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Q&A: US Withdrawal From Iran Deal Could Create Economic Pressure

Experts say President Trump's decision to withdraw from the Iran nuclear deal isn't surprising, but it could present a major roadblock for Iran's economy.

Jamsheed Choksy is a distinguished professor in the IU School of Global of International Studies with a background in Iranian history and contemporary issues.

He says the nuclear deal lifted economic sanctions in Iran, and Trump's decision is part of a larger strategy to put economic pressure on the country.

"What it appears that Trump is doing right now is ratcheting up the pressure," Chosky says, "and by essentially saying that he's going to impose sanctions, and cut Iran off from the trade lifeline, the hard currency lifeline that Iran desperately needs."

The Obama administration approved the Iran nuclear agreement in 2015. As part of the deal, Iran agreed to freeze its nuclear development programs until 2030, and in exchange, the US and the United Nations agreed to remove economic sanctions placed on Iran.

During his election campaign, President Trump talked about scrapping the agreement and working on a new deal that would prevent Iran from working on missile development indefinitely.

Choksy says if President Trump is successful, his plan could provide more stability in the Middle East, but the stakes are high for both nations if he's unsuccessful.

"We could see Iran restarting its nuclear program," he says. "That again would be a gamble for Iran, because if Iran were to restart its nuclear program, it's quite likely that Trump would launch missiles against those sites."

Choksy says there is a 180-day window before imposed sanctions go into effect, and during that time diplomats will likely work to create a new agreement.

We talked more with Professor Choksy about the logistics behind President Trump's decision and the impact anticipated for both countries.

This conversation has been edited for clarity and conciseness.

Q: Can you explain what the Iran Nuclear deal is?

A: It's called the JCPOA, the Joint Comprehensive Plan of Action. So it's not a treaty, it's not a formal agreement- it's a plan of action entered into essentially by the members of the UN Security Council, the EU and Iran. So in terms of the UN Security Council- that's the United States, Russia, China, Britain and France. Also Germany and the European Union. Working together with Iran under the Obama administration, they reached an agreement under which Iran agreed to freeze its nuclear development programs until the year 2030. In exchange, the U.S. and the United Nations agreed to remove economic sanctions that had been placed on Iran. So, this was all signed off on in 2015 and the Obama administration began lifting sanctions and returned cash that had been frozen in the United States to Iran. Then the world began to trade with Iran again and Iran was reintegrated into the global banking and economic systems.

Q: What does it mean now that President Trump has pulled the U.S. out of this deal?

A: As we know, even as a candidate, Trump said he was going to rip the deal up and he felt it was a bad deal. One of his objections is that Iran is able to resume nuclear enrichment after 2030. He feels that Iran should be prevented from having nuclear capability forever. But, Iran says it needs to have the capability for nuclear energy, not nuclear weapons. However, Iran has, as we know, experimented in developing nuclear weapons and that's why we ended up with the JCPOA. And so the Trump administration does have a legitimate point in trying to press to get the deal extended so it doesn't end in 12 years' time and Iran just resumes their capability.

The other issue President Trump has is that that the agreement covered only nuclear matters, it doesn't cover conventional weapons. Iran has been developing missiles so the fear is that, yes Iran agreed to freeze its atomic warhead development, so that it could catch up on the missiles, and then after 2030 be able to fuse the two together. That's the Trump administrations fear. And so Trump wants an additional agreement that prohibits Iran from continuing it's missile development. Those are the two issues. But then there are other issues like Iran's civil rights violations and Iran's involvement in places like Syria. So all that sort of came together and that's why Trump regards it as a bad deal. He feels the original deal should have included all of this. That was clearly not possible when that was negotiated but Trumps going to try it.

Q: Do you feel this decision by President Trump is a part of a strategy?

A: If we are looking at strategy, if Trump was to rip up the deal, this would be the time to do it because Iran's economy is weak. Despite this lifting of sanctions, Iran has internal economic problems: corruption, mismanagement, high unemployment, inflation, and unemployment. So what it appears that Trump is doing right now is rationing up the pressure, by essentially saying, he's going to reimpose sanctions and cut Iran off from the trade lifeline and from the hard currency lifeline that Iran desperately needs. He's essentially holding Iran's feet to the fire saying ‘come up with a new deal, agree to the new deal, agree to the additional matters, or else, we'll see what happens.'

Q: Is this something you would say was expected of President Trump?

A: He has been very clear that he was going to do this and now he's attempting to redo the agreement. Like I said, it's not unexpected. There has been diplomatic activity going on but Trump's now essentially trying to speed up the process by saying he's going to reimpose sanctions and push Iran into capitulating. Let's also keep something else in mind, the sanctions don't go into effect right away. There's an 180 day way window, so it's a volatile situation, but the sky is not falling. There will be six months where diplomats will run around and try to come up with a deal, and so I think all sides are trying to work through this.

Q: What are some of the pro's and con's of this situation?

A: This does raise the question whether nations can negotiate with the United States and whether the U.S. will honor their agreements. If Trumps gamble works out it certainly will provide more stability in the Middle East. If it doesn't then we could see Iran restarting its nuclear program. That again would be a gamble for Iran because if Iran were to do that, it's quite likely Trump would launch missiles against those sites.

Q: What could be the local impact that we see here in Indiana, if any?

A: Right down to Bloomington, as relations with Iran get worse, it becomes more difficult to travel to and from Iran. So Iranian foreign students coming to Indiana University are impacted. Secondly, with Iranian oil and gas entering into the world system, if that gets taken out, we could see the already rising points at the pump go up further.

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