Australia and Iran: post-nuclear agreement

Renee Westra, Foreign Affairs, Defence and Security

Key Issue
The relaxation of Iranian sanctions under the Joint Comprehensive Plan of Action will re-open trade opportunities with Iran—a historically significant market in the Middle East. Increased trade ties may also present an opportunity to influence Iran’s behaviour on a range of other non‑nuclear matters. However, monitoring Iran’s adherence to the nuclear agreement and amending Australia’s sanctions accordingly will be an ongoing process.

The Joint Comprehensive Plan of Action

The Joint Comprehensive Plan of Action (JCPOA) came into force in July 2015, following extensive negotiations between Iran and the P5+1 (permanent UN Security Council members plus Germany/EU). While Iran did not agree to end its nuclear program, it did agree to give up critical elements of its program that will put its progress towards nuclear weapons back by at least a decade. In return, Iran gets relief from some, though not all, sanctions that have crippled its economy, especially in recent years.

Australia-Iran relationship

Over the decades, Australia has attempted to balance its trade and economic objectives in the Middle East with its non-proliferation and global security objectives. One of the more challenging aspects has been the Australia-Iran relationship, which, prior to the last decade, was mostly cordial, bolstered by strong commercial and trade links. For much of the period following the 1968 opening of Australia’s embassy in Tehran, Iran was Australia’s largest trading partner in the Middle East and the ninth largest overall.

Academics have described Australia’s approach to Iran during this time as being distinctive for its constructive trade‑focused nature which differed from the periodically hostile relationships with other Western countries. Academic Shahram Akbarzadeh notes that ‘historically, Australia maintained a bipartisan consensus on keeping trade with Iran separate from other political considerations’. Successive Australian governments have pointed to the diplomatic and political advantages of maintaining strong trade ties. Former foreign minister Gareth Evans put this succinctly in 1995:

The Australian government has found these positions [support for Hezbollah and Hamas, opposition to Israel, and nuclear and chemical weapons] deeply unpalatable and has consistently said so ... But our generally cordial relationship with Iran and the strong trade and commercial links between our two countries have put us in a strong position to maintain a much more direct and critical dialogue with the Iranians on these issues than would otherwise have been possible.

However, over the past 15 years, increasing international concern over Iran’s nuclear program and state‑sponsored terrorism resulted in international sanctions. Australia implemented both sanctions and from 2008, additional autonomous measures. Specific regulations introduced in 2014 also imposed restrictions on financial transactions with Iran.

Iranian sanctions

After the International Atomic Energy Agency declared Iran in 2005 to be non‑compliant with its Non-Proliferation Treaty obligations, the UN Security Council developed targeted sanctions that are binding on all member states, including Australia.

Sanctions against Iran vary across different countries, have multiple objectives and look to counter multiple perceived threats from Iran. But it is those directly related to Iran’s nuclear (and missile) program that have recently been relaxed. Australia’s adoption of the UN sanctions and its own autonomous sanctions were largely aimed at addressing this specific nuclear threat, rather than a wider spectrum of issues.

Conversely, the US has a long history of sanctions against Iran—stretching back to the Iranian Revolution in 1979—that cover a broader spectrum, namely ‘Tehran’s support for terrorism and destabilizing regional activities’, and which remain current. Collectively, Iranian sanctions are still the toughest the world community has imposed on any country.

Outlook

The Australian Government has implemented changes in line with its international obligations, but while it has repealed certain autonomous sanctions on Iran (including the financial restrictions), others remain in place. In May 2016, the Foreign Affairs, Defence and Trade References Committee recommended that the Department of Foreign Affairs and Trade explain the reasoning behind this selective approach and ensure that its website clearly states what trade is still restricted or prohibited.

The Government has expressed strong interest in trading with Iran, and plans to reopen a trade office in Tehran—which it closed in 2010—noting that the office will ‘establish a permanent presence within the Australian Embassy in Tehran from the second half of 2016’. The Foreign Minister has also indicated on multiple occasions that she regards Iran as an important element of the fight against the Islamic State. 

However, the Opposition has not been quite so enthusiastic, with former shadow foreign minister, Tanya Plibersek, stating earlier in 2016:  

The Foreign Minister has been ... so prepared to turn a blind eye to the anti‑American rhetoric of the Iranian government, the anti-Israeli rhetoric of the Iranian government, to the human rights abuses, where people are locked up for their sexuality, for following a religion that’s not approved of by the regime, and most particularly, for political organisation against an oppressive government.

Although there is enthusiasm to capitalise on new opportunities afforded by the deal, the Brookings Institution notes that while ‘there will be a trickle of new business with Tehran ... the floodgates remain firmly shut for the foreseeable future’. The attitude of the next US President towards the sanctions regime will also be key to the long-term success of the deal. This uncertainly is a key impediment to doing business with Iran in the near future.

For now at least, the deal may provide Australia with an opportunity to reinvigorate its human rights dialogue and efforts against the Islamic State. To do this, Iran needs to see benefits from the deal, and the initial suspension of sanctions is just that.

Further reading

N Markovic, It’s complicated: a timeline of Australia-Iran relations in a historical perspective, Background note, Parliamentary Library, Canberra, 9 May 2013.

 

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