Iran is celebrating the lifting of economic sanctions by Western powers. The sense of euphoria is understandable as the country prepares to enter a new ear after decades of severe economic hardship. President Hassan Rouhani hailed the sanctions relief as a “glorious victory” and a “turning point”. The media celebrated the arrival of ‘a new era’ in style, with imaginative and screaming headlines. And the Tehran stock exchange performed strongly and is likely to remain bearish.
The sanctions were lifted on Saturday after confirmation from the International Atomic Energy Agency (IAEA) that Tehran had complied with the nuclear deal. In a clear sign of rapprochement with the United States, the announcement in Vienna came a day after a prisoner swap between Tehran and Washington.
But the mood in our region is not so upbeat. In stark contrast to the celebrations in Iran, the Gulf stock markets sank to multi-year lows at the news. The Saudi index plunged 3.3 percent to close at 5,838 points, its lowest finish since March 2011. Other bourses too panicked. Oil prices had fallen on Friday in expecation of the lifting of sanctions because Iran is expected to start oil exports.
The market reaction is a reflection of the mood in the Gulf countries, which have always been wary of Iran’s agenda in the region. The nuclear deal comes at a time of tension and financial turmoil, when the conflicts in Yemen and Syria are continuing with no end in sight and a disastrous dip in oil prices is straining the budgets of producing countries. In Yemen, the Iranian support for Houthis has complicated the war, forcing the Gulf countries to intervene militarily, and in Syria, Iran is one of the chief backers of President Bashar Al Assad which is delaying his departure. There is a genuine concern that Iran might use its new-found status to further its agenda. Tehran will be getting billions of dollars in frozen funds and this money can be used to increase its influence in the region. And Iranian oil is certain to roil the energy markets, with prices set to fall further.
Peace and security are vital for economic growth and any attempt by any side to exacerbate tension needs to be countered. Iranian leaders have spoken of the need for security and stability of the region, but their words need to be matched with action. Tehran must refrain from actions that could be seen as interference. And the western countries, which are already queuing up in Tehran to grab a slice of the economic opportunities that will be thrown up, must ensure that Iran strictly abides by every clause of the nuclear agreement.
Iran is celebrating the lifting of economic sanctions by Western powers. The sense of euphoria is understandable as the country prepares to enter a new ear after decades of severe economic hardship. President Hassan Rouhani hailed the sanctions relief as a “glorious victory” and a “turning point”. The media celebrated the arrival of ‘a new era’ in style, with imaginative and screaming headlines. And the Tehran stock exchange performed strongly and is likely to remain bearish.
The sanctions were lifted on Saturday after confirmation from the International Atomic Energy Agency (IAEA) that Tehran had complied with the nuclear deal. In a clear sign of rapprochement with the United States, the announcement in Vienna came a day after a prisoner swap between Tehran and Washington.
But the mood in our region is not so upbeat. In stark contrast to the celebrations in Iran, the Gulf stock markets sank to multi-year lows at the news. The Saudi index plunged 3.3 percent to close at 5,838 points, its lowest finish since March 2011. Other bourses too panicked. Oil prices had fallen on Friday in expecation of the lifting of sanctions because Iran is expected to start oil exports.
The market reaction is a reflection of the mood in the Gulf countries, which have always been wary of Iran’s agenda in the region. The nuclear deal comes at a time of tension and financial turmoil, when the conflicts in Yemen and Syria are continuing with no end in sight and a disastrous dip in oil prices is straining the budgets of producing countries. In Yemen, the Iranian support for Houthis has complicated the war, forcing the Gulf countries to intervene militarily, and in Syria, Iran is one of the chief backers of President Bashar Al Assad which is delaying his departure. There is a genuine concern that Iran might use its new-found status to further its agenda. Tehran will be getting billions of dollars in frozen funds and this money can be used to increase its influence in the region. And Iranian oil is certain to roil the energy markets, with prices set to fall further.
Peace and security are vital for economic growth and any attempt by any side to exacerbate tension needs to be countered. Iranian leaders have spoken of the need for security and stability of the region, but their words need to be matched with action. Tehran must refrain from actions that could be seen as interference. And the western countries, which are already queuing up in Tehran to grab a slice of the economic opportunities that will be thrown up, must ensure that Iran strictly abides by every clause of the nuclear agreement.
