As Iran Sells More Oil to China, the U.S. Gains Leverage

A new report from Bloomberg, citing data from Kpler, an analytics company, claims that Iranian oil exports to China will reach 1.5 million barrels per day this month, the highest level in a decade. The report has led to a flurry of criticism from hawks that President Biden is failing to enforce U.S. sanctions on Iran’s oil exports and thereby gifting Iran billions of dollars in oil revenue. But in reality, Iran appears unable to spend most of the money—a situation that is giving Biden leverage he can use in future negotations.

Iran’s resurgent oil exports are earning the country a lot of money. The crude oil price is currently hovering at around $80. Iran discounts its oil for Chinese customers, so the actual selling price is probably closer to $74 dollars per barrel. At this price, Iran’s 1.5 million barrels per day of exports are earning the country around $3.3 billion per month.

These back of the envelope calculations are necessary because China’s customs administration stopped reporting the value and volume of oil imported from Iran back in May 2019, when the Trump administration revoked a series of waivers permitting limited purchases of Iranian oil by select countries. When looking to the Chinese data alone, Iran’s export revenue appears much smaller than it is, hiding the true trade balance.

In the most recent three months for which we have customs data, Iran’s imports from China averaged $826 million. In the same period, Iran’s non-oil exports to China averaged $357 million. When not counting Iran’s oil exports, Iran appears to be running a trade deficit with China of around $469 million. But when adding the reasonable estimate of $3.3 billion of oil exports, the monthly trade balance swings dramatically in Iran’s favor. In recent months, Iran has likely run a trade surplus with China of around $2.8 billion per month.

In other words, Iran is earning billions of dollars it appears unable to spend. After all, Chinese goods, especially parts and machinery, are a lifeline for Iranian industry. If Iran was able to buy more Chinese goods, it would be doing so. Two other data points confirm this interpretation. Exports from the UAE to Iran remain depressed, so Chinese goods are not arriving in Iran indirectly. Purchasing managers’ index data for the manufacturing sector also indicates that Iranian firms continue to struggle with low inventories of raw materials and intermediate goods. Moreover, Iran is continuing to doggedly pursue the release of its frozen assets, including $6 billion that will be made available for humanitarian trade as part of the recent U.S.-Iran prisoner deal. Iran would not be so desperate to strike such deals were its oil revenues in China readily accessible. In short, Iran is selling its oil and earning money, but it is not getting the full economic benefit from the surge in oil exports.

Chinese exporters and their banks remain wary of trading with Iran, where entities and whole sectors remain subject to U.S. secondary sanctions. For most Chinese multinational companies, trading with Iran is not worth the risk. In the first six months of this year, Chinese exports to Iran averaged $898 million per month. Exports remain 35% lower than in the first six months of 2017, the most recent year during which Iran enjoyed sanctions relief.

It remains to be seen whether Iran can sustain this new, higher level of oil exports. Oil markets can be fickle, and China’s economic wobbles could depress demand. But for now, Iran’s significant trade surplus with China also means that its renminbi reserves must be growing. This is a novel situation. Historically Iran has run a small trade surplus with China. Between January 2012, when the Obama administration launched devastating financial and energy sanctions on Iran, and January 2016, when the implementation of the nuclear deal granted Iran significant sanctions relief, the average monthly trade surplus was just $511 million (China’s purchases of Iranian oil are reflected in customs data for this period). In other words, assuming its oil revenues are stuck in China, Iran’s reserves are now growing four times faster than in that period.

At first glance, this might look like a major failure for the Biden administration. Biden purposefully maintained the “maximum pressure” sanctions imposed by Trump in an effort to sustain leverage for negotiations and Iranian oil exports remain subject to U.S. secondary sanctions. But those who claim that Biden is failing to enforce his sanctions are failing to see the wisdom of the current U.S. enforcement posture.

First, Biden is loath to deepen already heightened tensions with China. Sanctioning Chinese refiners for their purchases of Iranian oil, thereby targeting China’s energy security, would be a dramatic escalation in the growing economic competition between Washington and Beijing. Second, such escalation would be entirely pointless given the circumstances around Iran’s oil exports—namely that Iran is not getting the normal economic benefits. Given that Iran is earning more money but cannot spend it, the U.S. is actually gaining leverage for future negotiations.

