The removal of economic sanctions on Iran on Saturday is a major development not only for Iran, but also for the entire region and the world. The process of the sanctions, which started with a ban on the export of Iranian goods to the U.S., came after a group of Iranian students raided the U.S. Embassy in Tehran and held U.S. diplomats hostage following the 1979 Iranian Revolution. First, let us take a look at what is changing.
The sanctions concerning the Iranian nuclear program, which provide a legitimate basis for many countries to impose sanctions on Iran, are being lifted. Namely, the EU has lifted sanctions on oil fields, banking and insurance firms and removed Iranian businessmen from the sanctions list. The U.S. also needs congressional approval to remove sanctions. U.S. President Barack Obama has said that he will bypass Congress using his presidential authority and will lift the sanctions if Congress does not approve it. Although the sanctions on the nuclear program are being lifted, restrictions on Iran's ballistic missile program and weapons will be maintained due to concerns about terrorism.
The impacts of these changes should be addressed starting from their significance for Iran. As a country that has suffered from sanctions for many years, Iran's currency, the riyal, has lost two-thirds of its value, its industry has faced difficulties finding raw materials and it has $100 billion in frozen assets overseas. So, with the opening of economic channels, Iran will spring to life once again. It is expected that the Iranian economy will enter an upward trend where it will grow by 8 percent on an annual basis and its national income will soar by 5 percent. It is possible that $50 billion of the frozen $100 billion in assets will be released. With this relief, the Iranian economy is expected to gain an additional volume of $110 billion on an annual basis. Certainly, the removal of sanctions will push up the amount of oil that it exports annually. Recently disclosed data suggests that Iran's oil exports will soar from 1 million barrels to 2.5 million barrels a year.
The fact that Iran will enter the oil market in a liberal fashion will lead to a further decline in oil prices, which have already dropped to an 11 year low. What does this signify? The first thing that springs to mind is that it will apply a further reduction in oil prices in order to challenge Saudi Arabia. This means that the world could see oil wars in the near future, since the removal of sanctions has already led to a 6 percent decline in stock markets in Saudi Arabia, Qatar and Dubai. Furthermore, as a new and large market, Iran has already become a center of attraction for foreign investors. It is said that Iran will attract nearly $50 billion worth of foreign investments and Tehran will see thousands of foreign visitors.
The easing of sanctions on Tehran is also an issue for Turkish-Iranian economic relations. It is said that the foreign trade volume between the two countries might surge to $30 billion in the next several years. Turkey is very ambitious in the production, construction and service sectors and in a recent interview with Turkey's Milliyet daily, Turkey-Iran Business Council Executive Chairman Bilgin Aygül said: "Turkey is one of the three most important countries that invest in Iran and conduct business in the country. Turkey made the most investments in the country while sanctions were being enforced. Despite the challenging period, a total of 200 Turkish companies have invested in the country." Turkey has made major investments in Iran under difficult circumstances, indicating that it is important for Turkey to make the most of this period. If Turkey progresses in a precise manner and European and American companies conduct preliminary examinations in the country, the country will increase its falling foreign trade volume with Iran to the desired level.
These are the possible economic developments that will take place as a first step. Obviously, the removal of sanctions will profoundly affect political balances in the Middle East. Also, as a country that can consolidate its Shiite axis quickly and has rising competitive power, Iran is facing a period of polarization that will be led by Saudi Arabia. Can the U.S., which is on good terms with both countries, prevent the world from heading toward dividing into two poles again? Will a Sunni-Shiite rift take place? And will Russia continue its rapprochement with Iran? I will seek answers to these questions in my next column.