Iran will use sanctions relief primarily for domestic challenges but U.S. treasury will continue to monitor and prevent any attempts at diversion to militants
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None of this is to say that we view the sanctions relief Iran will receive if it complies with the JCPOA with indifference. As the agency with primary responsibility for sanctions against Iran over the last three decades, we are keenly aware of its nefarious activities in the region and have invested years in devising and implementing sanctions to frustrate its objectives.
That said, in gauging the impact of lifting these restrictions, we should be measured and realistic. These funds represent the bulk of Iran’s foreign reserves — they are the country’s long-term savings, not its annual budgetary allowance, and as a matter of financial management, Iran cannot simply spend them. Of the portion that Iran spends, we assess that Iran will use the vast majority to attempt to redress its stark economic needs. President Rouhani was elected on a platform of economic revitalization and faces a political imperative to meet those unfulfilled promises. Iran’s needs are vast — President Rouhani faces well over half a trillion dollars in pressing investment requirements and government obligations. And Iran’s economy continues to suffer from immense challenges — including perennial budget deficits, rampant corruption, and one of the worst business environments in the world. Put simply, Iran is in a massive hole from which it will take years to climb out.
In any event, we will aggressively target any attempts by Iran to use funds gained from sanctions relief to support militant proxies, including by continuing to enhance our cooperation with Israel and our partners in the Gulf.