61. The Economic Dimensions of a Better Iran Deal
- Author:
- Hadi Kahalzadeh
- Publication Date:
- 06-2025
- Content Type:
- Policy Brief
- Institution:
- Quincy Institute for Responsible Statecraft
- Abstract:
- President Donald Trump can secure a new, better nuclear deal with Iran by removing the barriers that have prevented American companies from entering the Iranian market. This could be achieved through a phased approach that would not require immediately lifting primary sanctions. Doing so would help secure greater nuclear concessions from Iran, generate economic opportunities for American companies that would create an estimated 200,000 American jobs annually, and make a new agreement more durable by strengthening its political bases of support in both the United States and Iran. Decades of sanctions on Iran have failed to compel political capitulation. Instead, Iran has rationally developed a so-called “resistance economy” that evades sanctions, benefiting and empowering hard-liners with close connections to the government. In Washington, many misinterpret Tehran’s resistance and believe that sanctions have not worked because the pressure has not been great enough. But Tehran has held firm, not because sanctions have been too mild but because of a lack of clear and immediate benefits from disarmament. A U.S. policy that includes real economic incentives for compliance will change this equation, empowering more moderate elements of Iranian society and bringing economic benefits not only to the Iranian middle class but to the U.S. and the wider Persian Gulf region. President Trump should issue targeted Office of Foreign Assets Control general licenses, enabling the export of up to $25 billion in U.S. goods annually to Iran, primarily in aviation, agriculture, automotive production, and telecommunications. A deal should also license a five-year carve-out for American–owned foreign subsidiaries operating in Iran, enabling U.S. access to as much as $4 trillion in unrealized Iranian investment opportunities by 2040. Such a license would allow the United States to partner with Gulf regional allies to modernize Iran’s transport and logistics networks, thereby advancing broader regional development and cooperation. The prospect of losing such partnerships would be a powerful incentive for Iran to exercise military and political restraint. In parallel with the technical nuclear discussions, a dedicated economic dialogue could explore ways to keep Iran’s consumer market open to American companies in the near term and unlock investment opportunities for U.S. investors over time. One potential method in that vein would be the inclusion of a “snap-forward” mechanism, in which economic openings accelerate based on Iranian compliance and good behavior. Such a carrot offers the path toward a more robust and dynamic U.S.–Iran economic partnership built on trust. Incorporating economic incentives into a new U.S.–Iran nuclear agreement would benefit private sector constituencies in both countries, bolstering American jobs and industry while reintegrating Iran into the global economy. In the long term, such a multifaceted agreement could blaze a path toward peaceful coexistence with Iran.
- Topic:
- Economics, Treaties and Agreements, Sanctions, Negotiation, Nuclear Energy, and Foreign Policy
- Political Geography:
- Iran and Middle East