Iran’s currency, the rial, has tumbled to near-record lows, now trading at more than 1 million rial to $1 in Tehran. Even the EU’s largest member, Germany, is growing alarmed. As a result, they might soon begin the process of reinstating United Nations sanctions against Iran due to its nuclear program. The Iranian economy is bracing itself for a double whammy should the sanctions come back. These steps will freeze Iranian assets abroad, prevent arms transfers, and hold accountable those supporting the advancement of Iran’s ballistic missile program.
For years, Iran has insisted that its nuclear ambitions are entirely peaceful. Western countries and the IAEA have determined that Iran had a nuclear weapons program in operation. They argue this continued through 2003. New developments have brought the longstanding tensions back to the forefront.
For its part, Iran responded at first by seeming to underestimate the severity of the renewed sanctions as a threat, and doing very little evident diplomacy for weeks. In recent days, the country has kicked off an incredible diplomatic push. It has committed to providing the IAEA increased access to its nuclear sites, beyond what is usually permitted under the terms of the 2015 nuclear agreement. This decision could be Iran’s first step to reassure the international community that it has no intention of pursuing nuclear weapons.
Despite these diplomatic overtures, concerns remain. Prior to the flareup of conflict in June, Iran was stockpiling uranium enriched up to 60% purity. This is only a short technical step away from achieving weapons-grade enrichment at 90% purity. It was a move that would quickly prove incendiary. Iran stopped IAEA inspections in response to the start of the 12-day war between the two countries, which was initiated by Israeli airstrikes.
Iranian attacks during this period eliminated many of the top military officials responsible for these strikes. Supreme Leader Ayatollah Ali Khamenei had to find his retreat. According to reports, Iran moved uranium and other key equipment from targeted facilities prior to the strikes. Such a step would have required moving the materials to new, unspecified locations. Such moves deepen concern that we may be heading towards a situation where IAEA monitors are unable to keep tabs on the state of Iran’s nuclear program.
Second, Iran has provided ominous threats about the future of its cooperation with the IAEA. Kazem Gharibabadi stated, “We have told them if this happens, the pathway we have opened for working with the IAEA will be completely affected and the process will likely be stopped.” Specifically, he argued that bringing back sanctions would leave it “impractical” for Iran to negotiate seriously with the West. This second proposal would significantly undermine their joint cooperation.
Deputy Foreign Minister Abbas Araghchi offered a fatalistic account of Iran’s diplomacy towards the West. He noted, “Sometimes war is inevitable and diplomacy alone is not able to prevent it.” This sentiment represents growing pessimism among Iranian decisionmakers about the ability of talks to stop the escalation from worsening.
Moreover, Araghchi reiterated past sentiments regarding the futility of negotiations in times of conflict: “Weren’t we in the talks when the war happened? So, negotiation alone cannot prevent war.”
The possibility of US sanctions being re-imposed represents a very real danger to Iran’s unprecedentedly weak economy. Public health and economic experts alike strongly condemn the measures as creating greater economic crisis. Consequently, the rial will most likely continue to experience depreciation, and inflation will increase. For its part, the Iranian government is very conscious of the fact that a restored sanctions regime would put an end to any attempts at economic recovery.
