Iran’s Nuclear Deal Threat

by Aveek Sen

Iran recently announced a series of steps to reduce its commitments to the nuclear deal (the Joint Comprehensive Plan of Action or JCPOA). It announced that, invoking articles 26 and 36 of the JCPOA, it will not abide by stockpile limits for enriched uranium (LEU) and heavy water. Further, Iran announced that after a period of 60 days, if the other JCPOA signatories don’t help Iran with a mechanism to access banking channels and sell its oil, Iran would suspend compliance with uranium enrichment limits and also modernize the Arak heavy water reactor.

The move was widely seen as an attempt to push the EU to deliver on its JCPOA commitments so that Iran gets some economic relief from U.S. sanctions imposed last November. The EU has rejected what it calls Iran’s “ultimatum.”

Kelsey Davenport, the director of Nonproliferation Policy at Arms Control Association, says that Iranian President Hassan Rouhani’s announcement that Iran will no longer abide by the limits on heavy water and enriched uranium is an unfortunate but unsurprising escalation. The Trump administration’s systematic campaign to deny Iran all of the benefits envisioned under the deal drove Tehran to take this step. Davenport adds that, although any violation of the nuclear deal is troubling, the steps Iran announced do not pose an immediate proliferation risk. It will be critical for the remaining parties to the deal to work with Iran to head off further steps that risk reigniting a nuclear crisis and increase the chance of conflict.

According to Ellie Geranmayeh, deputy director of the MENA Program at the European Council on Foreign Relations, Iran is no long complying with relatively minor provisions of the nuclear deal. Iran has said that it is giving JCPOA members 60 days to sit down and resolve the issue diplomatically. “It’s time now for the Europeans to really knuckle down,” she says, and come up with something “that will allow Iran some breathing room to continue implementing the deal.”

Iran is shifting away from its tactic of “strategic patience,” Geranmayeh adds. Iran has been very insistent that it wants to see more from Europeans on some sort of an economic package that makes selling the deal at home in Iran viable. “One of the first priorities here for Europe should be to make INSTEX, the special purpose vehicle that they launched in January of this year, operational,” she continues. “By the end of the summer, we need to see some transactions go through this. If Iran is able to say that at least INSTEX has become operational than this might be enough at least partially to allow to continue the deal going forward and prevent a full collapse.”

“Why they did this is difficult to say,” says Jarrett Blanc of the Carnegie Endowment for International Peace. “It could be due to domestic compulsions. Or as leverage for economic support from Europe, Russia and China. Or it could be to get into the room with Trump for a Kim Jong Un-style pageant.”

Iran’s move takes place against the backdrop of troubling U.S. actions. “We’ve seen Iran and the United States take quite an escalatory approach in the way that they are operating within the Middle East region,” Geranmayeh points out. “Secretary of State Pompeo was just in Iraq to try and send signals and messages to Iran reportedly to prevent the further escalation. Iran itself has said repeatedly that it doesn’t want a conflict with the United States, and President Rouhani has said that Iran has not left the negotiating table and its open to further diplomacy with the United States so longer as it rejoins the nuclear agreement.”

Escalation had always been the aim of some senior U.S. officials, argues International Crisis Group President Robert Malley. “How else to explain its continuous tightening of the economic squeeze or repeated calls on Europe to exit the agreement, steps that were almost certain to provoke an Iranian response?” he says. “The administration’s self-proclaimed goals were to change Iran’s behavior and get a better deal. Those were never going to be achieved. They were not the real objectives.”

It could have been worse, points out International Crisis Group Iran Director Ali Vaez. “Iran has taken minimum retaliatory measures against U.S. maximum pressure,” he says. “This slow-motion escalation is the continuation of the same strategy as before: buying time in the hope that cooler heads prevail. The ball is now in the court of the deal’s remaining signatories to choose between challenging U.S. unilateral sanctions or witnessing additional Iranian violations leading to the eventual unraveling of the deal.”

For Iran, the state of the economy is at stake. The U.S. cancellation of sanctions waivers for countries that import Iranian oil can potentially reduce Iran’s oil exports to a very low amount, most of it delivered via the black market. No refiner is willing to risk trading with Iran for fear of U.S. sanctions nor will anyone ship the oil or provide insurance. Additionally, the United States is applying fresh sanctions on Iran’s non-oil exports such as iron, steel, aluminum, and copper. These fresh sanctions could very well trigger protests by newly unemployed workers in key sectors like steel and automobile.

Iran needs to tread carefully, says Andrey Baklitskiy, an Iran expert at the Moscow-based PIR Center. Tehran will try not to alienate Europe too much or risk getting EU or even UN sanctions reimposed. “Iran will also try not to rush into an action that might provoke Israel or the United States to use military force,” he says. “Tehran still seems to try to outlast the Donald Trump administration and restart talks with next Democratic president.”

Invoking the dispute resolution mechanism of the JCPOA is tricky, Baklitskiy adds. “One step further and the whole thing goes to the UN Security Council, and that could trigger reimposition of all of the previous resolutions sanctioning Iran.”

Aveek Sen is an independent journalist working on cybersecurity and the geopolitics of India’s neighborhood, focusing on Pakistan, Afghanistan, Iran, and Bangladesh. @aveeksen.