farhad emam Farhad Emam
Publish Date : 03/04/2016

Donald Trump’s Presidency and its Impact on International Trade with Iran

Two days ago, on “Super Tuesday”, Donald Trump won Alabama, Arkansas, Georgia, Tennessee and Virginia and captured Massachusetts and Vermont. As reported by Stephen Collinson on cnn.com on March 2, 2016, he has won so far 233 delegates on Super Tuesday. This gives him a total of 315 delegates in the overall race. He needs a total of 1,237 delegates to win the Republican nomination.

What will happen if he wins the Republican nomination and then the Presidency? This is the questions that is being raised more and more. As a result of the above victory, As the results rolled in, Google searches for “how to move to Canada” surged by 350% in the space of four hours on Tuesday, according to a tweet from the company’s Data Editor Simon Rogers (Loulla-Mae Eleftheriou-Smith: ‘How to move to Canada’ Google searches have skyrocketed since Donald Trump’s Super Tuesday performance, independent.co.uk).

The impact of his eventual election as the 45th president of the US can be analyzed in two distinct situations depending on whether he would maintain the status quo or would impose heavier and more serious sanctions on Iran. The international trade policy of Iran will also have a say in this context.

I. International trade policy of Iran

Iran is neighboring Afghanistan, Azerbaijan and Turkey. These three countries, in their turn, neighbor China, Russia and the EU respectively. Geopolitically speaking, the international trade policy of Iran should take into account the interests of its three powerful ‘neighbors’.

The triple alliance of Iran – China – Russia has undertaken the following key projects:

a)  Iran's full membership in the Shanghai Cooperation Organization (SCO);

b) The New Economic Silk Road and the Maritime Road blueprint of China; and

c) The Iran and Russia “Customs Agreement” that is signed on March 1, 2016 (as reported on the website of irna.ir) in order to launch the 'green customs corridor' connecting the two countries.

Around these three major projects, smaller agreements are signed between Iran and Azerbaijan, Georgian, Turkmenistan, Kazakhstan, Armenia, etc.). They will be analyzed in our coming Legal News and Legal Reports.

Iran – EU economic relationship is going to be cemented inter alia by the following agreements all signed after Iran and P5+1 singed the JCPOA:

1. The Agreement between Iran and Airbus - Please refer to our Legal Report of “Air Transport Law of Iran and Airbus Deal” dated January 29, 2016: http://lawiniran.com/Report/Details/1102/Air-Transport-Law-of-Iran-and-Airbus-Deal?lang=en.

2. Agreements between Iran and Italian companies - It is reported on the website of sputniknews.com on January 26, 2016 that:

The commercial agreements between Iranian companies and Italian steel firm Danieli worth at least 6 billion dollars, a 4-billion-dollar contract between Tehran and the Italian infrastructure development firm Condotte, and a 5.4-billion dollar deal that Tehran signed with the Italian company Saipem.  

3. Siemens – MAPNA Agreement: The website of dieselgasturbine.com reported yesterday that Siemens has signed far-reaching agreements with the Iran’s MAPNA Group to help modernize the energy infrastructure in Iran.

II. Should Trump maintain the status quo

If Trump opts for maintaining the status quo by keeping the existing US sanctions intact without arranging for imposing of new sanctions on Iran, the economic relationship between Iran and US will remain strained for the foreseeable future. In the current circumstances, American companies show almost no interest in even opening a representative office in Iran, let alone entering into an agreement with Iranian companies or governmental organizations. Their reluctance to enter into the Iranian market will become stronger if Donald Trump becomes the next president of the US.

What would be the impact of this hopefully ‘peaceful coexistence’ on the investment of European companies and firms in Iran? These companies have already started to test the water in Iran but would they be ready to continue their cautious approach if the new president of the US “encourages” them to keep reasonable distance from the Iranian market?

III. Should Trump impose heavier sanctions on Iran

It is almost certain that if the US imposes new and heavier sanctions on Iran, it would become much more difficult for the moderate president of Iran who counts on full support of a ‘moderate parliament’ (as reported on irna.ir on March 1, 2016) to pursue the politico-economic normalization process.

Another impact of this development would be a closer relationship between Iran and Russia, on the one hand, and Iran and China on the other. As mentioned above, the latest news is that “Iran and Russia finalized historic customs agreement”. According to trend.az on March 2, 2016:

 The most important item in the agreement is export of Iran's agriculture products to Russia stipulating that such items will be placed with priority in Russia's green customs corridor, IRNA news agency reported.

[…] The agreement also lays down expansion of transit between Iran and Russia which includes the facilities to be provided by the green customs corridor.

What would be the impact of Trump’s presidency on the policies of the EU vis-à-vis Russia and consequently on the rapprochement policy of Iran and Russia? According to bloombergview.com on February 12, 2016:

That possibility was in the air at this year's Munich Security Conference, where diplomats such as the European Union's foreign policy coordinator, Federica Mogherini, were pushing the idea that the deal she helped to negotiate with Iran shows that "win-win" approaches work, and should be applied to "other fields."

If the EU follows this policy, ideally the “triple alliance” will transform itself to a “quadruple alliance” that history has experienced in several occasions.

CONCLUSION

The presidential election date in the US is November 8, 2016 and the electoral votes will be cast on December 19. Announcement of the electoral result by the Vice President of the United States will take place on January 5, 2017 and the inauguration of the new President and Vice President will be on January 20. The result of this election may usher in a new era in Iran-US relationship, “for better or for worse”. Everything depends on the final outcome of the politico-economic developments and the decisions to be made by the next president of the US, possibly or probably Mr. Donald Trump.

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