Raheb Homavandi / Reuters A vendor counts money in a shop in Tehran's Grand Bazaar January 19, 2009.

Dollar Diplomacy in Tehran

How Promoting Business in Iran Boosts the Nuclear Agreement

The United States and international partners have signed a historic agreement with Iran on its nuclear program, but they still face important choices about just how far to go in allowing Iran back into the global economy. In the short term, U.S. companies will be limited in their ability to join the corporate march back to Iran when sanctions are lifted, and many in the West who have advocated for Iran’s isolation for decades do not want to see their nations’ companies and banks participate in Iran’s economic reintegration. Keeping Western companies on the sidelines, however, would be a strategic mistake. Allowing—or even encouraging—Western companies to invest in Iran provides Tehran with incentives to abide by the deal and gives Washington more leverage over Iran in the future.

The new nuclear accord lays out a path for international companies to initiate broad new trading and investment activities once Iran meets key nuclear commitments. For the private sector, this relaxation presents significant opportunities as well as a minefield of commercial risks. The sanctions on Iran for state-sponsored terrorism, regional destabilization, and human rights violations will remain in place. Investors thus face tremendous uncertainty in balancing an emerging market opportunity with the potential for expensive, damaging business losses if they inadvertently violate remaining sanctions. Over the past few years, regulators in the United States have already imposed billions of dollars in fines against Western companies for violating sanctions, even when they have done so unintentionally. This precedent might lead many European and Asian businesses to conclude that Iran’s potential financial rewards are simply not worth the risks. U.S. corporations are even more cautious. For many global companies and banks, hanging back will be the easiest and safest course of action.

Iranian students hold up their hands as a sign of unity as they form a human chain around the Uranium Conversion Facility (UCF) to show their support for Iran's nuclear program in Isfahan, 450 km (280 miles) south of Tehran November 15, 2011.

U.S. policymakers should take a more strategic approach to Iranian sanctions relief and encourage the international business community to pursue commerce in the nation. It is not the United States’ job to rehabilitate the Iranian

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