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Iran: Is There a Way Out of the Nuclear Impasse?
Iran: Is There a Way Out of the Nuclear Impasse?
Table of Contents
  1. Executive Summary
Report 51 / Middle East & North Africa

Iran: Is There a Way Out of the Nuclear Impasse?

There is no easy way out of the Iranian nuclear dilemma. Iran, emboldened by the situation in Iraq and soaring oil prices, and animated by a combination of insecurity and assertive nationalism, insists on its right to develop full nuclear fuel cycle capability, including the ability to enrich uranium.

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Executive Summary

There is no easy way out of the Iranian nuclear dilemma. Iran, emboldened by the situation in Iraq and soaring oil prices, and animated by a combination of insecurity and assertive nationalism, insists on its right to develop full nuclear fuel cycle capability, including the ability to enrich uranium. Most other countries, while acknowledging to varying extents Iran’s right under the Nuclear Non-Proliferation Treaty (NPT) to acquire that capability for peaceful energy purposes, have a concern – reinforced by Iran’s lack of transparency in the past, continuing support for militant Middle East groups and incendiary presidential rhetoric – that once able to highly enrich uranium, it will be both able and tempted to build nuclear weapons.

But EU-led diplomacy so far has failed to persuade Iran to forego its fuel cycle ambitions; the UN Security Council seems unlikely to agree on sanctions strong enough to force it to do so; and preventive military force is both a dangerous and unproductive option.

Two possible scenarios remain, however, for a negotiated compromise. The first, and unquestionably more attractive for the international community, is a “zero enrichment” option: for Iran to agree to indefinitely relinquish its right to enrich uranium in return for guaranteed supply from an offshore source, along the lines proposed by Russia. Tehran, while not wholly rejecting offshore supply, has made clear its reluctance to embrace such a limitation as a long-term solution: for it to have any chance of acceptance, more incentives from the U.S. need to be on the table than at present.

If this option proves unachievable – as seems, regrettably, more likely than not – the only realistic remaining diplomatic option appears to be the “delayed limited enrichment” plan spelt out in this report. The wider international community, and the West in particular, would explicitly accept that Iran can not only produce peaceful nuclear energy but has the “right to enrich” domestically; in return, Iran would agree to a several-year delay in the commencement of its enrichment program, major limitations on its initial size and scope, and a highly intrusive inspections regime.

Both sides inevitably will protest that this plan goes too far – the West because it permits Tehran to eventually achieve full nuclear fuel cycle capability, with the risk in turn of breakout from the NPT and weapons acquisition, and Iran because it significantly delays and limits the development of that fuel cycle capability. But with significant carrots (particularly from the U.S.) and sticks (particularly from the EU) on the table – involving the appropriate application of sequenced incentives, backed by the prospect of strong and intelligently targeted sanctions – it is not impossible to envisage such a negotiation succeeding.

This proposed compromise should be compared neither to the fragile and unsustainable status quo, nor to some idealised end-state with which all sides might be totally comfortable. The more likely scenarios, if diplomacy fails, are for a rapid descent into an extremely unhealthy North Korea-like situation, with a wholly unsupervised nuclear program leading to the production of nuclear weapons and all the dangerously unpredictable regional consequences that might flow from that; or a perilous move to an Iraq-like preventive military strike, with even more far-reaching and alarming consequences both regionally and world-wide.

Brussels/Washington/Tehran, 23 February 2006

Iran: Preserving the Nuclear Deal

U.S. withdrawal from the Iran nuclear deal has exacerbated tensions between the two countries and endangered the agreement. In this excerpt from our Watch List 2019 for European policymakers, Crisis Group urges the EU to uphold the deal conditionally and to handle other security concerns in the region separately.

The Trump administration’s decision to exit the 2015 Joint Comprehensive Plan of Action (JCPOA) and unilaterally reimpose sanctions on Iran as part of a “maximum pressure” campaign has put the agreement in significant jeopardy and set the U.S. and Iran on a possible collision course. The remaining signatories to the deal, including the EU and three member states (France, Germany and the UK, collectively known as the E3), are striving to preserve it and Iran has continued to adhere to it. But as sanctions take a severe toll on the Iranian economy, the urge to retaliate against the U.S. withdrawal is building up in Tehran. The accord’s collapse would lead to a renewed and perilous nuclear crisis at a time when tensions across the Middle East are already high, including between Iran and regional powers such as Saudi Arabia and Israel.

The EU and its Member States Should:

  • Uphold the JCPOA so long as Iran remains in compliance with its nuclear obligations and implement mechanisms such as the Special Purpose Vehicle (SPV) to ensure the accord delivers at least some of its anticipated economic dividends.
     
