How Iran’s sovereign fund was depleted

In a letter published Tuesday addressed to the chair of the Expediency Council Sadeq Amoli Larijani, they warned against endorsing the bills “until the threat of the snapback mechanism is fully lifted.”

Snapback refers to the automatic reimposition of UN sanctions under the 2015 nuclear deal framework. The UN snapback mechanism is expected to expire in October 2025—unless a party triggers it beforehand.

Their appeal signals deep resistance in conservative circles to legislation seen as necessary to remove Iran from the FATF blacklist.

The CFT targets terrorism financing while the Palermo convention tackles transnational crime. Their passage has stalled since parliament passed them with reservations.

Larijani recently suggested conditional approval was possible, citing parliamentary safeguards. But MPs insisted even a conditional endorsement could expose Iran to economic penalties.

The optimism stems from what appears to be a shift in Supreme Leader Ali Khamenei’s position—evidenced by his authorization of earlier negotiations in Muscat—and US President Donald Trump’s insistence that Iran must either accept a deal or face serious consequences. Notably, Khamenei made no mention of the talks during his meeting with military commanders following the Oman round, echoing his silence on other contentious issues such as the mandatory hijab in recent months.

“God willing, the negotiations will move forward in the right direction, public anxiety will ease, and the country can return to a state of calm so businesses can operate with more motivation and confidence,” said Mahmoud Alavi, special aide to President Masoud Pezeshkian and former intelligence minister, on Tuesday. Alavi added that a deal seems plausible because Trump, now positioning himself for the international stage, may prefer being remembered as a “peace hero” rather than a “war hero.”

The former head of Iran’s Atomic Energy Organization, Ali-Akbar Salehi, expressed similar optimism. He said both Tehran and Washington appear determined to reach a positive outcome and dismissed the likelihood of military conflict, adding that Trump has no interest in engaging the US in another war.

Azar Mansouri, head of the Reform Front, echoed this hopeful sentiment in a post on X, describing a “general feeling of optimism” within society. She emphasized that the talks were being coordinated by “all pillars of governance”—a veiled reference to Khamenei and his close circle—and described the process as constructive so far.

Abbas Golrou, a member of the parliament’s National Security Committee, also pointed to consensus within the political establishment. “The entire sovereign system has endorsed the talks,” he said, again alluding to Khamenei’s involvement. “This is the right thing to do.”

In interviews with the reformist daily Ham-Mihan, several former diplomats expressed cautious hope. “This may be the first time we can [realistically] hope for all sanctions—not just nuclear-related ones—to be lifted if the negotiations fully succeed,” said Qasem Mohebali, former Director General of the Foreign Ministry’s Middle East and North Africa Division.

Still, concerns remain. Mansouri warned of potential disruption from hardline factions with significant access to state media and public platforms such as Friday prayer pulpits.

The influence of ultra-hardline opponents of US engagement, including former nuclear negotiator Saeed Jalili and the Steadfastness Front (Paydari Party), appears to be waning amid internal divisions. Even among some hardliners, resistance to negotiations has softened, as outright opposition could now be interpreted as defiance of Khamenei’s authority.

Facing a deepening economic crisis, President Pezeshkian has publicly acknowledged that sanctions must be lifted for any meaningful recovery. As a result, many ordinary Iranians are also pinning their hopes on the success of the talks.

“People are hopeful, cautious, angry, and anxious all at once—but I think most of them are taking the possibility of a deal very seriously,” said Amir-Hossein, a Tehran-based businessman, in an interview with Iran International.

“You can see it in the market,” he added. “People are starting to sell the dollars they were holding onto, which shows they believe the rial might strengthen if sanctions are lifted," he said, adding that in his view Khamenei has realized that he has no option other than capitulating to save himself and the Islamic Republic from annihilation.

Indeed, the Iranian rial has appreciated in recent days, and the main index of the Tehran Stock Exchange has rebounded sharply—surpassing its all-time high from January after months of decline.

