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Iran Challenges Remaining Partners to Save Nuclear Deal
Iran Challenges Remaining Partners to Save Nuclear Deal
A Way Out of the U.S.-Iranian Impasse
A Way Out of the U.S.-Iranian Impasse
A man passes a mural painted on the wall of the former U.S. Embassy in Tehran, Iran, on 9 May 2018. US President Donald Trump announced a 'withdrawal' from the Iran nuclear deal on 9 May 2018. Fatemeh Bahrami / Anadolu Agenc

Iran Challenges Remaining Partners to Save Nuclear Deal

Responding to the Trump administration’s “maximum pressure”, Iran has announced it will no longer respect all the limits placed on its nuclear research activities by its 2015 deal with world powers. With Washington having renounced the deal, the remaining signatories should hasten to save it.

One year ago today, President Donald Trump announced that he was withdrawing the U.S. from the 2015 Joint Comprehensive Plan of Action (JCPOA). Until now, Iran, as repeatedly confirmed by the International Atomic Energy Agency (IAEA), has abided by the restrictions placed by the nuclear agreement on its proliferation activities, despite rapidly declining returns. That status quo was increasingly untenable; Iran’s decision today is the predictable and unwelcome result. As Crisis Group has long argued, the burden now falls on the JCPOA’s remaining signatories to cooperate with one another on finding ways to provide Iran with a meaningful economic incentive that in turn could allow Tehran to come back into full compliance with the JCPOA and avoid a much more dangerous escalation.

In a statement issued on 8 May by the Supreme National Security Council (SNSC), which sets the country’s major domestic and foreign policies, Iran announced that it would no longer “commit itself to respecting the limits on the keeping of enriched uranium and heavy water reserves at the current stage”. It went on to present a 60-day ultimatum to the deal’s remaining participants (Russia, China, France, Germany and the UK) to ensure that the economic normalisation envisioned under the JCPOA’s terms, increasingly curtailed in the face of a withering unilateral U.S. sanctions campaign, is addressed. Should the two months pass without a breakthrough by the P4+1, the SNSC warned, “Iran will suspend compliance with the uranium enrichment limits and measures to modernise the Arak Heavy Water Reactor”. In remarks to the Iranian cabinet, President Hassan Rouhani asserted that “we are announcing the reduction of our commitments, not withdrawal from it”.

Iran has opted for minimum retaliatory measures in response to U.S. maximum pressure. This suggests that Tehran hopes to keep the deal alive until the outcome of the U.S. presidential election.

The response from Iran’s JCPOA interlocutors has thus far been cautious and concerned. Russian Foreign Minister Sergey Lavrov, who has been hosting his Iranian counterpart Javad Zarif in Moscow, put the blame for the looming crisis on Washington, citing “the U.S.’s irresponsible behaviour”. The Chinese government, too, suggested that “the U.S. has further aggravated the tension on the Iranian nuclear issue”, while urging that cooler heads prevail. The latter sentiment is also clear in the statements of European parties, but not without an accompanying warning. “There are no sanctions today from Europe because Iran has so far always respected the commitments it has taken”, France’s defence minister explained. “If these commitments were not respected, naturally this question would be asked”. 

There are several lessons from today’s developments:

