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From Iran to Nigeria, cheap oil means perilous politics

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One of Donald Trump’s stock campaign lines is that the Iran nuclear agreement was “terrible.” I’m beginning to wonder whether that’s true, but from the other side. Iran has ended up with a much worse deal than it expected. Remember, Tehran entered the negotiations in the heady days of high oil prices. As the Iranians are discovering, it’s a new world out there.

Put yourself in Iran’s shoes. The Islamic Republic got serious about negotiating and signed an interim agreement in 2013. That year, oil was hovering around $100 a barrel. Iran’s great rival, Saudi Arabia, was thriving, with an economy that had grown about 6 percent in 2012. Spending lavishly at home and abroad, its 2013 budget had swelled, up 19 percent.

Iran, meanwhile, was isolated with a shrinking economy. The real prize for Tehran was not the return of its funds frozen in banks in Asia and Europe due to international sanctions (about $100 billion). It was finally getting back into the markets as the second largest oil producer in the Middle East and reaping the riches of the boom. In 2010, Iranian officials were predicting that by 2015, Iran’s oil and gas revenue could reach $250 billion annually. That’s what they were banking on when making their concessions.

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