million people…a country the U.S. considers the world’s leading state sponsor of terrorism.

The business world is keeping a watchful eye. When the deal went through two years ago, some multinationals were allowed to resume doing business with Iran.

And ran they did

Here are a few Iranian business dealings since 2015:

  • Boeing sold 80 commercial airliners to Iran Air worth $16.6 billion. Airbus sold 100 for $20 billion.
  • French carmaker Peugeot agreed to a $472 million joint venture with Iran Khodro, a domestic car manufacturer. Together, they’ll produce 200,000 cars annually.
  • French oil company Total will develop an Iranian gas field for $1 billion.

So it’s pretty clear why both corporations were hungry for an agreement, and why Iran was ready to deal. In 2016, Iran raked in $11.8 billion in foreign direct investment, a 600% increase from 2015, when the pact was signed. 

But Trump’s pulling the Persian rug out

Because the president campaigned on a promise to rip apart the deal (and now he’s on that path), many multinationals aren’t about to take the risk. Just take a look at Orange, France’s largest telecom company. In 2016, it made moves to acquire a piece of MCI, its Iranian counterpart. But recently, it hasn’t been returning MCI’s texts (h/t WSJ). 

And then there’s oil. Iran is OPEC’s third largest crude producer, exporting 2.3 million barrels a day. But sustaining that type of output relies on nearly $100 billion worth of investment.

It’s unlikely to reach that number if major players like BP and Shell keep Iran at arm’s length.

https://www.morningbrew.com/stories/1174-2/

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