By Vivienne Walt
May 9, 2018

Late Tuesday night in Tehran—the capital of what President Trump calls “the world’s biggest state sponsor of terrorism”—there was one sure way to catch the president’s announcement that he was withdrawing the U.S. from the Iran nuclear deal: Fox News.

That’s where at least one startup entrepreneur in Tehran followed the president’s declaration, tuning into the conservative-leaning network’s livestream service on the Internet, as many of Iran’s 80 million people regularly do in order to follow American news. The announcement, while a blow, was hardly unexpected. “This is nothing new to us,” Mohammadreza Azali, 30, co-founder of TechRasa, a startup website and event organizer in Tehran, told Fortune by phone on Wednesday. “We have been under sanctions for the past 40 years, and we survived. So it is nothing new for Iranians to stand up against these sanctions.”

The shock and frustration among Iranians after Trump’s announcement was a contrast to the optimistic atmosphere when Fortune traveled to Tehran two years ago. At that time, Iranians spoke of a burst of new business energy, after the nuclear deal promised a roll-back of Western sanctions and brought a flood of interested companies to the country to look at opportunities.

At least for now, there is fighting talk among some in the country as they absorb Trump’s decision to reimpose sanctions against Iran, nearly three years after former President Barack Obama, along with E.U. countries, China, Russia and the U.N., signed an agreement with the Iranian government to halt its nuclear enrichment program until 2025. The deal, signed in July 2015, promised to roll back significant economic sanctions—allowing Iran to sell its oil internationally, for example, and not punishing multinationals that signed contracts with Tehran.

Since then, however, several of those promises failed to materialize, as conservative lawmakers in Washington balking at lifting sanctions. “As soon as Trump came to power, the U.S. sanctions did not fully lift,” says Vahid Jozi, an Iranian-Canadian tech entrepreneur in Toronto, who recently returned from Tehran, and is involved in creating startups in Iran. “For Iran, nothing has changed.”

Instead, Jozi says that after decades of isolation from the U.S., Iranians have pieced together workarounds, such as building internet applications platforms to replace Apple’s App Store. “Every time we have needed something that was not available, we built it,” Jozi says, when reached by phone in Toronto. “The potential upside of business ventures in Iran is still extremely high.”

Yet few doubt that Trump’s decision to pull out of the Iran deal will have a major impact on the country’s economy.

“Everyone is worried, from the taxi driver on the street to corporate CEOs,” says Ardavan Amir-Aslani, an international lawyer with offices in Paris and Tehran, who represents major companies weighing business deals in Iran. “Companies looking at Iran will not take the risk of suffering consequences in the U.S. in order to go into Iran,” he said on Wednesday from Tehran. “So we are back to stage one before the nuclear agreement, and probably even worse.”

Amir-Aslani fears that the economic effects of Trump’s decision will likely embolden conservative hardliners, who from the start criticized the more moderate President Hassan Rouhani for cutting a deal with Western leaders. For years, they warned that the U.S. was untrustworthy; now their argument appears to have won out, he says. “ All will render the Rouhani government weaker and emaciate its position,” he says.

The hopes for massive investment were high at one point. McKinsey Global Institute estimated that if Iran sanctions were lifted, the country could increase its GDP by $1 trillion and create nine million new jobs by 2035.

Instead, only a tiny trickle of deals have been signed since the 2015 agreement, as major global companies waited for assurances that the U.S. would not reimpose sanctions, and that they could operate in Iran without facing American sanctions. Such assurances never came.

Europe’s Airbus Group, for example, has delivered only three planes, part of a multi-billion-dollar deal it had signed to replace some of the aging aircraft of Iran Air’s fleet. Boeing CEO Dennis Muilenberg told investors last month that the company had for now shelved a 110-plane deal with Iran “in line with the U.S. government processes.”

Those “processes” are now clear. Shortly after Trump’s announcement, U.S. Treasury Secretary Steven Mnuchin said that Boeing and Airbus would violate U.S. sanctions if they continued operating in Iran. “The existing licenses will be revoked,” he said.

Amir-Aslani believes Trump’s withdrawal will hit Iran’s economy hard. “The government is trying downplay the matter, saying it’ll continue with EU,” he says. “But people understand that the economy is going to go down the drain.”

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