Testimony of David S. Cohen: Iran Nuclear Negotiations: Status of Talks and the Role of Congress
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If you take a step back and look at Iran’s broader economy, the picture is no less dismal. Despite some signs of an uptick in Iran’s GDP, Iran’s economy is performing far below its potential. Iran’s GDP shrank by roughly 9 percent in the two years ending in March 2014, and its economy today is 15 to 20 percent smaller than what it would be had it remained on its pre- 2012 growth trajectory. Moreover, at 17 percent, Iran’s inflation rate is one of the highest in the world.
The dire predictions we heard that the limited sanctions relief in the JPOA would lead to a collapse of the sanctions regime and reduce pressure on Iran clearly have not materialized. The sanctions structure has held up just fine. We estimate that the total value to Iran of the JPOA sanctions relief, which comes largely from enabling Iran to access some of its own restricted oil revenues held overseas, will add up to approximately $14 to $15 billion by June 2015. This relief pales in comparison to the significant revenues that Iran has forgone as a result of sanctions, and it cannot make up for Iran’s systemic economic weaknesses and imbalances.
Put simply, Iran’s economy is significantly impaired, and it will remain that way as long as our sanctions are in place – and Iran’s leaders know this. Thanks to cooperation on the international stage between the United States and its allies, and the joint work of Congress and this Administration, Iran is negotiating with its back against the wall. So long as we continue to maintain our current pressure on Iran – and we are committed to doing just that – its leaders have every incentive to come to a comprehensive solution and resolve this issue peacefully.
In our efforts to prevent Iran from obtaining a nuclear weapon, sanctions were never an end in themselves. Sanctions alone were never going to stop Iran from installing centrifuges or enriching uranium. Instead, sanctions always were intended principally as a means to persuade Iran to negotiate in earnest.
And that has worked. We now have a situation in which Iran is engaged in a serious negotiation with the P5+1, while progress on its nuclear program is frozen, certain aspects of the program have been rolled back, and we have unprecedented insight into its nuclear activities. And, furthermore, its economy remains under enormous pressure, in large measure because we have been able to hold together the international coalition that has joined us in imposing crippling sanctions.
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