The Iranian Nuclear Agreement: What Does it Mean for US Diplomacy and International Trade in the Middle East?

Photo by United States Department of State (Public Domain)

On April 2^nd, the members of the P5+1, the European Union, and Iran reached an agreement on the framework for a Joint Comprehensive Plan of Action (JCPOA) regarding Iran’s nuclear program, outlining a set of parameters for a final agreement to be drafted by June 30^th. Although a final comprehensive deal palatable to all parties will prove to be difficult, this framework agreement marks a milestone achievement in negotiations that have spanned over a decade. The nuclear accord faces resistance, however, by lawmakers in both the US and Iran, as it would require a broad leap of faith between two countries that have been at odds for over thirty years and have competing national interests in the region. An agreement with Iran would also call into question existing US alliances in the Middle East and lead to increased Russian influence in the region.

News of the agreement evoked mixed reactions from US lawmakers, with the Senate drafting a bipartisan bill that would allow Congressional oversight on the final deal. President Obama agreed to sign the existing bill, allowing a hold on lifting sanctions during a 30-day congressional review of the final accord. Nevertheless, both President Obama and Secretary of State John Kerry stated that they would not allow Congress to stand in the way of the best deal possible.

Many US lawmakers are hesitant to believe that the Iranian government will abide by its obligations under any agreement regarding the nuclear program, and their mistrust was exacerbated by the discrepancies between the fact sheets issued by the US and Iranian governments regarding the framework agreement.

The US fact sheet states that Iran will reduce the number of installed centrifuges to 6,104 IR-1s (Iran’s first-generation centrifuge) to lengthen Iran’s breakout time to one year (versus 2-3 months). Furthermore, IAEA inspections would be conducted on all of Iran’s nuclear facilities, and access would be provided for UN inspectors to examine suspicious sites and investigate any allegations of covert facilities. Should the IAEA confirm that Iran has held up its end of the final comprehensive deal, US and EU nuclear-related sanctions would be suspended. The framework also references a restructuring of UN Security Council resolutions in order to lift the past resolutions regarding the nuclear issue. Yet, other US sanctions and UN resolutions related to terrorism, ballistic missiles, human rights violations, and cargo inspections would remain in force.

Contrary to the US fact sheet, Iran’s fact sheet states that sanctions will be lifted at the time of the agreement, Iran will keep operating 10,000 centrifuges and not allow inspections of military sites, the Fordow site will continue enrichment activities, and the limits on the nuclear program will remain in effect for only 5 years.

Iranian President Hassan Rouhani acknowledged that drafting the final deal would prove to be the true hurdle of the negotiations, but highlighted that the advancement of negotiations to this late stage reflected an international commitment to the process. Meanwhile, other Iranian politicians expressed their frustration with the reaction from Congress and Iran’s lack of recourse should the P5+1 fail to meet their obligations under the deal. Analysts in the US remain optimistic that all parties will come to a deal through “creative negotiations” and speculated that the Iranian fact sheet was prepared by Iranian hardliners in response to the proposed US Congressional review of the agreement.

The framework agreement currently enjoys broad support from Iranian civil society as it promises the possibility of sanctions relief and economic growth. Sanctions relief should stabilize the foreign exchange rate and inflation, boost foreign private sector investments and domestic job creation, and increase foreign trade as businesses anticipate a sharp rise in economic and financial activity. Resuming oil production and exports will increase Iran’s hard currency revenues and should theoretically also revitalize its economy. This will ideally entrench the power of Iran’s moderates upon whom rest any hope of positive US-Iran relations in the coming years.

The prospect of a nuclear deal seemingly threatens Saudi Arabia, who believes that positive US-Iranian diplomatic relations and sanctions relief will lead to Iranian crude exports driving down oil prices and revenues, and fears that its long-standing alliance with the US will be in jeopardy. A change in oil prices is unlikely, however, as analysts believe that, while Iran should be able to export up to 500,000 barrels of crude oil per day by early 2016, the steady increase in global demand for oil should prevent this influx from impacting prices.

Despite Saudi fears and the fact that improved US-Iranian diplomatic relations will allow for cooperation against certain regional threats like the Islamic State in Iraq and Syria (ISIS), the US is not likely to drop its alliance with Saudi Arabia. Iran’s aid to Houthi rebels in Yemen has been detrimental to both the United States and Saudi Arabia, which has led to the US providing logistics and intelligence support to the Saudis.

The current Saudi campaign in Yemen is more than likely a show of force, intended to both distract from the nuclear deal negotiations and to remind the US of its existing alliance in the region. As a result, Saudi Arabia will likely scale back its campaign in Yemen once the nuclear deal is finalized. The current situation, however, exemplifies the contradictory interests the US will have to consider in the region for years to come should the nuclear deal come to fruition.