  • Undertake more effective public diplomacy, particularly toward Iran and the European private sector, to clarify its policies and explain the complexity of European efforts in adopting such mechanisms.
     
  • Continue discussions with the U.S. regarding member state exemptions on secondary sanctions, particularly with regards to humanitarian trade with Iran.
     
  • Separate efforts to save the JCPOA from their response to other security concerns, including purported plots against Iranian dissidents on European soil and Iran’s ballistic missile tests and transfers.
     
  • Encourage Iran to deepen and widen ongoing EU-Iran discussions on Yemen to include other regional issues as well as Iran’s ballistic missile program and human rights.

Threats to Diplomacy and Regional Stability

In May 2018, President Donald Trump announced that the U.S. would terminate its participation in the JCPOA and reimpose sanctions lifted in 2016 as part of the nuclear agreement. Washington’s repudiation of the JCPOA is part of a wider “maximum pressure” campaign against Iran seeking to not only coerce Iran into renegotiating the terms of a concluded and functioning multilateral accord, enshrined in a UN Security Council resolution, but capitulating to a longer list of U.S. demands on Iran’s regional policies and ballistic missile program. The risks in the coming year are threefold: that Iran, seeing dwindling benefits from its continued adherence to the JCPOA, decides to curb or terminate its participation in the accord, sparking a renewed nuclear crisis; that the U.S. and Iran will keep edging toward a direct conflict; and that regional frictions between U.S. and Iranian allies could escalate and draw in other parties.

If Iran’s dividends from the nuclear deal keep shrinking, hardliners in Tehran who call for abrogating the JCPOA and assuming a more confrontational posture in the nuclear realm and the region could gain ground. Sanctions have already weakened Iran’s economy, driving a significant devaluation of the rial, pushing up inflation, curbing the country’s oil revenue (some limited oil waivers notwithstanding) and sinking the economy into a recession. With a parliamentary election in 2020 and a presidential vote in 2021, pragmatic politicians associated with an increasingly fruitless diplomatic approach could lose ground to more hard-line forces critical of international engagement.  

At the same time, tensions over Iran’s regional role and a U.S.-led drive to curb it could leave Washington and Tehran jostling for the upper hand across a string of regional flashpoints, from Afghanistan and the Gulf to Iraq, Syria and Lebanon. Tensions between Iran and Israel are of particular concern, with Israel acting more frequently to counter what it perceives as Tehran’s rising influence across the Levant. A confrontation between Hizbollah and Israel, for example, could rapidly escalate in Lebanon and Syria, drawing in Iran and the U.S. in support of their respective allies.

Bolstering the Deal and Broadening Dialogue

As core participants in the nuclear deal, the EU and three of its member states have thus far delivered a consistent and unified message against Washington’s JCPOA withdrawal and sanctions. High-level European participation in the upcoming ministerial meeting on the Middle East in Warsaw, which will likely see significant U.S. emphasis on criticising Iran, could erode this message and European credibility in Tehran. EU measures to protect the deal, such as the blocking statute introduced in August 2018 and the SPV expected in early 2019, backed by the E3 and designed to facilitate European trade with Iran in a way that bypasses U.S. sanctions, are critical to forestalling the accord’s collapse, and should be fully implemented. Such efforts would be more effective alongside more robust political signalling and public diplomacy campaign underscoring the extent of the EU’s work to preserve the JCPOA, both to the European private sector and Iran itself. Visits by high-level EU officials to Iran, outreach to Persian-language media platforms explaining EU decisions and policy, and the production of readily-accessible information in Persian of relevant EU statements and announcements could each serve to increase the visibility and explain the importance of EU decisions on Iran. Brussels should also intensify its consultations with the Islamic Republic to allow the establishment of an EU delegation in Tehran.

In parallel with these efforts, the EU should encourage the U.S. to issue extended and ideally expanded sanctions waivers for member states, and press for clarity on nuclear and humanitarian exemptions. It can also maintain its dialogues with Tehran on Yemen (there were four rounds of discussions that France, the EU, UK, Germany and Italy held with Iran in 2018) while exploring wider avenues of engagement on both regional and domestic issues. Such conversations may be crucial for eventual talks on building on the nuclear agreement, not least if the U.S. chooses to re-engage diplomatically in due course. 

Preserving the JCPOA does not preclude the EU from pressing Tehran on other security issues, particularly alleged assassination attempts against Iranian dissidents on European soil, renewed ballistic missile testing, and potential Iranian weapons transfers to local allies in the Middle East. The JCPOA does not constitute a carte blanche for Iran to behave in ways that damage European interests. Still, should the EU and its member states eventually place targeted sanctions on Iran, it should make it clear that these measures do not prejudice continued cooperation on the nuclear front.