Background and Research Question
In 2015, the United States and the Islamic Republic of Iran reached an agreement to significantly curtail Iran’s expanding nuclear program in exchange for the lifting of approximately $100 billion in U.S. sanctions on Iranian entities.[1]The agreement, known as the Joint Comprehensive Plan of Action (JCPOA), followed a wave of Iranian electoral victories by “moderates” who were perceived as wanting to improve relationships with the West.[2]The JCPOA was therefore hailed among global liberal politicians as an essential step towards liberalizing the Islamic Republic- by opening up Iran to Western trade and investment, many hoped that Iran would gradually begin to accept liberal ideals and move away from its conservative political system. Many conservatives, however, bemoaned the JCPOA as a poorly negotiated and unfair agreement- a colossal policy error which would not only fail to liberalize Iran, but provide the Islamic Republic (the world’s largest and most prolific state sponsor of terrorism) with billions of dollars with which to support terrorist and proxy organizations across the Middle East. In May 2018, President Donald Trump intentionally failed to recertify the terms of the JCPOA, thus ending U.S. obligation and opening the door for the reinstatement of crippling U.S. sanctions on Iran, which will come back into effect in November, 2018.[3]Consequently, although the JCPOA has failed to survive, the question remains as to whether or not the agreement succeeded in its attempt to open Iran to deeper financial and political relationships with the West.
This project will therefore examine precisely how Iran’s trade network changed in response to the negotiation of and entry into the JCPOA, starting in 2013 and ending with its ultimate unravelling in 2018. In order to understand this change, the project will compare Iran’s trade network in this time period with that from 2006-2012, when Iran’s political arena and foreign policy apparatus was dominated by conservative and strongly anti-Western domestic forces. Simply put, the research question that will guide this project is: was the JCPOA successful in deepening Iran’s trade and investment ties with the Western, liberal democracies?
Hypothesis
My hypothesis is that the JCPOA failed to significantly encourage greater trade between Iran and liberal, democratic nations. I believe a network analysis will show highly dense networks of trade among U.S. allies and liberalized democracies (likely with the United States as a node with high betweenness, degree, and closeness), but that Iran will not be included in these networks even after the JCPOA. I also believe that there will be no noticeable change in Iran’s centrality in its current network(s)- i.e. Iran’s significance as a trade partner will not change, even among partners outside of the liberal, democratic world. I also hypothesize that, if foreign direct investment (FDI) proves a manageable metric, the JCPOA will be shown to have motivated Iran to enter into some liberal, democratic FDI networks. I believe that this involvement, however, will be limited.
Data and Methodology
In order to arrive at conclusions, I will utilize public data from a number of sources. I have already located much of the trade data I will need (import and export data to provide bi-directional ties) through an MIT site which coded trade data from written reports.[4]As mentioned above, I would also like to utilize data regarding FDI in my project. I have downloaded some of this data from the United Nations Conference on Trade and Development.[5]Unfortunately, constructing a data set incorporating FDI origins and destinations for every nation in the world would be enormously time consuming and result in an incredibly large dataset. I will therefore likely utilize the trade data to visualize and understand the primary global trade networks (and specifically those most important to Iran) and then collate and utilize FDI data to further examine those networks.
Attribute data will be assembled primarily from public sources and include such country features as: signatory of the JCPOA (binary), Iran ally (binary), GDP, geographical region, U.S. ally (binary), NATO member (binary), U.N. Security Council member (binary), population, dominant religion (most interested in Sunni/Shia Islam), liberal democracy rating (determined from the 2017 Democracy Index from the Economist[6]). Other attributes may be added as the project develops.