A nuclear deal also promises greater direct Russian influence in the Middle East through resumed trade relations between Russia and Iran. Naturally, US and Israeli lawmakers are suspicious of this relationship, as it brings the competing interests of another major world power into the region. The framework agreement has already prompted Russian President Vladimir Putin to lift a five-year ban on the delivery of the S-300 air defense missile system to Iran by the end of the year. Russia and Iran had agreed to the $800-million contract in 2007, but the delivery had been suspended in 2010 under strong objections from the United States and Israel. Iran hopes to receive the S-300s by the end of the year, but Nikolai Patrushev, head of Russia’s Security Council, noted that manufacturers needed at least half a year to complete production. Russia’s Foreign Minister Sergey Lavrov expressed his country’s interest in the success of this nuclear agreement with Iran and the lifting of all sanctions, stating that “[Russia is] confident that de-escalation of tension around Iran will improve bilateral trade-and-economic ties and, correspondingly, will be beneficial for Russia.”

Thawing the icy relationship between the US and Iran that has persisted for the past 36 years has vast implications for future diplomatic and trade efforts. Whether or not the nuclear deal could bring stability to this historically turbulent region remains to be seen, but at the very least, the opportunity to negotiate with Iran as a legitimate state actor instead of dismissing it as a rogue state opens the door to diplomatic approaches to the bigger issues in the region: the sectarian fighting between the Sunni and Shia populations in Syria and Iraq, the Houthi uprising in Yemen, and the relationship between Israel and its Arab neighbors. The real challenge will be bringing to the negotiating table competing regional interests and finding diplomatic solutions to these problems.

This article originally appeared on Ramen IR, an international affairs blog.

Negotiations Deadline Extended Again for Iran and P5-1

Iran and the P5+1 reached the deadline of their nuclear talks yesterday without any consensus. The talks have gone on for months between Iran and the five permanent UN Security Council member nations (plus Germany), with a questionable amount of progress being made. However, yesterday did not mark the end of the talks - the deadline was simply extended another seven months. Is this a good or bad thing for the United States? Well, perhaps it's both.

The biggest thing to take away from yesterday's deadline extension is that the deadline was extended at all. Clearly both sides see the importance in reaching a consensus on such an important issue, and the fact that all parties involved wish to remain involved could itself be seen as a success. However, a more pessimistic observation would be that despite months of negotiations, the parties have still been unable to find common ground - what could seven more months possibly achieve?

There is more good news, however, in the fact that Iran will continue to bear the brunt of all sanctions while negotiations continue. The economic sanctions that have been imposed on Iran have crippled the country, bringing urgency to the table on the part of Iranian President Rouhani who is trying to turn his economy around. In addition to economic sanctions, Iran continues to accept stringent nuclear inspection policies, meaning they will be highly scrutinized for the next seven months to ensure they are not continuing their nuclear development as negotiations stall.

However, the public on both sides is becoming less and less patient with the talks, and the next seven months may quite possibly be the longest that successful negotiations can take. In Iran, criticism has risen over Iran "giving too much away". In the U.S., warhawks on the right have criticized the Obama Administration for appearing weak - especially by extending the deadline - and have called for outright military action against Iran if negotiations fail (note: this is not a good negotiating strategy).

If there is to be any accord reached on this sensitive issue, it must come within the next several months. A deal with Iran on its nuclear development will be a significant precedent on nuclear policy and a major win for President Obama as he gears up to leave office. For Iran, it will mark the first time in years that their economy will have an opportunity to bounce back from harsh sanctions they have endured. And for everyone, it will mean one less country with nuclear weapons - something we should all be happy about.

Giving Thanks for the Iran Nuclear Deal

Every year around Thanksgiving, it is typical, if not cliché, to sit around the table and give reasons to be thankful. This year, I’m thankful for the nuclear deal between the UN and Iran, and said as much at my family dinner, to many groans and eye rolls. Alternately celebrated as a successful performance of diplomacy and decried as the harbinger of nuclear war, the deal has already generated enough controversy to run for New York City mayor. Yet overall, its critics seem to have concerns that have little to do with nuclear weapons, and everything to do with local and regional geopolitics. The deal itself can be hailed as a huge diplomatic success for the United States – which received nearly every concession that it asked for in the negotiations – and a positive first step towards a less nuclear world.