Unlike Trump, Biden has made a serious effort to engage in nuclear diplomacy with Iran and is likely to continue those efforts if there is a reasonable opportunity to achieve a new diplomatic agreement that contains Iran’s nuclear program. But U.S. negotiators have struggled to make a compelling offer to their Iranian counterparts. Many Iranian policymakers felt the promised economic uplift of sanctions relief would be too small. Iran’s opening gambit in the negotiations with Biden included the claim that sanctions had inflicted $1 trillion of damage to Iran’s economy and that Iran was owed compensation.

With its oil exports significantly depressed, Iran has been unable to significantly grow its foreign exchange reserves, which the IMF estimates at around $120 billion. If Iranian officials believe that they need to remediate $1 trillion of economic damage, the windfall represented by the unfreezing of foreign exchange reserves does not count for much.

The longer the sanctions remain in place, the more money will be needed to undo the cumulative effects of U.S. sanctions, which have now hobbled Iran’s economy for over a decade. It is politically impossible for Biden to promise any kind of compensation for Iran—the best that the U.S. can do is promise to once again unfreeze Iran’s own money as part of a new diplomatic agreement.

For this reason, it is a good thing if Iran’s reserves are growing. Iran’s oil exports to China are kind of like payments made as part of a deferred annuity insurance contract. One day, Iran will be able to cash out on that policy. But it can only cash out if it meets the conditions set by the U.S. In other words, every barrel of oil Iran is currently selling to China is increasing U.S. leverage for future talks. It would be wise to let the oil flow.

Photo: Canva

As Protests Continue, Biden Should Enable Remittance Transfers to Iran

Protests in Iran are continuing as the Iranian people bravely maintain a presence in the streets and on social media. So far, Iranian authorities have given no clear indication that they will reform policies in line with protest demands and have signalled that a larger crackdown may be coming.

While the protests have meaningfully shifted the political discourse around women’s rights and state repression, it is unclear whether Iran’s civil society has the resources necessary to generate a large and lasting protest movement that maintains pressure on Iranian authorities and raises the costs of further crackdowns. One critical factor is the economic disempowerment of Iranian society over the last decade.

Between 2010 and 2020, the spending power of the average Iranian household has fallen by just over 20%. This loss of economic welfare is primarily the result of U.S. sanctions, particularly those imposed in 2012 and re-imposed in 2018. In the two decades leading up to 2012, Iranian households enjoyed an unbroken period in which living standards were rising.

U.S. sanctions policy has made protests in Iran more frequent, but also less likely to succeed. The economic precarity that has become a dominant feature of the Iranian social condition over the last decade makes it harder to sustain protest movements. Many Iranians literally cannot afford to organise and mobilise over weeks and months. Workers are reluctant to strike given the risk of losing their jobs. Even those who retain the economic means to protest lack the tools to organise.

In institutional terms, sanctions have weakened the formal and informal civil society organisations that help mobilise the middle class and channel middle class resources towards political action. Charities, advocacy groups, legal aid providers are starved of resources. Civic-minded women, who are at the forefront of Iran’s new protest movement, have been hit especially hard. As one Iranian activist put it last year, “Activists are struggling to survive… If they do end up with a bit of time at the end of the day for their activism, they are often too exhausted and preoccupied with economic survival to be effective.”

The recent protests have no doubt energised a wide range of social groups in Iran, but looking in both economic and institutional terms, the balance of power between Iranian state and Iranian society has clearly shifted in the state’s favour. Mobilisations have become more frequent, but they tend to be smaller and more fleeting, making it easier for the state to either crackdown or to simply wait out the protests.

As such, the Biden administration should adjust its sanctions policies to broadly authorise remittance transfers to Iran, making it possible for Iranians in the diaspora to support family and friends in ways that reduced economic hardship and strengthen capacities for political participation.

Remittance flows are restricted because banks and money transfer companies do not facilitate transfers to Iran owing to sanctions on the Iranian financial system. Most remittances are therefore made via exchange bureaus (known to Iranians as sarafis) or are hand-carried into Iran by individuals. U.S. persons are explicitly authorised to hand-carry personal remittances but are not permitted to use money service businesses. The financial flows made through exchange bureaus and hand-carry channels are difficult to track and so the true extent of remittance flows may not be reflected in authoritative estimates, but Iran is likely receiving far less remittance transfers than countries with similar economic characteristics.