Hardliners in Tehran have been working to frame the opaque, closed-door meeting—described as positive by both sides—as a political win for the Islamic Republic. Some have even gone so far as to label it a victory.

The following day, Javan, the IRGC-affiliated daily, declared: "Iran is the winner of the negotiations, with or without an agreement." The paper described the meeting as "a show of Iran's power against the United States' helplessness."

Javan highlighted the breaking of the deadlock and the promise of further negotiations as signs the process would ultimately benefit Iran. It claimed Iran had dictated "all of its preconditions, including the venue, timing, and agenda" to the United States.

This triumphant narrative, however, stood in contrast to Araghchi’s own statement that the talks focused solely on nuclear issues. Meanwhile, Reuters reported that the negotiations aimed to "de-escalate regional tensions, facilitate prisoner exchanges, and reach limited agreements to ease sanctions in exchange for controlling Iran's nuclear program."

At the same time, some hardliners sought to emphasize Supreme Leader Ali Khamenei’s authority by noting that he had personally authorized the meeting.

However some opposition to negotiations was evident among ultra-hardliners. They appeared to highlight Khamenei's role with the possible intent of assigning blame to him should the renewed diplomatic engagement fail.

Hossein Shariatmadari, editor of the Khamenei-linked Kayhan newspaper, wrote: "The indirect talks with the United States could not have taken place without Khamenei's permission. If he had not approved them, he would certainly have blocked the meeting."

Shariatmadari added: "The horizon is not clear, and Iran must think of a Plan B." He dismissed US threats of military action as "a bluff," and claimed that "the draft Witkoff handed to Araghchi included no such thing as dismantling Iran's nuclear establishments or the possibility of a military attack."

Outspoken ultra-hardliner lawmaker Hamid Rasaei said in parliament on Sunday morning: "We all know that the Supreme Leader believes that the United States is not trustworthy and that negotiations with Washington are useless." He added, however, that "The Leader has authorized the talks to prove to some Iranian officials that the US breaks its promises and will put forward illogical demands."

Meanwhile, another ultraconservative MP, Mahmood Nabavian, vice-chairman of the Iranian parliament's national security committee, claimed that Trump initially wanted US Secretary of State Marco Rubio to participate in the talks with Araghchi. "But we insisted that Witkoff should go to Oman instead," he said, adding: "Trump accepted all of Iran's conditions regarding the format of the talks."

Saeed Haddadian, a political aide to parliament speaker Mohammad Bagher Ghalibaf, also warned against excessive optimism about the negotiations with Washington. He suggested that Trump might not even support the approach taken by his own special envoy.

"If you show weakness in front of a thug such as Trump," Haddadian said, "you are likely to end up like Ukrainian President Zelensky. You will be humiliated, and you will not get any results."

In a separate development, Mehdi Fazaeli, a member of the Supreme Leader's office staff, denied claims that senior Iranian officials had pressured Khamenei to shift his position in response to Trump’s letter or to adjust his overall approach to the talks.

Early on Sunday, dissident lawyer and civil activist Hassan Younesi posted on X that he had heard “some groups and organizations stationed at the embassy building … have been ordered to evacuate it.” The post quickly drew attention, partly because Younesi’s father, Ali Younesi, served as intelligence minister under reformist President Mohammad Khatami.

Hours later, however, Younesi deleted the post and published a follow-up, saying he had been contacted by what he called “responsible authorities” who denied the reports and said his post had created the mistaken impression that preliminary steps were being taken to prepare the embassy for a handover.

Such deletions by political activists and media figures—often under pressure from security agencies—are not uncommon in Iran.

Some users suggested that a potential handover could pave the way for American investments in Iran, especially after President Masoud Pezeshkian commented recently that Supreme Leader Ali Khamenei had “no objection” to American investors entering the Iranian market.

