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Iran Challenges Remaining Partners to Save Nuclear Deal
Iran Challenges Remaining Partners to Save Nuclear Deal
How the EU Can Soften Iran-U.S. Tensions
How the EU Can Soften Iran-U.S. Tensions
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.

How the EU Can Soften Iran-U.S. Tensions

The alarming escalation between the U.S. and Iran risks unravelling the nuclear deal, prompting direct military engagement and destabilising the Arabian Peninsula. In this excerpt from its Watch List 2019 – Second Update, Crisis Group urges the European Union and its member states to de-escalate tensions and maximise efforts to preserve the nuclear deal.

Tensions between Iran and the U.S. have grown at an alarming pace in recent months. The Trump administration’s “maximum pressure” campaign, following its withdrawal from the 2015 nuclear deal, has inflicted significant harm on Iran’s economy – an estimated 80 per cent of which is now under unilateral sanctions. Yet economic coercion has so far failed to either compel Iran to change its behaviour in the desired direction or bring it to the negotiating table. Instead, it has responded by shooting down a U.S. drone, claiming it had entered Iranian airspace; it is also accused by many of attacking tankers near the Strait of Hormuz and by the U.S. of encouraging its Shiite militia allies in Iraq to target U.S. assets.

This escalation poses three distinct threats: the unravelling of the Joint Comprehensive Plan of Action (JCPOA), which constrained Iran’s nuclear program; the possibility of a direct military engagement between Iran and the U.S., by design or miscalculation; and broader regional spillover across a series of flashpoints. These threats could jeopardise European security, especially the latter two scenarios. Europe should save the JCPOA by honouring its commitments and trying to contain (and de-escalate) tensions between Tehran and Washington.

The EU, working closely with its member states, should take the following steps to:

  • Intensify ongoing efforts to facilitate trade with Iran through the special-purpose vehicle (INSTEX) by injecting export credit into it and expanding it to other EU and non-EU states to pre-empt further incremental breaches of the JCPOA’s nuclear restrictions by Tehran. To ensure compliance, the EU should continue to strike a careful balance between supporting the consolidation and expansion of INSTEX and criticising Iran’s missile program, regional policies and human rights record; and it should stay united in its response to any further breaches of the JCPOA by Iran.
  • In parallel, expand, deepen, and broaden existing cooperation with Iran on development projects to demonstrate its willingness to invest in Iran and help improve the Iranian people’s economic well-being regardless of Washington’s hostile policies toward Iran. In this vein, the EU should consider hiring a Persian-language spokesperson to better communicate its goals and plans to Tehran and the Iranian public.
  • Explore opportunities for expanding the existing E4-Iran dialogue framework for Yemen and Syria to include other regional issues, such as stability in Iraq and Afghanistan.
  • Forge discreet channels for dialogue on areas of disagreement with Tehran, such as Iran’s ballistic missiles program and human rights record, and help open communication channels between Iran and regional actors as well as between Iran and the U.S. to de-escalate tensions and prevent a military conflict by miscalculation.
  • Explore the possibility of initiating and supporting a regional dialogue on reducing tensions and preventing the inadvertent outbreak of conflict.

Safeguarding a Beleaguered Deal

The EU played a key role in shepherding the arduous negotiations that yielded the Iran nuclear deal four years ago. Today it has an even more critical role in preventing the JCPOA from unravelling. Since the agreement was implemented, and especially after the U.S. withdrawal in May 2018, Iran has seen the JCPOA’s core bargain (limiting its nuclear program in return for economic normalisation) break down under the pressure of intensified U.S. sanctions. In May 2019, Tehran began to take incremental (but still reversible) steps reducing its compliance. These became concrete in early July, when Iran surpassed the 3.67 per cent uranium stockpile threshold, which the JCPOA capped at 300kg, and started enriching above that level in violation of the deal’s terms. It also threatened to take additional steps by 6 August if the remaining parties to the deal fail to salvage its economy in the face of U.S. sanctions. The challenge, now and over the coming year, is to protect an accord that has delivered crucial non-proliferation gains.

Deep mistrust and limited communications channels could allow an isolated and accidental incident to quickly spin out of control.