The World Bank estimates Iran received $1.3 billion of remittances in 2021, equivalent to just one-tenth of a percent of GDP. By comparison, Thailand, a country with a higher per capita GDP ($19,000 vs. $16,000 in PPP terms) and a smaller population (70 million vs. 84 million), received $9.0 billion of remittances, equivalent to 1.8 percent of GDP.

It is unlikely that exchange bureaus and physical transfers total in the many billions of dollars. In short, Iran’s remittances inflows are much lower than expected given the size of the economy and the economic needs of the population. Remittances flows are far too limited to shore the economic welfare of households in the face of the generalised economic crisis to which sectoral sanctions contribute—a fact evidenced by the erosion of household consumption over the last decade.

A significant body of academic research suggests that remittances encourage political participation, including in protests. In a 2017 paper, Malcolm Easton and Gabriella Montinola use individual-level data from Latin America to explore the relationship between the receipt of remittances and political participation. They find that “remittance recipients are more likely to select protest rather than the base response” whether in a democracy or autocracy. Additionally, in autocracies, remittances make political change seem more achievable. Easton and Montinola explain that “receiving remittances increases the odds of selecting protest relative to believing change is not possible by 34%.” Abel Escriba-Folch, Covadonga Meseguer, and Joseph Wright arrive at a similar conclusion in their 2018 study which used individual-level data from eight African countries. They find strong evidence that “remittances increase protest by augmenting the resources available to political opponents” and “remittances may thus help advance political change.”

The Iranian diaspora in the United States is the largest and most politically active in the world. As U.S. persons, members of the diaspora living in the United States are unable to send remittances to Iran beyond the hand-carry method, which is not an option for those who cannot travel to Iran for personal or political reasons, or who are opting not to travel to Iran due to the increased risks facing dual nationals. To provide routine and reliable financial support to family and friends in Iran, members of the Iranian diaspora should be able to avail themselves of money service businesses or other payments solutions.

The relevant regulation does stipulate that remittance transfers “processed by a United States depository institution or a United States registered broker or dealer in securities” are authorised. However, there is a lack of such institutions offering remittance services for Iran—U.S. banks do not maintain correspondent accounts at Iranian financial institutions. As such, the Biden administration should update its regulations to enable U.S. persons to make remittances transfers through other channels. This can be done through the issuance of a new general license with two aims.

First, the Biden administration could authorise the use by U.S. persons of money service businesses, such as Europe-based exchange bureaus, to transfer non-commercial, personal remittances to Iran. Second, and perhaps more usefully, the Biden administration could authorise the use by U.S. persons of cryptocurrency exchanges to purchase USDC stablecoins and transfer those stablecoins as non-commercial, personal remittances to Iran. The administration would also need to authorise U.S. cryptocurrency exchanges to onboard users in Iran.

Exchange bureaus can typically make deposits to accounts at Iranian financial institutions. The existing regulations do state that U.S. banks can engage with money service businesses in third-countries to make remittance transfers to Iran. But that makes such transfers subject to the discretion of U.S. banks. The guidance should be modified such that U.S. persons can directly engage exchange bureaus, for example those in Europe, to make transfers to Iranian bank accounts. Making it possible for U.S. persons to use third-country money service businesses would have an immediate impact on the volume of remittances sent to Iran. However, this channel cannot scale indefinitely as money service businesses generally need to balance inflows and outflows to make transfers in a netting process.  

The use of cryptocurrency could be even more impactful. While few Iranians maintain cryptocurrency accounts, the technology provides one of the few scalable options for enabling U.S. persons to make remittance transfers to Iran. So long as cryptocurrency exchanges receive guidance that allows them to onboard Iranian users, Iranians can be expected to adopt the technology and U.S. persons will be able to transfer cryptocurrency without a constraint on scale.

