The Iran Nuclear Deal at Two: A Status Report

by the International Crisis Group

It could have been worse. President Trump’s 12 January decision to waive sanctions while threatening to withdraw from the Joint Comprehensive Plan of Action (JCPOA) – the July 2015 nuclear agreement between Iran and the five permanent members of the UN Security Council plus Germany (the P5+1) – unless Congress and Europe agree to unilaterally alter its terms, leaves the deal in the state of limbo it acquired shortly after his election. Still, given his unpredictability, manifest hostility to the deal, abhorrence at the thought of validating anything that bears his predecessor’s mark and the unrest that has shaken Iran, speculation had been rampant that he would announce the agreement’s demise. But celebration is premature. The White House decision constitutes little more than a reprieve: taken at face value, the standard Trump insisted be met by May in order for the U.S. to remain in the deal is inconsistent with the JCPOA. The accord’s other signatories should use this period to encourage the U.S. not to withdraw while considering ways to sustain the accord regardless of U.S. actions. Its collapse would reignite a crisis that could deepen tensions in a tumultuous region and strike a hard-to-reverse blow to multilateral diplomacy and the non-proliferation regime.

As it enters its third implementation year, the JCPOA continues to serve its essential purpose: last year, Tehran scrupulously adhered to its nuclear obligations, according to the International Atomic Energy Agency (IAEA), rendering an undetected dash toward nuclear weapons impossible. This apparently is only of marginal interest to the Trump administration, which continues to denounce the accord as flawed because some of its nuclear restraints expire between 2026 and 2031 and because it fails to address Iran’s broader policies, including its ballistic missiles program and support for non-state actors in the region.

Trump took a first major step toward undermining the JCPOA in October, when he refused to certify the accord on the grounds that the sanctions it suspended were not proportionate to Iran’s nuclear steps. Pressed by most of his cabinet members, who argued that withdrawal from the deal would be diplomatically costly, he has continued to waive the sanctions. But the administration has both imposed other economic penalties and discouraged international business with Iran, thereby putting Tehran in the uncomfortable position of having to comply with the deal’s nuclear restrictions while only partially benefiting from its economic rewards. Trump also tasked Congress with passing legislation that would unilaterally alter the terms of the JCPOA. As some of his backers put it, his message was plain: either fix the deal, or I will nix it.

By the time Trump once again had to decide whether to waive the sanctions, his approach had not borne fruit. This in no small part is because unilateral alteration of the JCPOA would constitute a violation and thus would isolate the U.S., something even many Republican members are loath to do. Congress to date has been unable to find a compromise that simultaneously placates the White House, complies with the deal and is acceptable to the Europeans. So this time he upped the ante: he made clear he would pull the plug on the JCPOA if over the next 120 days Congress and Europe failed to meet his demands.

For its part, and for the time being, Tehran has complied with the deal, focused on winning the international blame game and ensuring continued European economic dealings. But patience could be wearing thin. Iran’s favourable diplomatic posture hasn’t helped inside Iran, where the accord’s dividends have been slow to materialise, dashing popular expectations and contributing (alongside deeply rooted dissatisfaction at mismanagement, endemic corruption, and political and socio-economic deprivation) to unrest and protests in several cities. Should those dividends further erode as a result of U.S. actions – more uncertainty, more sanctions, or pulling out of the deal – Iran could respond in damaging fashion.

Europe, with which Iran’s trade has nearly doubled in the past year, arguably holds the key to the deal’s survival: it needs both to persuade the U.S. not to renege on its commitments and to preserve sufficient incentives for Tehran to remain in the deal even if Washington does so or if its actions continue to eat away at Iran’s economic benefits. But here too there is uncertainty over how effective Europe can be. The Trump administration would like to act in unison with its European partners, but not at all costs; it could decide to go its own way notwithstanding European opposition. And the imposition of U.S. secondary sanctions on European companies doing business in Iran would confront them with the choice of either scaling back their (still relatively modest) Iranian trade and investment or risk jeopardising access to the far larger and more lucrative U.S. market.

Fear that the president might keep his word and walk away from the deal likely will motivate European actors and members of the U.S. Congress to seek ways to mollify Trump without endangering the JCPOA. Several Republicans and Democrats in the U.S. Congress already have been floating draft legislation that would meet the White House half-way. For their part, France, Germany, the UK and the European Union (EU) have been debating how to signal greater concern about Iran’s ballistic-missile program and regional activities, considering what to do once some of the nuclear restrictions expire and weighing their reaction to passage of the above-mentioned U.S. legislation. How Trump’s bombastic 12 January ultimatum will affect their calculus – and whether his tough rhetoric still leaves room for compromise – remains uncertain.

There was some ambiguity in the president’s language that it is worth testing, but only up to a point. Should Congress pass legislation or Europe agree to U.S. measures that constitute JCPOA violations – for example by threatening automatic sanctions snapback if Iran engages in activity permitted under the deal – they would be complicit in the deal’s breakdown. This in turn would render it virtually impossible to keep Iran from taking reciprocal measures of its own. In other words, steps designed to forestall a U.S. pullout from the deal could end up killing it. Neither the U.S. Congress nor Europe should have anything to do with them.

