Written By Suraj Rangnath
July 14, 2015, marked a historic day when Iran and six other world powers reached a deal that, on the surface, seemed simple: Iran would limit its nuclear program and, in return, sanctions would be lifted on the country. The key parties that brokered the deal were Iran, the European Union (E.U.), and the P5+1 (China, France, Russia, the U.K., the U.S., and Germany). The Joint Comprehensive Plan of Action (JCPOA) was crafted to manage the deep mistrust between the parties involved; the deal was more than just a diplomatic handshake. Through the JCPOA, Iran vowed not to pursue nuclear weapons. It was regulated through caps on uranium enrichment, reductions in uranium stockpiles, and limitations on the number of centrifuges it could own. Additionally, the International Atomic Energy Agency (IAEA) and a joint commission composed of the signatories were tasked with monitoring Iran to verify compliance. This “trust-but-verify” approach was embedded in the JCPOA to address prevalent cooperation problems—the uncertainty of behavior and enforcement challenges—through institutional features such as delegated monitoring, formal punishment provisions, and phased rewards. This deal was not just a nuclear agreement, it was a much-needed economic lifeline for Iran.
Before the JCPOA, Iran’s economy was under severe strain due to global sanctions from key actors such as the U.N., the E.U., and the U.S. Iran’s most important export, oil, contributes to 85% of the Iranian government’s revenue, so sanctions heavily affected the state (Strait of Hormuz – Iran and Oil, n.d.). The U.S was the first to ban the import of Iranian oil through Clinton’s Executive Orders in 1995 (Islam, 2024). Similarly, the U.N. and the E.U. tightened sanctions by restricting Iran’s access to the international financial system, executing the UN Resolution 1929 in 2010, and the E.U. Oil Embargo of 2012. Crude oil exports decreased by 50% from approximately 2.5 million barrels to about 1.2 million barrels per day in 2011, and inflation rates soared to a peak of 45.1% in 2012. This eventually led to a currency devaluation as the Iranian Rial lost more than half its value, and the unemployment rate soared to 12% (Brief History of US Sanctions on Iran, 2023). These mounting economic pressures led to a significant shift in Iran’s strategy, leading to its acceptance of the JCPOA and, in turn, giving way to economic optimism within the nation.
The JCPOA took about 20 months of planning, negotiations, and amendments to pass due to the collective action dilemma and mutual mistrust. The agreement delegated monitoring to the IAEA to tackle the mistrust between both actors (Koremenos, 2016). Iran agreed to daily access to the IAEA at secure nuclear enrichment facilities such as Natanz and Fordow to regulate centrifuge storage and uranium drilling and mining operations (U.S. Department of State, 2015). After the JCPOA was signed, Iran experienced an initial rebound as oil exports boomed (more than 2.5 million barrels per day), leading to a GDP growth of 7.5%.
The JCPOA was a unique agreement as it included a reward system structured around the novel concept of salami slicing. This technique was implemented to break down the sanction relief piece by piece rather than ending it all. This approach ensured that if Iran complied, the West would too, while simultaneously reducing risks through cooperation in carefully monitored phases (U.S. Department of State, 2015). The monitoring was conducted by the IAEA, and once verified, the corresponding benefits, such as oil exports or access to other markets, were granted. This system can also be described as a win-win outcome, as the P5+1 could secure Iran’s nuclear compliance through ongoing assurances, while Iran gradually regains its economy. Salami-slicing toughened the ideas of monitoring and enforcement provisions, as rewards are not given without proof, once again reinforcing the trust-but-verify theory (Koremenos, 2016). However, Iran’s optimistic future proved fleeting as the collapse of the JCPOA caused sanctions to return once again, sending Iran’s economy into another period of hardship and isolation.
In 2018, the United States withdrew from the JCPOA, triggering the return of harsh sanctions. The US claimed that the agreement did not provide adequate scrutiny over Iran’s nuclear proliferation, and the idea of Trump’s “Better Deal” spread, arguing that the JCPOA was fundamentally flawed (Beauchamp, 2018). Though the IAEA claimed Iran was compliant, the sanctions were reimposed, and the JCPOA collapsed. The JCPOA failed because of the difficulty in crafting an agreement when several underlying cooperation problems between Iran and the P5+1 were prevalent. The most immediate problem was the uncertainty of behavior as the West was unsure if Iran would comply with the regulations (Koremenos, 2016). There were a staggering number of mandates, such as the limits on enriching uranium, the uranium stockpile, and the number of centrifuges, all while making sure the nuclear program was to be maintained within peaceful limits. The sheer oversight needed to head such a hefty task was a clear barrier, as information asymmetries made accountability harder to achieve.
