Overlooked Consequences of the Iran Nuclear Deal

On July 14^th, Iran and the US reached a historic deal concerning Iran’s nuclear proliferation. Essentially, what the deal means is that the US and five other countries will stop enforcing sanctions on Iranian products, while “Iran reaffirms that under no circumstances will [they] seek, develop or acquire any nuclear weapons” (look here for the full text of the deal, or here for a simplified version).

The deal has sparked heated criticism. Republican Presidential candidate Marco Rubio told Reuters that he is not going to “support a deal with Iran that allows the mullahs to retain the ability to develop nuclear weapons, threaten Israel, and continue their regional expansionism and support for terrorism.” This is by no means unique to Senator Rubio. House Speaker John Boehner claims that “[the deal is] going to hand a dangerous regime billions of dollars in sanctions relief while paving the way for a nuclear Iran,” as do several other Republicans. Many Democrats are also skeptical about the deal, and the Israeli Prime Minister warns that the deal is a threat both to Israel and to the US. He (dis)informs us that Iran has “killed a lot of Americans. It’s killing everybody in sight in the Middle East.”

Moving away from the scaremongering rhetoric, the criticism against the deal is largely based on a belief that the deal will be ineffective in preventing Iran from developing nuclear weapons; that it will threaten the security of the region and eventually lead to an armed conflict. Those who support the deal claim that the deal actually will prevent Iran from developing nuclear weapons; Iran will still be allowed to enrich uranium, but inspections will be conducted regularly to ensure that the enrichment is insufficient for the purpose of developing nuclear weapons.

Most of the media coverage focuses only on whether the deal will be successful in preventing Iran’s development of nuclear weapons or not, the salubrious effects of lifting the sanctions on future Iranian policies seem to have been overlooked. To the extent the removal sanctions are covered, they are only related to Iran’s increased capacity to use wealth to fund foreign terrorist groups. According to CIA, however, it is unlikely that Iran will spend a game-changing amount of the sanction relief funds on terrorist groups. Furthermore, similar critique can (and arguable should) be made towards the Saudisas they have funded Al-Qaeda (and some say, ISIS).  Still, the US remains a close ally to Saudi Arabia.

By overlooking the implications of lifting the sanctions, the media has ignored what may be the most important argument in support of the deal – the argument concerning the effect of free trade on interstate conflict. The notion that countries that trade with each other do not go to war with each other is an old one; Montesquieu said in 1748 that “[p]eace is the natural effect of trade. Two nations who differ with each other become reciprocally dependent; for if one has an interest in buying, the other has an interest in selling; and thus their union is founded on their mutual necessities.”

In addition to this, more recent empirical data show a significant negative correlation between trade and interstate conflict. Economists Polachek and Seiglie found in their paper that “overwhelming evidence indicates that trade reduces conflict regardless of the proxies used to capture the gains from trade and conflict.” Further, they argue that “[t]he policy implication of [their] finding is that further international cooperation in reducing barriers to both trade and capital flows can promote a more peaceful world.” Thus, with this in mind, it should be clear to any reader that the lifting of sanctions against Iran will actually decrease the risk that Iran will go to war, in contradiction to what skeptics to the deal are arguing.

Not to be forgotten, sanctions traditionally hurt civilians the most; when the country have to be more self-sufficient, the population cannot concentrate on doing what they are best at – utilizing their comparative advantage – but have to produce more things by themselves. This leads to a decrease in consumption possibilities for the populations. This has also been the case in Iran, where people have struggled to acquire food and medicine. Therefore, it is also likely that the Iranian population will be better off as a result of the sanctions being lifted, and hostile attitudes towards the US might change.

This is not saying that the deal is perfect. It is not even saying that the deal will nullify the risk of Iran going to war. There is important research suggesting that it is not only trade, but economic freedom as a whole, that prevents countries from going to war – something that Iran still lacks (as they are ranked 171/178 on the Economic Freedom Index). What this is saying, however, is that the risk of Iran engaging in warfare will decrease as a result from the recent nuclear deal. As more countries trade with Iran, they will have less reason to go into interstate conflict, and considering their military history (the Islamic Republic has never invaded another country), the risk of an Iran-initiated war seems diminishingly small. Therefore, in order to support a more peaceful world, one should support the Iran nuclear deal.

Eva Forslund
2015 Summer Intern
Minaret of Freedom Institute

Eva Forslund