If the Trump administration is determined to breach the JCPOA, better it do so on its own, and better Europe then do what it can to save it. Key would be to ensure sufficient diplomatic and economic dividends for Iran provided Tehran abides by its commitments and even though these dividends undoubtedly would fall short of the full realisation of what the JCPOA envisioned. For this to happen:

  • Europe should move beyond rhetorical support and ensure the JCPOA’s survival by providing cover for its businesses in the event of unwarranted U.S. secondary sanctions. According to an exclusive Crisis Group survey of more than 60 senior managers at multinational companies actively pursuing opportunities in Iran, this could be achieved if Iran remains committed to its JCPOA obligations and European countries pre-emptively revive their “Blocking Regulations”, shielding their companies from U.S. extraterritorial sanctions. Europe so far has been wary of taking a step that could prompt a trade war with the U.S., but may now feel its own security is at stake. It should also reach agreements on a bilateral EU plan to invest in the Iranian economy and a long-term energy partnership with Tehran, while diplomatically engaging on its regional policies and human rights record.
  • Iran should take several steps of its own. It should put its house in order by improving its banking standards and creating a less corrupt and more transparent business environment; this is not only essential to attract foreign capital and technology, but also to address popular grievances. To increase Europe’s confidence in its intentions, Tehran should bolster cooperation with the 1996 Comprehensive Nuclear Test-Ban Treaty (CTBT) organisation, sign the 2002 Hague Code of Conduct (HCOC) against ballistic-missile proliferation, and release dual-nationals arrested in Iran on dubious charges.
  • The U.S. Congress should refrain from altering the JCPOA’s terms by threatening to reimpose sanctions even if Iran abides by the deal. Such legislation might defer an immediate crisis, but it would violate a delicately balanced multilateral accord and undermine U.S. credibility as a reliable negotiating partner. Congress could reduce the president’s certification burden, strengthen sanctions’ snapback provisions tied to potential Iranian JCPOA violations, and express its sense that there needs to be a supplemental deal, but it must not be complicit in killing a deal that is working.

That the JCPOA, despite Trump’s antagonism, has outlived other multilateral accords that he rolled back is a testament to its utility and possibly its strength: the agreement has put a lid on Iran’s nuclear program and opened the door to its economic rehabilitation. But its other signatories should not assume that it can withstand further blows. They ought to defend it proactively, before it gets too late.

Reprinted, with permission, from the International Crisis Group. For the full report, click here. Photo: Iranian Foreign Minister Javad Zarif speaking on the JCPOA in the Iranian parliament.

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  1. What US citizens (and the world) have to deal with is the fact that we have, in many matters including this one, undemocratic presidential rule. The Constitutional stipulation that “He shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur” is regularly disregarded and, hey, we have an “agreement” signed by the president and not a treaty. It’s a situation giving every president total authority to accept or reject.
    In this case, let’s face it, two-thirds of the Senate would probably not have consented, therefore Trump is not so far off base in a matter that actually the US (and other countries) have no legal authority meddling in, i.e. Iran’s domestic affairs.
    So it isn’t only Trump’s antagonism, would that it were so. It is US antagonism toward Iran because Iran won’t accept US hegemony (as US allies do). It’s all about regime change in Iran, which the President and the Congress (as in Iraq and Syria) is working toward.

  2. The issue was never “nuclear weapons in Iran”; that was always just a pretext for another policy, of imposing regime-change in Iran. The people who are opposed to the JCPOA are not opposed because of any actual concern about nuclear weapons from Iran, but only because until now nuclear weapons provided a convenient pretext to start a war between the US and Iran to impose regime-change there. So, no matter what the JCPOA says, they will still oppose it.

    There was never any evidence of a nuclear weapons program in Iran (ever) and Iran had long been offering BETTER nuclear compromise terms that the US rejected, ignored or even actively undermined in order to maintain that pretext for regime-change. Examples abound, from the 2003 faxed offer, to the Khatami administration’s suspension of enrichment for 3 years under the Paris Agreement deal with the EU3 (which resulted in Iran receiving “an empty box in pretty wrapping” from the EU-3, thanks to US pressure on them to not deal with Iran) plus the Turkey/Brazil nuclear swap deal that Obama killed-off in his first term after Iran had agreed to the same terms as Obama’s letter (which the Turks and Brazilians made public out of resentment for having the rug pulled out from under them by Obama.)

  3. The approval process of an agreement or a treaty is an internal matter for the US. When other countries negotiating with the US executive branch they really don’t concern themselves by the internal process of the negotiating party. In this case, all they care about is that the president of the USA has signed the agreement. Knowing the fact that the Republicans in Congress and the Senate were not interested in cooperating and/or helping President Obama for 8 years is of no concern to Iran as Javad Zarif, Iran’s Foreign minister, had mentioned it many time that he’s dealing with government representatives from 5+1 countries!

  4. I agree with both of you, Cyrus and Don Bacon! The issue between the US and Iran has never been about the nuclear development! It is all about “SUBMISSION” to the power which Iran refuses to do so. As I mentioned before regardless of the regime in Iran, Iranians have a problem with the method by which US is approaching Iran and the level of disrespect and propaganda they are getting from the US! Of course the Shah’s reign and his submission to the US was never acceptable to the Iranians which eventually resulted into a big blow out!
    Unfortunately the US is repeating the cycle by raising the next excuse which the Iranians missile development! Bottom line is that the US government would love to see Iran turned into another Afghanistan or Iraq and/or Syria & Libya! I’m not optimistic about this situation and once again I believe that Iran had made a bad political judgement by not finishing what they started in late 1980’s following Saddam Hossein attacking Iran!

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