US: Eased Sanctions Barely Help Iranian Economy

Official: 'this package is really quite modest and economically insignificant.'

Tova Dvorin ,

Money (Illustration)
Money (Illustration)
Flash 90

US treasury officials stated Monday that the deal waged between Western powers and Iran over the weekend will have very little impact on the Iranian economy, according to an AFP report. 

An official, who wished to remain anonymous, reportedly claimed that the country's economy remains in deep recession  - and will receive little relief from the narrow measures agreed to expand Tehran's access to international trade and finance.

"In relation to the depth of the economic distress that Iran is currently facing, this package is really quite modest and economically insignificant," the official stated in a press briefing.

The official also warned international businesses that most sanctions remain in place on Iran and said they should not assume they can trade freely with the country now that a deal has been brokered. "Any business, any bank, any broker, anybody who thinks it's open season to go into Iran today, I think is sorely mistaken. We will enforce these sanctions," the official said.

USA Today reports Monday that most of Iran's economic sectors will remain under sanctions, especially Iran's dominant oil and gas sector. Companies that do enter the Iranian market, even in areas not subject to sanctions, will continue to encounter continuing financial and logistical restrictions, and find it difficult to get paid, according to Caitlin Hayden, spokeswoman for Obama's National Security Council.

The White House has said Iran will receive "limited, temporary, reversible relief" valued at $7 billion over six months in return for capping some of its uranium enrichment activities. While most Western powers welcomed the move, some nations - e.g. Israel and Canada - remain deeply skeptical about the efficacy of a deal, arguing that it may make the situation worse. 

Even more troubling are reports that retracting sanctions relief might be near-impossible in the event that Iran defaults on its end of the agreement, according to the USA Today report. House Majority Leader Eric Cantor stated that despite the Obama Administration's claims that sanctions could easily be re-imposed, the fact is that the process would be long and slow - and Iran knows this. 

"We have now let the door open to sanctions going away," Cantor told CBS News. "We have said that we will ease up on sanctions which have taken years and years of progress for them to build and to be able to apply the kind of pressure that it did."

The Financial Times notes that crude oil prices will not be returning to pre-sanctions levels anytime soon. In the short term, Iranian exports may receive a limited boost from current levels, estimated by traders at up to 1.2m barrel per day, as the remaining large buyers of the country’s crude feel less pressure to reduce imports. Despite this, Goldman-Sachs analysts stated that the sanctions lift will probably not leave a significant impact.