The authorisation should be limited to exchanges and should not cover transfers made directly to addresses or via wallet providers, because of the additional controls that the exchange can impose. It is technically feasible for cryptocurrency exchanges (such as Coinbase and FTX) to limit the value of transfers that can be received and held by Iranian users in line with the provisions of the authorisation. Additionally, transactions processed by the exchange do not happen on cryptocurrency blockchains, they are run within the exchange’s internal database. This enables the exchange to freeze any account held by its user and block further transfers if necessary. Moreover, the exchange could ensure that users were only able to transfer certain cryptocurrencies to Iran, such as traceable USD stablecoins which are pegged to the dollar (the best option is USDC, which has a track record of cooperation with US regulators). This would ensure that exchanges are not providing a platform for speculative trading by Iranian users and that Iranians do not have a perverse incentive to hold onto their remittances. These exchanges can also require additional KYC for U.S. persons and Iranian individuals on either end of a given transfer.

To be effective, these authorisations would need to be followed by extensive outreach by the U.S. Department of Treasury and U.S. Department of State to ensure that money service businesses and cryptocurrency exchanges begin supporting Iran-related transfers. U.S. authorities would also impress the importance of monitoring for suspicious transactions and could ask for data on the remittance flows to enable better enforcement. Any authorisation could be granted based on a limit to the value of remittances made by a U.S. person each month—a limit as low as a few hundred U.S. dollars could make a significant difference in supporting basic household welfare in Iran.

There is a risk of abuse by individuals seeking to transfer funds to designated entities or individuals in Iran. But the risk is limited. Flows of USDC cannot be directly taxed or expropriated by the state. To spend any remittances they have received, Iranians would either need to pay for goods and services by transferring USDC to another Iranian user that has created an account on the exchange, or by finding an Iranian user who is willing to exchange USDC for cash.

The lack of hard currency flows means that the proposed action does not entail a substantive change to the structure of U.S. sanctions on Iranian economic sectors and state-owned and controlled entities. Even so, the authorisations can significantly boost the economic resources of Iranian civil society and enable more robust political participation, including in protests. However, the decision to participate in the protests lies with each Iranian. Unlike a strike fund, this policy does not create an incentive for protest, nor are the remittances made contingent on certain kinds of political action.

There is a precedent for this approach. Even while adding sanctions on the Maduro government, the Trump and Biden administrations have notably allowed Venezuelans to continue to use U.S.-based financial services, such as the payments app Zelle, to send and receive U.S. dollars. This has had the effect of shielding many Venezuelans from even steeper declines in economic welfare as the country experienced a steep sanctions-induced recession.

Enabling Iranian-Americans to make remittance transfers to their family members in Iran within the context of existing sanctions regulations would mean that the Biden administration is not only seeking to deprive the Iranian state of resources for repression but is also working actively to preserve the power of the civil society at a time of general economic crisis. This is what true solidarity would look like.

Photo: IRNA

Do Sanctions Pose an 'Irreversible Knowledge' Problem?

As the deadlock over the future of the Joint Comprehensive Plan of Action (JCPOA) continues, there is growing concern that Iran’s nuclear activities are hollowing out the benefits of the nuclear deal, even if it were to be successfully restored. Western governments believe that Iran’s enrichment activities are allowing Iranian nuclear scientists to gain “irreversible knowledge.” Even if Iran comes back into full compliance with its non-proliferation commitments under the JCPOA, it will have edged closer to becoming a threshold nuclear state.  

Irreversible knowledge is powerful shorthand. A joint statement issued by France, Germany, and the United Kingdom in March 2021 noted that the recent breaches of the JCPOA were “providing Iran with irreversible knowledge gain that it did not possess prior to signing the JCPOA, as well as permanently and significantly enhancing Iran’s enrichment capacity.” In January of this year, Republican lawmakers sent a letter to U.S. Secretary of State Antony Blinken to urge him to abandon the nuclear talks and increase pressure on Iran, in part because Iran was continuing “to gain irreversible knowledge” as it produced more enriched uranium. In May, Israeli Defense Minister Benny Gantz warned that “Iran continues to accumulate irreversible knowledge and experience in the development, research, production, and operation of advanced centrifuges.”

Clearly, the concept of irreversible knowledge is well defined among those parties seeking renewed non-proliferation commitments from Iran, as well as those parties seeking to scupper any deal. According to Kelsey Davenport, the Biden administration will remain committed to the nuclear talks so long as the “the non-proliferation benefits of restoring the JCPOA outweigh the irreversible knowledge that Iran has gained.” Crucially, the nuclear deal prevents Iran from gaining further nuclear knowledge—commitments to cease significant enrichment activities and to dismantle advanced centrifuges reflect concrete measures that prevent the kind of nuclear research and production activities consistent with a weapons programme. By preventing additional knowledge gains, the JCPOA restricts Iran’s inherent nuclear capabilities.

