Small Positive News

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1: writing material (such as a parchment or tablet) used one or more times after earlier writing has been erased.

2: something having usually diverse layers or aspects apparent beneath the surface

JCPOA News

Some positive developments to start the new year.

Current Status of Negotiations

It looks like things are taking a U-Turn from my previous assessment of no agreement being reached between Iran and the United States. There has been diplomatic movement between the two countries and the other P5+1 countries for a possible interim agreement. See the Media Roundup by the United States Institute of Peace’s Iran Primer for a quick recap of the past week.

What I’ve seen on Twitter has been an overall positive chatter from various negotiators (looking at #JCPOA hashtag). There have been a couple Al-Monitor articles saying the same thing( 1 & 2). You can see also a New Arab post stating the same positivity.

Factor of Iran’s Improved Economy

If I have more time to really dig into the data I would, but I found an excellent overview of the JCPOA with some non IMF economic numbers. ¹ The USIP Iran Primer just posted an update with the new IMF report which backs up Hadi’s analysis.

(Disclaimer I am unfamilar with Iran’s economic makeup and have not been following the devastation of US imposed sanctions on its economy.)

A while back I attended a panel discussion about the limits of US sanctions on Iran’s economy by President Trump. The one nugget from that talk was a prediction that US sanctions would make the Iranian economy more robust in the long run. Among the many countries which have been ‘cursed’ with oil and labelled as a “rentier state* is Iran.² As Hadi puts it much better than I,

“Despite the dramatic impact of sanctions, however, Iran’s economy showed a modest recovery in the two quarters immediately prior to the coronavirus pandemic. In summer 2019, the quarterly growth rate in non-oil sectors reached 0.4%; in the fall, it reached 2.7%. This modest recovery was rooted in the fact that the economy had gradually become more diversified and self-reliant over the long course of sanctions. Manufacturing was also helped by currency depreciation, which made domestic products more competitive than imports; this allowed domestic manufacturers to increase their market share and avoid laying off some of their workforce. In addition, Iran’s restricted ability to export oil led the country to increase its domestic manufacturing capacity to process its own crude into petrochemical and petroleum products and export them to its neighbors instead. As a result, though Iran’s oil revenues dropped by 83% under sanctions (from USD 48.2 billion in 2017 to around USD 8 billion in 2020), non-oil exports dropped by only 25% (from USD 46.9 billion in 2017 to USD 35 billion in 2020). New non-oil exports (including petrochemical and petroleum products), along with decreased demand for imports, covered part of Iran’s hard currency shortfall. And to replace export markets lost as a result of sanctions, Iran increasingly turned to a smaller number of countries, especially Iraq, Afghanistan, China, Turkey, and the UAE."³

Something which backs up Hadi’s analysis is an anlysis of sanctions on the rial’s exchange rate.

“However, in early 2018, the United States decided to withdraw from the agreement, and the sanctions were resumed. Again, the exchange rate fell to less than one-tenth of its value before 2010. However, the depreciation of Iran’s Rial does not show a uniform trend, and the decline path has been complicated. For example, in some sections of the sanctions period, oil revenues have not diminished altogether, but the exchange rate of Rial has sharply declined. On the contrary, for example, after Iran’s elections in 2013, while the oil revenue was fixed or even shrinking due to the shale oil shock, the exchange rate of Rial has remained unchanged and the real exchange rate has even improved."⁴

The point of this short analysis was to show the robustness of Iran’s economy after weathering the storm of US sanctions pressure and COVID-19. The true effects of this iteration of sanctions seems to have already hit a terminal low point. If you add this with the now seven year high oil prices it makes sense for Iran to focus its demands to be able to sell oil on the global market. Exporting oil to China has provided it a lifeline and this concillation by the United States could greatly help its economic recovery. From the US side, its sanctions attack seems to have run out of new ammunition. There are still many different factors going into these discussions but any actual analysis of the US sanctions on Iran is interestingly absent from current news reporting.

Wrap Up

The main sticking point on Iran’s side for more progress to be made is for a legal pledge that the United States will not back out of the new deal again.⁵ I do not believe this demand will be accepted by the US side. Some comprimise will probably be reached instead for this iterim deal.

Yemen

I have briefly mentioned the Ma’rib Offensive currently underway. Recently the Saudi led coaltion has made recent advances after losing terroritory to Houthi forces. “We appear to once more be entering an escalatory cycle with predictable implications for civilians and for the immediate prospects of peace,” Grundberg said.⁶

UAE Airport attack via Drone

The reason oil prices are so high was due to a reported Houthi drone attack at the UAE.

Image from (https://www.thenationalnews.com/uae/2022/01/17/abu-dhabi-blasts-a-sinful-attack-by-houthi-militia-says-senior-uae-official/)

A direct response by the Saudi coalition was to launch retaliatory airstrikes.

Ethiopia

It has been confirmed that Turkish Bayraktar TB-2 drones have been deployed by the Ethiopian governement against the Tigray Defence Forces.⁷ This is significant because drones seem to have been the decicisive element in turning the tide against the Tigray Defence Forces. Turkey’s drone program has paid dividends in Libya and is now demonstrating its usefullness in Ethiopia. Good for weapons sales, bad for civillians.

https://www.reuters.com/world/africa/un-rights-office-decries-ethiopia-air-strikes-says-108-killed-this-month-2022-01-14/

Iran and Saudi Arabia Diplomacy

Article - https://english.alaraby.co.uk/news/iran-diplomats-arrive-saudi-arabia-begin-oic-roles