A second growing concern is the possibility of a direct military clash between the U.S. and Iran. Washington has been progressively bolstering its military presence in the region in response to assessments of heightened Iranian threats. The fact that the U.S. came close to launching a retaliatory strike in mid-June after Iran shot down a U.S. drone it claimed had breached Iranian airspace underscores how precarious the situation has become. If Washington continues to pursue a coercive maximalist strategy whose endgame is Iran’s capitulation rather than diplomatic engagement, the short- to medium-term prospects point to growing friction rather than de-escalation, let alone a major diplomatic breakthrough of the type President Trump says he is championing.

Rising tensions could ignite a confrontation in several ways. Should Iran continue to breach the JCPOA limits, its activities could reach a point that the U.S. and Israel find intolerable and conduct a military operation against Iran’s nuclear installations. From its side, Iran, through its own forces or local allies, could target U.S. interests or those of its partners; the U.S. has asserted that any American deaths would prompt a muscular response. May and June already saw a string of attacks against shipping in and around the Gulf of Oman, responsibility for which Washington explicitly pinned on Tehran. The spark need not be intentional: deep mistrust and limited communications channels could allow an isolated and accidental incident to quickly spin out of control. Should a clash occur, it could draw in other state and non-state actors in the region, rapidly devolving into a larger conflagration.

A third challenge is that developments in another theatres – for example, in Yemen, Syria or Iraq – could draw the U.S. and Iran in more deeply, exacerbating tensions between them. Take, for instance, a possible attack by Afghanistan’s Taliban in Afghanistan or an Iraqi paramilitary group against a U.S. military or diplomatic facility, resulting in loss of life or substantial damage. In the current environment, the U.S. may assign blame to Iran and launch retaliatory attacks without first ascertaining whether Iran or other local actors bear primary responsibility.

Recommendations for the EU and its Member States

European action is essential for addressing the first of the three challenges laid out above, and important in tackling the other two. While France, Germany and the UK (the E3) have established INSTEX, the EU should encourage its consolidation and expansion to other European (and perhaps even non-European) states. The E3 should inject several billion euros worth of export credit into the mechanism to render it operational and allay concerns of Europeans firms and banks, which remain fearful of U.S. penalties and would welcome backing from their governments. Seven other EU countries (Austria, Belgium, Finland, the Netherlands, Slovenia, Spain and Sweden) announced on 1 July their interest in joining INSTEX. Involving non-EU states such as China, which continue to import oil from Iran, or Russia, which is willing to be a conduit for exporting petrochemical derivatives from Iranian oil to Europe, could generate much needed funds for European exports to Iran. Europe should clearly state – and warn the Trump administration – that targeting INSTEX or its Iranian counterpart will entail consequences.

Separately, but in parallel to these efforts, the EU should deepen and expand technical and development cooperation with Iran across a range of fields, such as water, narcotics, refugees and private sector promotion. It should also consider expanding the E4-Iran dialogues on Yemen and Syria to other regional conflicts, such as Iraq and Afghanistan. At the same time, it should seek discreet avenues for discussing other sensitive issues with Tehran, be it on Iran’s missile program or human rights record. These channels can help maintain diplomatic contacts and help prevent dangerous escalations.

The EU, particularly member states such as France, should strongly press for a freeze in the escalatory cycle between Tehran and Washington.

 Success on this front could help not just stabilise the nuclear deal but build leverage and cooperation for non-nuclear discussions, including on de-escalating Iran’s role in regional conflicts. While the U.S. continues to pursue a sanctions-driven strategy, the EU, particularly member states such as France, whose president has a direct channel to his U.S. counterpart, should strongly press for a freeze in the escalatory cycle between Tehran and Washington. From Washington’s side, this would need to include, at a minimum, waivers to loosen the noose on Iran’s oil exports; and from Tehran’s, a return to full JCPOA compliance, releasing U.S. prisoners and agreeing to broader talks about the JCPOA’s future and other areas of dispute.

Be it on the nuclear issue or less time-critical initiatives elsewhere, the EU should enhance its image in Iran, which, because of its inability to shield the Iranian economy from U.S. sanctions, has been damaged to such a degree that Iranians widely view it as “good cop” to the Trump administration’s “bad cop” rather than an independent diplomatic partner. This requires the EU to hire a Persian-speaking spokesperson to communicate its goals to Tehran and the Iranian public. Balancing expressions of concern and criticism with constructive and mutually beneficial discourse, and striking a balance between public and more discreet methods of messaging, could prove the best approach to influencing Tehran’s decision making in these dangerous times.