In return for its compliance with these restrictions and strict monitoring, Iran receives significant sanctions relief—this is the basic quid-pro-quo of the JCPOA. Iran continues to place significant value on sanctions relief, especially as its economy languishes, but even so, the terms of the agreement are not as fair as they might seem. 

Countries that apply sanctions (sanctionists) regularly use economic coercion to achieve non-proliferation goals. The Biden administration, like its predecessors, believes that the economic pain of sanctions forces uncooperative countries like Iran to the negotiating table, where non-proliferation agreements can be hammered out. Whether Iran entered into the nuclear negotiations because of economic pressure is up for debate. Notwithstanding, non-proliferation experts have heralded sanctions as a critical part of the arms control toolbox.   

But what if the use of sanctions as part of non-proliferation diplomacy introduces another kind of irreversible knowledge problem, one overlooked by Western policymakers? Afterall, non-proliferation agreements impose no restrictions on the ability of sanctionists to further develop their means of economic coercion. Even after a deal like the JCPOA is adopted and implemented, sanctionists can continue to advance their understanding of how to apply and enforce sanctions with devastating effect. This irreversible knowledge is gained in three ways.

First, sanctionists can continue to study the target’s economy even after the implementation of a non-proliferation agreement. Some Iranian critics of the nuclear deal have complained that re-entering the JCPOA will make Iran more vulnerable to sanctions by increasing economic dependence on the West. But the issue is more subtle than that. Whether or not trade increases with Western companies after the lifting of sanctions, Western governments can continue to study the Iranian economy to understand its composition and its vulnerabilities in ways that will aid the design of future sanctions, whether those are broad sectoral measures or specific designations. Indeed, the U.S. continued to apply sanctions on Iran even after the nuclear deal was agreed, designating additional entities on the basis of terrorism or human rights related authorities. Even if these moves did not amount to a direct violation of the JCPOA, they did reflect how the U.S. was continuing to gain knowledge about how to target Iranian individuals and firms even after the deal’s implementation. 

Second, sanctionists can continue to apply sanctions on other countries in ways that advance knowledge about how to make sanctions hurt. Were the JCPOA restored in full today, the United States and Europe would still be applying sanctions on a wide range of countries, most notably Russia. The application of sanctions in Russia, for example, provides practical experience that can inform how future sanctions on Iran might be made more harmful. Were Iran to gain irreversible nuclear knowledge in an analogous manner, Iranian nuclear scientists would be enriching uranium outside their borders, while ceasing the problematic research in Iran. In this way, even if sanctionists were to completely abstain from applying sanctions on Iran after the implementation of the JCPOA, they would still retain the ability to use sanctions in other countries in ways that expand capabilities.

Third, sanctionists can continue to strengthen the institutions responsible for designing and imposing sanctions. Whereas Iran could not install more centrifuges were it to re-join the nuclear deal, the U.S. can continue to increase staff within key offices such as the U.S. Treasury Department’s Office of Foreign Assets Control. As a result, the JCPOA actually exacerbates the escalation dominance of the U.S. over Iran. Sanctionists are inherently better prepared for the breakdown—whether wilful or accidental—of any non-proliferation agreement in which sanctions relief has been traded for non-proliferation commitments.

In this way, the irreversible knowledge gained by sanctionists represents a serious challenge to non-proliferation efforts. Conceptually, as U.S. and European officials increasingly conceive of sanctions as “economic weapons” and describe themselves as “nerd warriors” it is appropriate to apply to sanctions the concept of irreversible knowledge that has so far been only been invoked in the context of Iran’s nuclear programme.