  1. Iran has opted for minimum retaliatory measures in response to U.S. maximum pressure. This suggests that Tehran hopes to keep the deal alive until the outcome of the U.S. presidential election becomes clear in November 2020. The framing of these measures as in line with the JCPOA’s paragraphs 26 and 36 proves that Iran is trying to remain within the deal’s framework. In essence, Iran is signalling its desire to maintain its strategic patience policy, but coupling that gesture with a warning that its patience is wearing very thin, especially given rising domestic criticism of the Rouhani administration’s restraint.
  2. The two measures announced today pose different proliferation risks. Heavy water overproduction would not in the short run enhance Iran’s capabilities to dash for nuclear weapons, if it decided to do so. A new IAEA report is expected later this month, but according to the last one Tehran had 124.8 metric tonnes of heavy water back in February. If Iran continues producing at the same average pace as before (two tonnes per month), it would not reach the threshold before 7 July. As to the low enriched uranium (LEU) threshold, Iran had 163.8kg of uranium enriched to 3.67 per cent. Tehran has the capacity to produce around 100kg of LEU per month. If it does so, it will surpass the limit before the 60-day deadline, and thus start shortening its breakout timeline (the time needed to enrich enough uranium for a single nuclear weapon) from one year to less than that. But Tehran remains in control of how fast it desires to escalate. The good news is that because Iran is still implementing the Additional Protocol to the Nonproliferation Treaty, the IAEA can monitor all of these activities closely.
  3. Washington is no position to complain about these Iranian violations, because it committed the original sin by unilaterally withdrawing from the deal last year. Moreover, by revoking waivers for countries to purchase excess production of Iran’s heavy water and LEU last week, the Trump administration had rendered compliance with these commitments nearly impossible for Tehran. So by choosing these two measures as its first response, Iran is making clear where the blame lies.
  4. The bigger concern is the 60-day deadline, which raises risks of an escalatory spiral. This agreement's erosion could well pick up pace in the next few months as Washington doubles down on its sanctions and Iran digs in. If Iran restarts work on the Arak heavy water reactor or increases the volume or level of its uranium enrichment in July, it will compel the Europeans to trigger the snapback of the UN sanctions, which will be the kiss of death for the JCPOA.
  5. With Iran insisting that they step up their efforts to salvage the deal, and threatening otherwise to withdraw, the ball is now in the court of the deal’s remaining signatories. Europe has done a lot to establish a banking channel, but this step is only one of many to which Brussels committed, and it is not yet operational. The reality is that Russia and China have not done much, either, and the latter seems to have given in to U.S. pressures by reducing its oil imports from Iran. Now is the time for Russia, China, France, Germany and the UK to intensify their cooperation with one another and implement steps that could provide Iran with a meaningful economic incentive that in turn would allow Tehran to come back into full compliance with the JCPOA. For instance, China could continue to buy oil from Iran or Russia could engage in oil swaps with Tehran (with the latter providing some of Russia’s energy needs in the south in return for the former exporting the same amount of oil on Iran’s behalf) and inject the proceeds as credit into the European special banking channel that would allow Iran to import goods from Europe.

The Trump administration’s continuous tightening of the economic squeeze and repeated calls on Europe to exit the agreement always carried the risk of provoking an Iranian response. The administration’s self-proclaimed goals were to change Iran’s behaviour and get a better deal. As should have been clear from the outset, those stated aims were always wholly unrealistic. But they were not the real objectives. For at least some senior U.S. officials, escalation with Iran is and always has been the name of the game. That is precisely what the remaining parties to the deal should strive to avoid.

A Way Out of the U.S.-Iranian Impasse

U.S.-Iranian clashes have pushed the JCPOA to the brink of collapse. In this excerpt from our Watch List 2020 for European policymakers, Crisis Group urges the EU and its member states to use their economic and diplomatic power to keep Iran in compliance with the JCPOA and prevent Iraq from being sucked further into the conflict.

This commentary is part of our Watch List 2020.

As 2019 faded into 2020, the U.S. and Iran careened up to the brink of war. In late December, a series of U.S. airstrikes on Iranian-backed Iraqi militias, in response to militia attacks on U.S. assets in Iraq, brought crowds of Iraqis with a battering ram to the doors of the U.S. embassy in Baghdad. On 2 January, reportedly stinging from the embassy assault and determined to restore what he considered to be eroded U.S. deterrence, President Donald Trump ordered a drone strike on Qassem Soleimani, head of the Quds Force, the expeditionary unit of Iran’s Islamic Revolutionary Guards Corps. Vowing revenge for the general’s death, Iran fired ballistic missiles at U.S. bases in Iraq, killing no one there, but in the aftermath inadvertently downing a Ukrainian passenger jet outbound from Tehran with 176 people on board. Both the exchange of attacks and the airline disaster seemed to close this particular chapter of the conflict between Tehran and Washington. But the danger of broader confrontation has not passed.