While some are posing the deal as the Iranians pulling one over on the US, in reality the P5+1 negotiators were very successful at extracting concessions from Iran. The deal, outlined in this excellent New York Times infographic, capped enrichment at levels safe for nuclear power only, halted production of new centrifuges as well as construction of the Arak heavy water reactor, mandated that uranium already enriched to 20% be diluted or converted, and overall, extended Iran’s “breakout time” – the time necessary to build a complete nuclear weapon – from less than two months to three or even four months. Essentially, the deal delays Iran’s ability to produce a weapon while still allowing it to have a peaceful nuclear program, which was the entire idea behind the original (US-approved and supported) nuclear program in the 1960s.

In return, Iran has received about $6 billion in sanctions relief over the next six months. Many among the anti-Iran lobby have argued that this will give the government economic breathing room while it continues to develop its nuclear capabilities. While it is true that the sanctions relief, largely in the form of unfreezing petroleum revenue stuck in foreign banks, will provide some breathing room to the Iranian people, in a country that is losing an estimated $5 billion a month due to sanctions, it is just a drop in the bucket. To get further and more meaningful sanctions relief, Iran will need to finalize a permanent deal to come into force after the current six-month deal expires. That will mean more concessions, more oversight, and more opportunities for wary partners like Israel and Saudi Arabia to express their concerns and address them in negotiations. Since the entire point of sanctions is, in theory, to bring a belligerent actor to the negotiating table, the current deal appears to be a rare example of when sanctions actually succeed.

There are still major obstacles to striking a permanent deal with Iran, or even fulfilling the current deal. First and foremost is that the deal includes an agreement on no new sanctions against Iran, something that the US Congress may ignore as they consider passing new sanctions this month. Republicans and many Democrats for once seem able to come together and pass a bill; unfortunately it is one that could compromise a once-in-a-generation opportunity. Another obstacle is the attitudes of two of the United States’ strongest allies in the Middle East, Saudi Arabia and Israel, who, like the Congress, are divided on almost every other issue except for Iran’s nuclear program. Israeli Prime Minister Benjamin Netanyahu has called the deal an “historic mistake” that has thrown Israel’s entire future into jeopardy. Saudi officials have also made rare public statements deploring the secrecy of back-channel talks prior to the public negotiation of the deal.

While the populations of Israel and Saudi Arabia may certainly fear Iran’s acquisition of the bomb, the two countries’ governments are more preoccupied with the threat of an Iran fully integrated into the international economy. These fears were more than amply laid out by Stephen M. Walt in a recent Foreign Policy piece, but in sum, the deal’s opponents have far more to lose from an integrated Iran than a nuclear bomb (no, really). Saudi Arabia has long vied with Iran for dominance in the Middle East, and especially fears Iranian influence on its Shi’ite population, which happens to be located exactly where the largest Saudi oil reserves are. Israel also fears the economic power that Iran could wield if sanctions were lifted, foreseeing that its large, well-educated population could soon overtake Israel as the most developed country in the Middle East An economically empowered Iran would at least would take a bigger piece of the economic pie, which would give it opportunities to project power throughout the region. Detractors (ahem, Ted Cruz) have already held up the example of North Korea (which signed an agreement aimed at denuclearization in 1994 only to test its first nuke in 2006) to decry the current deal. Yet Iran is different for so many reasons, and the bleak warning signs that existed with North Korea have yet to materialize within Iran.

Supporters of Rouhani hold up his picture and celebrate

In Iran, too, there are still challenges to overcome. The country at large reacted with joy at news of the deal: the prospect of sanctions relief, economic recovery, and a legitimate and recognized peaceful nuclear program were greeted with jubilation. Yet many powerful Iranians actually benefit from the sanctions regime through the black market and corruption, and security hardliners who have the ear of Ayatollah Khamenei are unlikely to come on board anytime soon. If the benefits of sanctions relief outweigh the rhetoric of the hardliners, however, the Iranian population and its current administration might stay the current course and remain on track to a permanent deal.

At this moment, I remain cautiously optimistic that this deal will delay the Iranian nuclear project and set the stage for a long-term treaty. While I agree that Iran has a right to a peaceful nuclear program under the Non-Proliferation Treaty, I am opposed to a nuclear-armed Iran, not least because this would likely lead to a nuclear-armed Saudi Arabia and a ramped up regional Cold War. This deal is the first step to ensuring that all sides get the best possible outcome, and is the first shot that diplomats have had in years to end the antagonism between Iran and the United States and its allies. A best-case scenario would be a halt to the Iranian nuclear weapons program, a thawing of relations between Iran and the US and its allies, reintegration of Iran into the global economy, and a better standard of living for Iranian citizens. In international affairs, however, the best-case scenario is rarely the one that plays out. For now, I’ll settle for a temporary halt to the weapons program, and a glimmer of a hope that the decades-long culture of dangerous US-Iran animosity is finally drawing to a close.