Sanctions go, but Iran must wait for economic recovery

Talks with the P5+1 powers -- Britain, China, France, Russia and the United States plus Germany -- started in September that year and an interim agreement two months later gave Iran some sanctions relief in exchange for curbs on its nuclear activities.

Those steps helped Iran exit two years of recession, with three percent growth last year.

Rouhani's government, which wants foreign investment, has also managed to bring inflation down to 15 percent from 42 percent, helping stabilise Iran's currency the rial, which had previously lost two thirds in value.

But without a surge in funds and a new economic push those gains are in jeopardy, according to David Ramin Jalilvand of the European Policy Centre in Brussels.

"It will take at least until early 2016 before the energy-related sanctions are lifted," he said, noting the need for UN nuclear monitors to verify Iran has met its commitments.

Foreign companies may be reluctant to invest in Iran, given the risk that sanctions may be re-applied if Tehran is deemed to have breached its promises.

Rouhani admitted in June that "weeks or even months will pass" between the signing of the agreement and sanctions relief.

Iran's energy sector is considered a juicy target.

With the fourth largest oil reserves and the second in gas, Iran has the biggest combined energy deposits in the world.

The oil ministry has announced it intends to attract up to $100 billion of foreign investment to modernise the sector, which has been underdeveloped for a decade.

Production has dropped below three million barrels per day (bpd) since 2012, while exports almost halved to 1.3 million bpd -- against 2.5 million bpd in 2011.

Iran could produce an extra million barrels per day in the six months following the end of sanctions, Oil Minister Bijan Zanganeh has said.

And by changing the structure of its oil contracts, the ministry is trying to lure back oil majors -- which sustained big losses by having to leave.

Dutch-Anglo energy giant Shell and Italy's ENI have both sent envoys to Tehran for talks.

But finalising the new contracts -- the process started after Rouhani's election -- has been a drawn-out affair.

An unveiling of terms in London in September has been deferred until December.

The nuclear agreement may also spur interest in Iran's auto sector.

The French manufacturer PSA Peugeot Citroen which in early 2012 quit Iran, its second largest market, is discussing a renewed partnership with IranKhodro.

But for Mohammad Gholi Yousefi, an economics professor at Allameh Tabatabai University in Tehran, foreign investment alone will not suffice.

Iran "needs fundamental economic reforms" to boost production and avoid another crisis, he said, referring to the need to root out corruption and mismanagement.