At the origin of these events lies the Trump administration’s exit from the 2015 nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA). Under the JCPOA, Iran accepted limits on its nuclear program in return for integration into global trade. Since May 2018, when it withdrew from the pact, the U.S. has been exerting “maximum pressure”, mostly through unilateral sanctions, to compel Iran to negotiate a more stringent, comprehensive deal and curb its regional behaviour. Sanctions have inflicted great harm upon Iran’s economy. In light of the failure of the JCPOA’s remaining signatories to provide Tehran economic respite, Iran took retaliatory measures of its own. It ramped up its regional activities, notably in the Gulf, and started loosening its compliance with the nuclear deal as of May 2019, shedding all restrictions on its uranium enrichment program by January 2020. That last move in turn led France, Germany and the UK, the so-called E3, to trigger the deal’s dispute resolution mechanism, which could ultimately resuscitate UN sanctions on the Islamic Republic. The JCPOA is closer than ever to collapse, and any small incident could fuel escalation, by either the U.S. or Iran.

To help ease tensions, the EU and its member states should:

  • Seek to salvage the nuclear deal by delivering some economic benefits to Iran in exchange for its compliance with the JCPOA. Triggering the dispute resolution mechanism could backfire if failure to reach a settlement leads the E3 to restore UN sanctions – a step that Tehran has warned would prompt it to withdraw from the deal and perhaps the non-proliferation treaty as well. The E3 should seek to stretch the timeline provided by the mechanism as much as possible;
  • Ensure the Iranian people’s access to humanitarian goods, via the Instrument in Support of Trade Exchanges (INSTEX);
  • Encourage a partial drawdown of U.S. forces from Iraq and a reaffirmation of the fight against ISIS as Western militaries’ sole objective in Iraq, which would remove an immediate source of U.S.-Iranian friction. As part of the drawdown, European states and other members of the International Coalition to Counter ISIS should take over some of the more visible military tasks from U.S. forces in Iraq.
  • Explore possible ways of lowering regional tensions, such as a deconfliction channel.

Salvaging the JCPOA

As the smoke cleared after the Soleimani killing and the Ukrainian airliner catastrophe, both Washington and Tehran were sticking to the strategies that produced the present impasse. The Trump administration boasted of having “restored deterrence” against Iran, claiming that by responding to Soleimani’s death with restraint, Tehran was tacitly admitting that “maximum pressure” works. Economic sanctions, notably those limiting oil exports, have indeed drained the Iranian state’s coffers, forcing it to enact deeply unpopular spending cuts, and hurt the living standards of Iranian citizens. To date, however, “maximum pressure” has failed to deliver on the goals laid out by the U.S. administration itself. Far from curtailing nuclear ambitions, it has led Iran to wriggle out of the JCPOA’s handcuffs; rather than stop Iranian meddling in the Middle East, it has prompted Tehran to redouble it. Meanwhile, and despite recurrent eruptions of mass discontent, the Islamic Republic appears firmly ensconced in power.

[Maximum pressure] has led Iran to wriggle out of the JCPOA’s handcuffs.

For its part, Iran is continuing to pursue parallel paths: escalating on the nuclear front while leaving a door open to diplomacy. On 5 January, Iran breached its nuclear commitments for the fifth time, announcing that it would cease observing JCPOA limits on centrifuge quantities – the last restriction it still faced. It stopped short of quitting the accord, however, and it did not say what practical steps it might take. The diplomatic part of its strategy suffered a blow on 15 January, when the E3 triggered the deal’s dispute resolution mechanism, which could result within 65 days in reimposition of the UN sanctions in place before the 2o15 deal – an outcome that the Trump administration appears to be keen on, if only because it would stop removal of the UN arms embargo on Iran that the JCPOA says should be lifted on 18 October 2020. U.S. Treasury Secretary Steven Mnuchin, in his statement welcoming the E3’s move, said he “expect[s] that the UN sanctions will snap back into place”, though E3 officials were at pains to say they have no such intention. Should there be no resolution within the coming months, U.S. pressure on the E3 to take the next step – snapback of sanctions – inevitably will grow.

As renewed UN sanctions would signal the nuclear accord’s demise, the E3 should do all they can to ward off this outcome. In the short term, their best option is to extend the timeline for dispute resolution – something the JCPOA allows – so that they can assemble an economic relief package that might persuade Iran to reverse its breaches and stay in the deal. They also should accelerate efforts to meet humanitarian needs in Iran, ensuring that the INSTEX mechanism gets fully up and running.

