[original article in Eghtesad Online]
Iranians have asked their government to spend the economic benefits from sanctions relief on improving their standard of living. According to diplomats and analysts, during the coming months after the lifting of the financial sanctions, Iran will be able to access its money from foreign banks, which is estimated to be in excess of $100B.
This is [also] in hopes of receiving the money owed to them by foreign countries from oil sales, which have been frozen due to the sanctions. However, due to severe budget cuts in the past year because of low oil prices as well as the expected economic and social improvements for the country after the lifting of sanctions, the Iranian government is under pressure to invest that money in the country.
Charles Hollis, Managing Director at FTI Consulting said, “This idea that Iran’s pockets will be full of money and it will be able to use that money for any purposes is, in my opinion, an exaggeration.”
The oil sector requires much needed repairs due to infrastructural damage from the sanctions over the years, as well as mismanagement. [As a result,] the Oil Ministry injected large amounts of money into the [nuclear] negotiations in order to restore [Iran’s oil] production to levels to that prior to the sanctions. Mansour Moazzami, Iran’s Deputy Oil Minister said in February [of this year] that the oil industry needs $30B annually.
Iranian officials have not publicly announced how much money they will receive in the event that sanctions are lifted, or how much and what portions of the money will be spent. Analysts believe the money that will be released as a result of the sanctions relief will be kept in Iran’s Central Bank. David Butter, Associate Fellow at the Middle East and North Africa Program at Chatham House Institute was quoted as saying, “As soon as there is a feeling that the money will [enter the Central Bank], every [government] agency will begin lobbying to receive some capital.”
Rouhani’s government will be under pressure by the middle class – [the demographic] who voted him into office in 2013 – until it improves its management of internal issues and its pragmatic diplomacy to improve the economic situation. Matthew Kroenig, a nonresident senior fellow at the Atlantic Council, said, “If a significant number of sanctions are lifted…that means more money will reach the hands of Iran, and Iran will be able to use this money to increase its influence throughout the region.”
Jacob Lew, US Secretary of the Treasury, commented back in April that most of the money that Iran received from the reduction of sanctions will not be used to support their activities and actions through proxies in the region. “Iran will be under great pressure until they use their frozen assets to improve its country’s economy.”