News Analysis: Nuclear deal turns a new page in Iran's history

The nuclear deal Iran and world powers struck Tuesday has signaled Iran's comeback to the world community, paving way for the normalization of its ties with most countries in the world, analysts here said.

The deal ushered in a new era for Iran's relations with the world. "If the deal is implemented, the wall of distrust between Iran and western powers will be gradually demolished," Iranian President Hassan Rouhani said in a live TV speech.

The deal is a landmark in Iranian history, comparable to the seizure of the U.S. embassy in 1979 and Iran-Iraq war in the 1980s in significance, Sadeq Zibakalam, a political analyst, told Xinhua in an interview on Tuesday.

"We are at the beginning of the end of radicalism and extreme anti-western sentiment in Iran," he said.

ROUHANI ACES TEST

With the deal struck, Iranian President Rouhani aced the most important test he faced since assuming office two years ago. "Even those who did not vote for Rouhani will respect him for achieving the impossible," said Zibakalam, who successfully predicted the deal as well as Rouhani's election in 2013.

If the deal gets implemented, Rouhani will almost certainly get reelected for a second term in office. Moderates and reformists are also expected to take over the majority in the Iranian parliament from the hands of hardliners in next year's election, Zibakalam said.

Reformists are set to win all 30 Tehran seats and 70 percent of all seats in Iran's upcoming parliamentary elections early next year, Mohammad Reza Aref, a leader of reformists, said.

As President Rouhani and his political faction further consolidate power, the government is well-positioned to launch its moderate economic and social policies, moving away from radicalism.

Hardline groups who have entrenched interest in the status quo will resist change. But rational, practical and moderate factions will eventually triumph as it is what Iran's future generation wants. It has become increasingly harder to convince young Iranians of radical slogans and extreme hatred toward certain countries, Zibakalam said.

ECONOMIC BOOM

The nuclear deal will also reconnect Iran's battered economy with the international system after years of isolation because of sanctions, Iranian economist Saeed Laylaz told Xinhua.

Banking sanctions cut Iran's banks out of the international financial system, preventing money transference in and out of the country, which according to experts "blocked the circulatory system" of Iran's economy. In addition, restrictions on Iranian oil in the global market cut deep into Iran's revenue.

Iran has seen little to even negative economic growth in the past few years, with rampant inflation and unemployment. However, previous lack of growth may contribute even more to Iran's tremendous untapped pent-up potential when sanctions are removed.

Iranian media expects tens of billions of U.S. dollars of oil revenues, kept abroad because of sanctions, to be repatriated. Others estimate such revenues could be as much as more than 100 billion U.S. dollars.

However, analysts cautioned against over-optimistic hopes for economic miracle.

"With sanctions, Iran was like runners with stones strung on his legs, removing the stones will not give him advantage but only enable him to compete fairly," Zibakalam said.

Laylaz predicted 2 to 3 percent of annual economic growth after sanctions are removed. Other than sanctions, Iran has multiple economic problems such as mismanagement, corruption, lack of productivity and investment, which require proper long-term economic management.

"However, removal of sanctions does not mean we will have the motivation to solve other problems," Laylaz said.

OLIVE BRANCH TO NEIGHBORS

In his speech on the deal, Rouhani reassured other countries in the Middle East of Iran's intentions. Rouhani urged Iran's neighbors to turn a deaf ear to Israel's Iranophobia propaganda, saying Iran wants peace and stability in the region.

Iran has two options, struggle to dominate the region and consequently be surrounded by enemies and endless conflicts. The other option is to extend olive branch and cooperate with its neighbors to solve crisis, which are rife in the region. "Rouhani obviously prefers the second option," Zibakalam said.

Since his election into office, Rouhani has made it his priority to improve relations with Iran's neighbors. Iranian Foreign Minister Javad Zarif even made unprecedented tours to Gulf countries in late 2013 and June last year.

Iran's neighbors will also be willing to work with Iran to solve regional issues through talks and cooperation, Zibakalam said.

Picking on Rouhani's signals for improving relations, Saudi Arabia's Foreign Minister Prince Saud al-Faisal invited Zarif to visit Riyadh last year to disscuss ties. Zarif, however, couldn't make it because he was busy with nuclear talks.

IMPACT ON OIL PRICES

Oil prices are not likely to take a free fall because of the removal of Iran's sanctions, experts and business insiders have said.

Stable oil prices are in Iran's interest in the long run, therefore, Iran is not likely to dump its oil reserves into the market at low prices.

Iran has about 30 to 40 million barrels of oil stored in tankers floating on its shores, a senior analyst at Chinese oil giant SINOPEC's office in Tehran told Xinhua. He spoke on condition of anonymity as he is not authorized to speak on the matter.

Iran now exports less than one million barrels of oil per day. The amount can gradually increase by some 20 to 40 percent in the midterm. But further increase of oil export will require Iran to greatly boost its production, which will take time, he said.

Chinese oil companies operating in Iran welcome the deal and look forward to work with other foreign companies to facilitate project development in Iran, he added.

Laylaz expect the oil price to stabilize between 55 to 66 dollars per barrel because crisis in the oil producing region. However, he believes Iran needs to at least double its oil output in the long term, which will put pressure on the prices.

But Iran first need to attract enough investment to develop its oil fields to boost production. The country's oil sector needs over 250 billion U.S. dollars of investment, which is expected to come at a rate of 3 to 5 billion U.S. dollars a year, even after the sanctions are lifted.

Iran's oil ministry has recently announced that it will introduce new models of development contracts for its energy sector, offering a share of the output as incentive to attract foreign investors.

However, business insiders say such business model are still being discussed and may take months or even longer to come to effect. Endit