The E3 could also help broker other means of rescuing the nuclear deal. One option that had previously been mooted would be for the U.S. to reissue limited oil waivers for key Iranian importers and restore civil nuclear waivers, in return for Iran’s full compliance with the JCPOA, de-escalation in the region and, possibly, its agreement to initiate negotiations with the U.S. and others over a new nuclear arrangement, but also regional security and ballistic missiles. In a narrower version, the U.S. would suspend key non-oil sanctions (eg, on Iran’s metals and petrochemical sectors) and restore civil nuclear waivers, in return for Iran agreeing not to ramp up its nuclear program beyond its current status and, possibly, reversing one or more of its breaches, as well as halting aggressive behaviour in Iraq and the Gulf. A third party would almost certainly be required to facilitate either of these bargains.

Sparing the Region from Further Harm

From the outset of the U.S.-Iranian standoff, Crisis Group has warned that it could take its deadliest form in third countries where both powers have strong interests. Particularly in the wake of the Soleimani killing, the country at highest risk of becoming a battleground is Iraq.

The circumstances surrounding the killing – the preceding bombing of Iraqi militia bases without notice to Baghdad, the targeting of the Quds Force leader on Iraqi soil, the death of militia commander Abu Mahdi al-Muhandis alongside Soleimani – have greatly angered many Iraqis and not just those close to Iran. Many Iraqi politicians are calling upon the government to expel U.S. troops from the country. The result is a triple challenge: first, the demand, while popular with many, is nevertheless liable to be so divisive that it paralyses Iraqi political institutions. Secondly, some of the factions opposed to the U.S.-led troop presence will resort to violence, particularly if attempts to end that presence through parliamentary and diplomatic means fail. Thirdly, a full U.S. withdrawal would likely put paid to the mission of the International Coalition to Counter ISIS, perhaps giving the jihadist organisation a new lease on life.

To mitigate the attendant risks, the EU should encourage the U.S. to partially draw down its military forces in Iraq and to transfer some military tasks to other members of the International Coalition to Counter ISIS, while continuing to provide logistical and other forms of support. The EU should also encourage the Coalition to reaffirm the fight against ISIS as its sole objective in Iraq.

The EU ought to send unambiguous signals that it respects Iraqi sovereignty above all else.

In addition, the EU and its member states should expand existing cooperation with Iraq, in particular in, but not restricted to, the security sector. While calling for foreign troops to leave the country, Iraqi authorities have affirmed that the EU’s civilian Advisory Mission to Iraq is welcome to stay for the purpose of security sector reform support. In order for this mission to be effective, the EU should make sure that all its personnel return to Iraq, with adequate resources and security guarantees to maintain a full presence. Iraq desperately needs more security forces that are committed to the state, rather than various factions, and that can handle challenges such as public protests in a professional manner. At the same time, the EU ought to send unambiguous signals that it respects Iraqi sovereignty above all else, as the contrary impression created by the U.S. attacks and dismissal of calls for its departure threatens the very basis of any cooperation. The High Representative has received the acting Iraqi prime minister in Brussels to demonstrate the EU’s support for the country’s stability and reconstruction, which is a good start.

The EU also needs to urgently impress on the U.S. and Iran the need to refrain from turning Iraq into an arena for their rivalry. The contestation between Tehran and Washington is already polarising the Iraqi political system, rendering reform impossible and creating a real risk of backsliding to the partial state collapse that pertained in 2014. The EU should clearly convey this message to Washington, while it should tell Tehran that it, too, would be harmed were the Iraqi government to weaken further and the resulting vacuum to allow ISIS to re-emerge.

Outside Iraq, the EU and its member states should seek to expand possibilities for engagement between U.S. regional allies, in particular Saudi Arabia and the United Arab Emirates, with Iran, either bilaterally or through other Gulf countries, such as Kuwait and Oman. European states could establish a core group to encourage Gulf states to set in motion an inclusive regional security dialogue on issues of dispute in order to open up new channels of communication, gradually build trust among these governments and thus reduce risks of inadvertent conflict. A deconfliction channel through a mutually acceptable third party – perhaps Oman – could also diminish such risks by relaying messages between the U.S. Central Command and Iran’s general staff.