Pros and cons of Iran sanctions removal

Business Materials 18 January 2016 19:25 (UTC +04:00)

Baku, Azerbaijan, Jan. 18

By Khalid Kazimov - Trend:

The removal of International sanctions on Iran's financial and oil sectors have created a chance to boom the country's economy, however, if the Islamic Republic fails to use the chance properly it may become extremely harmful, an Iranian broker said.

Due to their low quality and high costs a group of Iranian industries will not be capable of competing with foreign companies, Amir Hossein Mohammadi, an official with Tamin Sarmayeh Novin Brokerage Company, told Trend Jan. 18.

Meanwhile, the implementation of the Joint Comprehensive Plan of Action (JCPOA aka nuclear deal) and consequently the removal of sanctions offer Iran considerable advantages.

Mohammadi believes that unblocking frozen assets, boosting exports, decreasing the costs of exports and production, creating new job opportunities as well as regaining share of oil market are considered among major advantages that Iran would gain from the removal of international sanctions.

Through a joint statement on Jan. 16, EU High Representative Federica Mogherini and Foreign Minister Mohammad Javad Zarif announced the implementation of the JCPOA and the removal of Iran's economic sanctions.

According to the statement, EU has confirmed that legal framework providing for lifting of its nuclear-related economic and financial sanctions is effective.

Iran's revenues from oil sales which were frozen in several international banks during the sanctions-era will be unblocked.

Given the decline in oil prices and the decline in the government's revenues, the unblocked assets would be considered as a suitable source to provide the government with funds to launch and complete development projects in the country, he said.

However the procedure of releasing the unblocked assets would have a significant impact on the issue, Mohammadi added.

According to him with the removal of sanctions on Iran's shipping lines and insurance companies the costs of exports will drop. Meanwhile given the capability of the country in exporting petrochemicals and oil products the removal of sanctions on the shipping lines and insurance sector will contribute to boosting the amount of exports.

Following the removal of sanctions on oil sector, Iran will have a chance to regain its market share which will lead to creating new job opportunities, he said.

He estimated that the removal of banking sanctions will decrease the cost of production as Iranian producers faced restrictions for importing raw materials and they had to buy the raw products through a third individual or company at higher prices.

Saying that Iran seems a good market for investment as the country enjoys high security and suitable profit margin in a number of industries, he concluded that foreign investments will lead to boosting the quality and quantity of the products in the Islamic Republic.