Written by Hamid Atharinejad
Introduction
Following rising tensions in Iran’s nuclear file, the possibility of activating the “trigger mechanism” has once again become a focus for some JCPOA member countries. This mechanism, embedded in UN Security Council Resolution 2231, could lead to the automatic reimposition of international sanctions against Iran. This article aims to provide a clear picture of Iran’s economic future by focusing on the economic implications of this development.
What is the trigger mechanism?
The trigger mechanism, or Snapback, is a clause in Resolution 2231 that allows for the reinstatement of all pre-JCPOA UN sanctions if any party fails to comply with its obligations—without the need for a new vote in the Security Council.
Upon activation of this mechanism, all sanction waivers granted to Iran under the JCPOA will be revoked, and arms, banking, energy, transportation, insurance, foreign investment, and technology sanctions will be reinstated.
Economic Consequences of Activating the Trigger Mechanism
1. Impact on Foreign Trade
If UN Security Council sanctions are reinstated, Iran will face even more extensive restrictions than during the maximum pressure period.
Exports of oil, gas, and petrochemicals will decline further; international insurance and transportation will be disrupted.
Non-oil exports will also be harmed due to difficulties in banking transactions and transportation.
The import of strategic goods, machinery, medicine, and raw materials will face difficulties, and transaction costs will increase.
2. Currency Market and Rising Inflation
The reinstatement of sanctions will lead to a sharp decline in the country’s foreign currency revenues. This decrease, both in real terms and psychologically, will cause a surge in exchange rates, weakening of the rial, and heightened inflation expectations. Under these circumstances,
Prices of imported and intermediate goods will increase.
Cost pressures on production will intensify, leading to a new wave of structural inflation.
3. Budget Deficit and Financial Pressure on the Government
Declining oil revenues and disruptions in exports will create a revenue shortfall for the government.
In the absence of oil revenues, the government will be forced to increase borrowing from the central bank or sell assets.
این وضعیت، منجر به رشد پایه پولی، افزایش نقدینگی و تشدید تورم می‌شود.
At the same time, the government’s ability to fund development projects, welfare programs, and support for vulnerable groups will diminish.
4. Capital Flight and Decline in Investment
With increased political and economic risks, capital flight from the country intensifies, and domestic investors lose their willingness to engage in productive activities.
Foreign direct investment (FDI), which was already very limited, will effectively come to a halt.
There will be an increase in the transfer of capital to safe assets such as real estate, foreign currency, and gold.
Large-scale projects in oil, gas, petrochemicals, and industry will be suspended or halted.
5. Pressure on the Banking and Financial System
Iranian banks will be re-listed on international sanctions, resulting in severed connections with SWIFT, correspondent banks, and global financial institutions.
Banking transaction costs will increase, and the efficiency of the monetary system will decline.
Currency smuggling, informal remittances, and alternative transfer systems will replace transparent channels.
Impact on Different Social Groups
The consequences of these sanctions are not limited to the macro level; their effects are also reflected in the daily lives of people:
Severe inflation of consumer goods, reducing the purchasing power of middle and lower-income groups.
Unemployment in vulnerable industries such as automotive, textiles, pharmaceuticals, steel, and construction.
Worsening inequality and increasing poverty, especially in underprivileged areas.
Outlook and Likely Scenarios
Sanctions Scenario and Economic Consequences
بازگشت کامل تحریم‌های سازمان ملل فعال‌سازی رسمی و اجرای بدون مانع کاهش شدید صادرات، رشد تورم، رکود عمیق فعال‌سازی نمادین با وتوی چین/روسیه فشار روانی بالا، اجرا ناقص نوسان بازارها، کاهش سرمایه‌گذاری، بی‌ثباتی
Renegotiation and de-escalation, revival of a limited type of agreement, gradual easing of pressure, partial return of stability
Conclusion
The activation of the snapback mechanism could push Iran's economy into one of the most risky periods in recent decades. With a sharp reduction in access to foreign resources, severed international financial connections, inflationary pressure, and a government budget crisis, all economic indicators will experience significant strain.
This situation requires that, alongside diplomatic efforts to manage the crisis, the government implement clear, realistic, and domestically-based strategies in the economic, currency, and budgetary fields.
Sources
International Monetary Fund (IMF) reports
Analytical report by the World Bank on Iran
Central Bank Economic Bulletin
Iran Customs Trade Data
Analyses by independent economic experts
English 
Persian