The year 2016 marked a new rise of Iran in the International Trade when the European Union along with the UN entities announced the lifting of sanction over Iran. The sanction imposed by US and European Union had limited Iran’s International trade including its sale of Oil and Gas.
What is the Restriction imposed on Iran?
In 1979, it was United States who first imposed restriction on Iran following the Iranian Revolution. It was later expanded in 1995 to include the firms dealing with the Iranian Government. In 2006, the UN Security Council passed resolution and imposed sanction after Iran refused to suspend its Uranium enrichment program. US restrictions initially targeted investment in Oil, gas, petrochemicals, export of refined petroleum products and business dealings. This encompasses banking and insurance transactions, shipping, web hosting services for commercial endeavours and domain name registration services. In addition to this, the European Union also imposed restriction on co operation with Iran in the year 2007 in foreign trade, financial services, energy sector and technologies, banned the provisions of insurance and reinsurance by member states to Iran and Iranian Owned Companies. Over the years, these restrictions have taken a serious toll on the Iran’s economy and people. The Iran sanctions were the toughest in among those imposed by the World Community on any Country.
The Turning Point on 16th January, 2016
The Lift of sanction on 16th January, 2016 (also known as the Implementation Day) can be literally considered as the turning point for Iran by re opening Iran’s door into the International economy. While most of the US sanctions will remain in place, the lifting of EU Sanctions will benefit a number of Industries like Energy, Finance and International Trade.
Energy/Oil/Gas: It is said that Iran has the Fourth largest crude oil reserve and second largest natural gas reserve. Now with the lifting of the sanction, they have opened business opportunities in this Industry. It is stated by the experts that by 2017, following the lifting of sanction, Iran’s Oil production would rise to around 4 million barrels a day.
Finance/Banking: Iran would also have access to the Money that was left frozen overseas. Iran could not transfer their monies abroad and this also affected Iran’s International Trade. By lifting the sanction, now the foreign companies are allowed to deal with Iran’s market and thereby, they are expecting a huge increase in its revenue from the sale of the oil and gas to the Asian Countries
The lifting of banking sanctions means that Iran is once again re connected to the World Financial network. Money will be able to move between the European Union and Iran without any special authorisation or Notification.
International Trade: International Trade is the next major industry that would benefit from the lifting of sanction. Now since Iran can easily step into the international trade and that now there is no difficulty in transferring the payments abroad, the Iran’s Shipping Companies and Port would definitely increase their foreign trade and thus the shipping industry is expected to rebound within no time.
Shipping and Transport: The European Union shall allow the trade to Iran of naval Equipment and technology for ship building. European Union would also allow the cargo flights from Iran to access member state airports. But it is reported that US will not sanction non US Citizens who are part of the shipping sector in Iran or to have financial dealings with it.
The Aircraft industry is the only one sector wherein US has fully allowed to do business in Iran. US Companies will now be allowed to sell the commercial aircraft and parts to Iran.
With the lift of sanction, countries are looking forward to build up a friendly relation with Iran. To support this fact, it was reported that the business delegations from various European Countries have already travelled to Iran to assess the business opportunities.