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Analysts Say U.S. JCPOA Exit Will Heighten Iran’s Economic Woes, Gov’t Infighting

AUSTRIA - A staff member removes the Iranian flag from the stage after a group picture with foreign ministers and representatives of he U.S., Iran, China, Russia, Britain, Germany, France and the European Union during the Iran nuclear talks

Iranian analysts say the United States’ withdrawal from the nuclear deal with Iran, also called the Joint Comprehensive Plan of Action (JCPOA), is likely to escalate factionalism and infighting in Iran and have far-reaching consequences for the country’s economy.

Speaking to Radio Farda on May 10, analyst Mehdi Mahdavi-Azad said, “For the time being, all factions pretend to be in agreement with each other. But hardliners demand radical measures such as leaving the Non-Proliferation Treaty (NPT) and starting a war with Israel, while moderates want to wait until the 2020 presidential elections hoping there would be a new U.S. president in office by that time.”

Mahdavi-Azad added, “It is not clear who will have the upper hand, but it is clear that the pullout escalates factionalism and infighting in Iran.”

He explained, “JCPOA has been the pillar of Iran’s economy, foreign relations, and domestic politics during the past two years. The pullout will bring about a political jolt in the country that would disrupt the current political balance in domestic politics.”

Elaborating on other possible implications of the United States’ pullout, Mahdavi-Azad said, “The U.S. withdrawal will empower hardliners, including the IRGC.”

He added, “Following his administration’s failure to improve the economy or stop the ban on popular messaging application Telegram, JCPOA was Rouhani’s only achievement.”

“The government will clamp down on civil liberties in order to prevent political unrest, and the situation will be reminiscent of how it was under former hard-line President Mahmud Ahmadinejad during his last years in office,” Mahdavi-Azad said.

Economic analyst Mehrdad Emadi told Radio Farda in a May 10 interview that the U.S. withdrawal from JCPOA would increase the cost and risk of economic exchanges with Iran for European parties.

He added that Iran is likely to face heightened restrictions on importing technology.

Asked how the EU will guarantee the continuity of contracts between Iran and private European companies, Emadi said there is a risk European companies might fear losing profits in the United States if they do business with Iran.

“This is the part of President Trump’s withdrawal statement that some observers have failed to notice,” he said. “European companies might decide to avoid the risks involved in working with Iran.”

Emadi added that reactions such as burning the U.S. flag at the Iranian Parliament would prompt Europeans to hesitate. “This kind of political suicide has had many examples in Iran in recent years,” he said, adding that such behavior leads to a reluctance in Brussels to support cooperation with Tehran within the framework of JCPOA.

Iranian analyst Mehran Barati told Radio Farda that working with Iran within the framework of JCPOA without the United States might work for European parties in the short term, but as soon as the United States bans oil purchases from Iran the shipping and insurance industries will feel the consequences.

He added that European intelligence agencies have warned private companies to hold off investing in Iran for the time being, as they fear punitive U.S. measures that would affect European investors wanting to enter the Iranian market.

Trump announced on May 8 that the United States would leave the 2015 nuclear deal signed by Iran with six world powers and that he would immediately reinstate sanctions on Tehran. The agreement, worked out with Iran by the United States, Russia, China, France, the United Kingdom, and Germany, lifted sanctions on Iran in exchange for Tehran limiting its nuclear program.

JCPOA, designed to prevent Iran from obtaining a nuclear bomb, has been strongly criticized by Trump, who called it "a horrible one-sided deal that should have never, ever been made."

The other signatories have indicated they would adhere to the agreement.