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“Why would Trump push for direct talks unless it’s about reopening the embassy?” one user posted. “How else can US companies invest here?”

Former Israeli official and spokesperson Ben Sabeti also weighed in on X: “Iran makes cheap gestures toward @POTUS for the success of negotiations? There are reports about the US Embassy in Tehran being vacated for the first time since 1979. Is the regime also ready to make nuclear concessions?”

Meanwhile, Iranian media—highly constrained by censorship—picked up Younesi’s now-deleted post, but offered minimal commentary. “If true, this is a very meaningful step,” read a brief article titled What’s the story of the evacuation of the US Embassy building? published by Rouydad24 on Sunday. Fararu, another popular online outlet, published a gallery of recent photos showing foreign tourists visiting the former embassy, under the headline US Embassy in Tehran Draws Attention Again on Day of Talks—without offering any further remarks.

The US embassy takeover forty-six years ago

Islamist students occupied the embassy in November 1979. The students held tens of American diplomats and other staff hostage for 444 days. The embassy compound, which the students called “Den of Spies”, however, has been used as a base by IRGC-affiliated groups, including the Basij militia and its affiliated Daneshjoo (Student) News Agency.

Other parts of the building were converted into a museum and opened to the public in recent years. The Swiss embassy has represented US interests in Iran in the past forty-six years.

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Calls for normalization of relations and re-opening of the embassy

In recent years, various Iranian political and media figures have supported the idea of restoring diplomatic ties with the United States and returning the embassy building after decades of occupation.

Most recently, reformist politician and cleric Mohsen Rohami suggested in an interview published by Khabar Online that Iran and the United States could re-open their embassies and that higher officials than foreign ministers could sit at the negotiation table.

“This will have a positive psychological impact, besides its practical outcome, on our society and neighbors,” Khabar Online on Sunday quoted Rohami, who served as the legal deputy of Pezeshkian’s campaign last year, as saying.

Back in August 2024, Mehdi Ghazanfari, head of the National Development Fund, called for the reestablishment of consular relations with the United States. He controversially blamed the Communist Tudeh Party for provoking the 1979 embassy seizure and urged the Pezeshkian administration to act fast before what he called his political rivals' honeymoon with him ended.

His suggestion was echoed by some other politicians and public figures including Mohammad-Hossein Khoshvaght, a former official of the Islamic Guidance Ministry and managing director of Fararu. Khoshvaght has close ties to Khamenei’s household through the marriage of his sister to Khamenei’s eldest son, Mostafa.

Khoshvaght contended that normalization of relations could benefit both countries. "An Iran that has normal relations with the United States is a nightmare for Russia and Israel; for Putin, an Iran with nuclear weapons is less dangerous than an Iran that has normal relations with the United States!" he wrote on X.

In a 2015 interview with The Guardian, Akbar Hashemi Rafsanjani said reopening the embassy was “not impossible” if both sides changed their behavior. Similarly, in a 2014 interview with Swiss TV during the Davos Forum, President Hassan Rouhani said animosity with the United States could eventually turn into friendship.

By publicly extending an olive branch to American investors, Iranian officials maybe testing Washington’s appetite for a broader détente—one that moves beyond nuclear containment toward economic normalization. Whether this message reflects a genuine shift or strategic posturing, and whether it leads to meaningful progress, will likely depend on what both sides are prepared to offer in talks that began in Oman on April 12.

However, a wide array of US sanctions, combined with deeply unfavorable conditions inside Iran, would make investment by the US—or any developed country—extremely difficult.

A bigger deal than 2015?

Recent comments by President Masoud Pezeshkian and Foreign Minister Abbas Araghchi suggest that Iran is seeking more than relief from secondary US sanctions—reimposed after Washington’s 2018 exit from the JCPOA—and is also pushing for the removal of primary sanctions that have long restricted American trade and investment in Iran.