Additionally, if Iran violated the terms of the agreement, a significant concern was how to punish the state. Usually, the provision would have to be embedded in the arrangement itself because there is no global authority capable of punishing a single state. Punishment provisions are rare in international agreements due to escalation risks; however, due to the severity of the situation—nuclear proliferation—the provisions were to be included (Koremenos, 2016). The JCPOA’s punishment provisions enforced compliance in the agreement, citing how consequences would be issued if violations occurred. This is evident in the snapback mechanism, a specific clause that allows any party of the P5+1 to solely reimpose the UN sanctions if they believe Iran is not complying. This mechanism ensured that any relief given was fragile, as the economic uncertainty led foreign investors to avoid long-term commitments. Iran struggled to justify the cost of compliance, weakening their stake in the JCPOA, ultimately leading to failed negotiations that led to the agreement’s demise.
Post U.S. withdrawal and the collapse of the JCPOA, Iran’s economy has suffered severely. The inflation returned to heightened rates of 35% in 2025, causing the Rial to depreciate significantly; it is now one of the least valuable currencies in the world (Galestan, 2025). The unemployment rate skyrocketed, with 50% of Iranians living under the poverty line, resulting in massive social unrest. Since the demise of the JCPOA, Iran’s nuclear capabilities have only increased as its total enriched uranium stockpile has reached 6,604 kilograms, over 22 times the JCPOA limit. They have installed advanced centrifuges at Natanz and Fordow, further improving their nuclear arsenal with enhanced facilities. In April 2025, Iran and the United States began informal talks in Oman discussing Iran’s weaponization of its nuclear program. Iran refuses direct discussions under the current US sanctions. Ultimately, Iran’s economy is the most fragile it has ever been. Its government continues expanding nuclear proliferation, refusing to meet the demands of its people. The JCPOA was a promising novel attempt at how international agreements can be structured to solve mistrust issues rooted in cooperation issues. Though uncertainty of behavior and the absence of a global enforcer, the deal was engineered to delegate monitoring, formal enforcement provisions, and a reward system. Through tools such as the IAEA conducting in-person inspections, the snapback mechanism, and salami slicing reward phasing, the JCPOA addressed all cooperation problems through its masterful design provisions.
In conclusion, the deal’s failure illustrates how fragile international agreements are. Iran found it difficult to justify compliance with the JCPOA without stable benefits, which increased tensions. On the other hand, the US did not believe there was enough monitoring of Iran through the JCPOA, which resulted in their withdrawal from the agreement. The failure of both sides eroded the once hopeful deal and now serves as a cautionary tale in international economics that sanction relief, once offered, must be safeguarded to uphold trust and ensure cooperation.
Citations
Beauchamp, Z. (2018, May 8). Trump’s Withdrawal From the Iran Nuclear Deal, Explained. Vox. https://www.vox.com/world/2018/5/8/17328520/iran-nuclear-deal-trump-withdraw
Brief History of US Sanctions on Iran – Center on Global Energy Policy at Columbia University Sipa: CGEP. Center on Global Energy Policy at Columbia University SIPA | CGEP. (2023, January 26). https://www.energypolicy.columbia.edu/publications/brief-history-us-sanctions-iran/
Galestan, M. (2025, March 18). Iran’s economic collapse and social unrest looming in 2025. NCRI. https://www.ncr-iran.org/en/news/economy/irans-economic-collapse-and-social-unrest-looming-in-2025/
Islam, M. T. (2024, April 17). Timeline: US sanctions on Iran in the last 45 years. The Business Standard. https://www.tbsnews.net/world/timeline-us-sanctions-iran-last-45-years-830006
Koremenos, B. (2016). The Continent of International Law: Explaining Agreement Design. Cambridge University Press.
Strait of Hormuz – Iran and Oil. The Strauss Center. (n.d.). https://www.strausscenter.org/strait-of-hormuz-iran-and-oil/
U.S. Department of State. (2015, July 15). Joint Comprehensive Plan of Action (JCPOA). https://2009-2017.state.gov/e/eb/tfs/spi/iran/jcpoa/
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