A number of different metrics at node, group, and network analysis will be examined for this project. The change in Iran’s centrality measures within networks of liberal democracies (if any), such as eigenvector, degree, and closeness, will be critical for understanding Iran’s trade role. Betweenness may also prove an important measurement for Iran’s closest trade partners, as goods could be exchanged between Iran and a liberal democracy through a third party intermediary. Cohesion measures of Iran’s network will be critical for the project- most importantly, Iran’s E-I index by certain attributes (U.S. Ally, NATO member, Democracy Index, etc.) before and after the JCPOA will provide a simple and direct means of determining the JCPOA’S success.
It should be noted that there is unlikely to be any distinct change in the trade/FDI relationship between the United States and Iran, as the JCPOA did not relieve “primary” sanctions preventing U.S. companies from doing business with Iran. The JCPOA did, however, eliminate “secondary” sanctions which previously punished non-U.S. companies for doing business with Iran.[7]This is why it will be critical to examine the change in Iran’s trade relationships with non-U.S. partners.
Limitations
There are several limitations to this project. The first is that the FDI data may prove challenging to collate and utilize to greater demonstrate the significance of the JCPOA. This data will need to be trimmed and cut, and it is difficult to know precisely how this is going to play out. More importantly, the short lifespan of the JCPOA will likely throw this study’s conclusions into question: the JCPOA was in place for less than 3 years, and it will therefore be difficult to say whether or not the JCPOA was “ineffective”, or if it simply did not have enough time to fully develop and effect Iranian trade. Many of the JCPOA’s most important sanctions-eliminating effects, for example, were only to come to fruition after eight years. Given how long some economic programs can take to come to full effect, the conclusions of this study may not ultimately prove anything about the JCPOA’s success or failure. Hopefully, however, it will at least be able to indicate whether or not the JCPOA was beginning to work when it was ultimately scrapped in 2018.
[1]Anne Gearan and Joby Warrick, “World powers reach nuclear deal with Iran to freeze its nuclear program”, The Washington Post, November 23, 2013, https://www.washingtonpost.com/world/national-security/kerry-in-geneva-raising-hopes-for-historic-nuclear-deal-with-iran/2013/11/23/53e7bfe6-5430-11e3-9fe0-fd2ca728e67c_story.html?noredirect=on&utm_term=.6a412b33df02
[2]Thomas Erdbrink, “Iran Moderate Wins Presidency by a Large Margin”, The New York Times, June 15, 2013, https://www.nytimes.com/2013/06/16/world/middleeast/iran-election.html.
[3]Michael C. Bender, Michael R. Gordon, and Rebecca Ballhaus, “Trump Withdraws U.S. from Iran Accord”, May 8, 2018. (Accessed May 13, 2018), https://www.wsj.com/articles/trump-to-withdraw-u-s-from-iran-accord-1525800212.
[4]“Where does Iran Export to?”, The Observatory of Economic Complexity, MIT.edu, https://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/irn/show/all/2006/
[5]“Bilateral FDI Statistics”, United Nations Conference on Trade and Development, Updated 2018, https://unctad.org/en/Pages/DIAE/FDI%20Statistics/FDI-Statistics-Bilateral.aspx
[6]“The Economist Intelligence Unit’s Democracy Index”, The Economist, 2016, https://infographics.economist.com/2018/DemocracyIndex/
[7]“Iran Sanctions”, Congressional Research Service, Updated September 26, 2018, https://fas.org/sgp/crs/mideast/RS20871.pdf
1 comment:
Great Question (capital Q intentional,) one which sets out the frame and the scope of your analysis. Without looking at what comes after it, I can already tell where you're going and can see that you'll have to define what "successful" means, in absolute or relative terms (I would think the latter.) I also like your hypothesis, actually, your description of it, as it gives you a target to shoot for and further defines what you mean by success. Nice call on limiting scope by not using all the UNCTAD and other trade data; this gives you license to make the case for what the "primary global trade networks" are. Adequate descriptions of how you can apply network metrics, although it's a bit of a laundry list of hopeful results. On the other hand, despite your attempt to limit the impact of your analysis in the last paragraph, I think that this approach may yield some unforeseen results. We'll see!
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