In May 2018, President Donald Trump unilaterally withdrew the United States from the JCPOA nuclear agreement between Iran and world powers and reimposed the secondary US sanctions that had been lifted under the deal. These sanctions aim to penalize any third parties breaking US restrictions on Iran.

Under current conditions, with both primary and secondary sanctions in place, no US company or individual is permitted to invest in Iran. Any such investment would only be possible after a nuclear agreement is reached and Iran begins implementing its commitments. Washington is unlikely to lift all sanctions upfront without Tehran first dismantling at least part of its uranium enrichment infrastructure and reducing or transferring its stockpile of highly enriched uranium.

What Iranian officials said about US investment

In October, President Pezeshkian said Iran needs at least $100 billion in foreign investment to reach an annual economic growth rate of eight percent. He emphasized that improving foreign relations is key to attracting such investment. Iran has averaged less than 3% annual growth throughout the 46 years of clerical government.

In a more pointed message this week, Pezeshkian said that Supreme Leader Ali Khamenei has “no objection to American investors” entering the Iranian market. “Let them come and invest,” he said. “But we oppose plotting, regime change efforts, and destructive policies. Iran is not a place for conspiracies or espionage followed by assassinations. [All] investors are welcome to invest in our country.”

Foreign Minister Abbas Araghchi reinforced this line in a Washington Post op-ed, arguing that the onus is on Washington to allow American companies to tap into what he described as a “trillion-dollar opportunity” in Iran, though he did not offer specifics.

While Khamenei has not commented on the talks or investment prospects, as Iran’s top decision-maker on foreign policy, he has authorized indirect negotiations with Washington and is expected to be closely involved in determining their scope and terms.

What type of US sanctions on Iran are in place?

After the 2015 nuclear deal the US lifted most of nuclear-related secondary sanctions. However, the primary US sanctions—which date back as far as the 1980s and ban nearly all trade and financial dealings between US persons and Iran—remained in force even after the deal.

These sanctions made it virtually impossible for American companies to invest in or trade with Iran, even during the brief JCPOA implementation period, unless they obtained special licenses from the US Treasury’s Office of Foreign Assets Control (OFAC).

For instance, Boeing was able to sign an agreement with Iran in 2016 to sell commercial aircraft after receiving a special OFAC license under the Obama administration. The company could not have even provided maintenance services without such an exemption under regulations like the Iranian Transactions Regulations (ITR).

Much to the dismay of Iran, Boeing’s aircraft were never delivered, and the license was revoked after the Trump administration exited the JCPOA.

Similar restrictions under the Export Administration Regulations (EAR), enforced by the US Commerce Department, also prevented non-US companies like Airbus from selling aircraft to Iran if they contained more than 10 percent US-origin components—unless licensed by OFAC.

Domestic impediments to investments

Beyond sanctions, one of the most significant barriers to American and broader international investment in Iran is the structure of its state-controlled economy. The system is riddled with opaque regulations, inconsistent enforcement, and non-transparent business practices. Key sectors are dominated by economic conglomerates affiliated with Supreme Leader Ali Khamenei and the Islamic Revolutionary Guard Corps (IRGC), creating an uneven playing field and discouraging foreign entrants.

Iran’s economy is effectively closed, especially when it comes to consumer-facing industries. Even domestic investors face serious risks due to unclear rules, political interference, and limited legal protections. While foreign companies can occasionally secure contracts for state-backed infrastructure projects—such as revamping oil and gas facilities—these are tightly controlled by government-linked entities and offer little access to Iran’s broader market. This model does not allow for the kind of real, diversified investment that would benefit Iran’s private sector or broader population.

A nuclear agreement, while potentially reducing the immediate risk of conflict and unlocking limited economic engagement, is not enough to attract serious Western investment. For that to happen, Iran would need to implement deeper reforms. This includes recalibrating its foreign policy, scaling back the IRGC’s grip on the economy, and creating a more transparent and rules-based business environment. Without such changes, the prospect of meaningful, long-term foreign investment will remain remote.