A memorandum of understanding between the United States and Iran was published on Wednesday evening, and it includes provisions on several issues, including a ceasefire in Lebanon. The two clauses with the biggest economic impact are a proposed compensation and reconstruction fund, and the lifting of sanctions on Iranian crude oil exports.
According to the draft, the United States, together with its regional partners, will formulate a plan of at least $300 billion for Iran’s reconstruction and economic development. The implementation mechanism is to be agreed as part of the final deal within 60 days. Before the agreement was published, Vice President JD Vance said the rebuilding fund would be financed by the United Arab Emirates, but only if Iran commits not to develop any kind of nuclear weapon.
Washington also agreed to remove sanctions on Iranian crude oil exports, a benefit valued at tens of billions of dollars a year. Before the various sanctions rounds in recent years, Europe was the main buyer of that oil, but it sharply reduced purchases when broad sanctions were imposed on Tehran over the past decade, and it also cut exports of other goods to Iran.
The article says that renewed free trade with the European Union is effectively the “carrot” Europeans have used in recent years to try to persuade Iran to accept a new and improved nuclear deal, even without American involvement. After the 2015 JCPOA agreement, Iranian trade with European countries rose to about 20 billion euros a year over the next two years and kept growing until President Donald Trump withdrew from the deal and effectively collapsed it. Europe later tried, unsuccessfully, to create a dollar-bypass mechanism to preserve trade in return for Iran’s continued restraint on uranium enrichment and its nuclear program. As a result of sanctions linked to increased enrichment, Iran-EU trade fell to about 3.7 billion euros last year. Before the latest war between the United States and Israel and Iran, Europeans even threatened to eliminate that remaining trade unless Iran agreed to a deal on its nuclear and missile programs.