The threat posed by the irreversible knowledge of sanctionists has weighed on Iran’s participation the nuclear negotiations. It is not merely the possibility of Trump’s re-election in 2024 that has cast a shadow over the talks, but also the fact that any administration that might wish to reimpose sanctions on Iran in the future will have a much deeper understanding of Iran’s economic responses to maximum pressure. For example, when the Trump administration sought to drive Iran’s oil exports down to “zero,” they did not expect that Iran would end up maintaining exports above 1 million barrels per day, with oil passing through the UAE and Malaysia, before heading to China. The role of intermediation in sustaining oil exports under sanctions is now a known feature of Iran’s economic resilience strategy. This datapoint can be incorporated into future sanctions design. There are countless other examples of where real and actionable knowledge has been gained by the U.S. and Europe that can be used to hammer Iran’s economy. As demonstrated by the circumstances of Trump’s withdrawal, Iran’s compliance with its commitments under the nuclear deal offers no guarantee that it will avoid the return of sanctions. 

Western negotiators have tried to account for Iran’s fears about another U.S. withdrawal from the JCPOA by engaging in a dialogue on possible political or technical guarantees that might serve to make the nuclear deal robust. But the discussion over guarantees is focused on reducing the probability of sanctions “snapback.” No solutions have been offered to try and curtail the impact of snapback. Theoretically, the impact of snapback gets worse as the U.S. and Europe gain more knowledge about how to deploy sanctions for maximum effect. Truly mitigating the risks for Iran means addressing both probability and magnitude.  

Western diplomats will no doubt continue to use sanctions to advance their non-proliferation agenda and the JCPOA is a good deal that ought to be restored. But Iran’s bitter experience under the nuclear deal makes clear that to create more durable and equitable non-proliferation agreements, Western officials must find ways to account for the fact that there is a fundamental asymmetry in the manner in which non-proliferation agreements deal with the issue of irreversible knowledge. Sanctions work by weaponising normal economic interdependencies. This makes it difficult to imagine that the knowledge gains of sanctionists can be curtailed. At best, these knowledge gains must be compensated for, either by limiting the non-proliferation demands made of countries like Iran, for example by granting them more leeway to undertake certain kinds of research, or by devising other more complex mechanisms, such as some kind financial annuity for non-proliferation agreements that kicks-in irrespective of the fault for the deal’s demise. 

For now, the solutions are unclear. But if they are to be found, policymakers and experts committed to global non-proliferation must recognise their one-sided approach to irreversible knowledge within the context of non-proliferation regimes. Under the JCPOA, Iran’s ability to gain nuclear knowledge is constrained, but the U.S. and Europe can continue to hone their sanctions. This asymmetry is emblematic of a significant flaw in all agreements that trade sanctions relief benefits for nuclear restrictions and monitoring commitments.

Photo: state.gov

Relations Between France and Iran in the Biden Era

The French government has welcomed the election of new US President Joe Biden, who disapproves of former President Donald Trump’s withdrawal from the Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), and has confirmed his desire to return to it. France, like the rest of Europe, is mostly pleased by Biden’s declared intent to rebuild transatlantic relations and consult European allies on Iranian matters, as well as on other regional tensions. Biden’s early steps to rejoin the Paris Agreement, the World Trade Organization and the World Health Organization confirm that he is following through on his campaign promises: that the United States is back and that it will play the multilateralism role, consulting allies and partners and ending the previous administration’s abrasive practices.

Against this backdrop, France, together with Germany and the United Kingdom—the E3 parties to the nuclear agreement—is facing several challenges with both Tehran and Washington. Paris seeks a clear understanding of Washington’s true intentions with Tehran, whilst also needing to realistically assess Iran’s posture and develop a European-wide vision for relations with Iran.

An Enduring Hawkishness

France’s current approach to Iran can be traced back to former President Nicolas Sarkozy, who introduced a new Middle East policy based on neoconservative intellectual visions shaped by a team of strategists nicknamed “The Sect” and led by the late Thérèse Delpech. Paris not only maintained its hawkish approach under François Hollande as president and Laurent Fabius as foreign minister, but it also hardened this approach during the painstaking negotiations leading to the Iran nuclear deal in 2015. At a series of tense meetings, Fabius endlessly added complexity to talks, claiming that US negotiators were naive and ready to make undue concessions to Iran while neglecting critical safeguarding details. The French felt that former US Secretary of State John Kerry and Iranian foreign minister Mohammad Javad Zarif were poised to strike a hurried, weak deal without taking France’s expert guidelines into consideration. Fabius nearly killed the negotiations.

Fabius and other members of The Sect also sympathised with Israeli Prime Minister Benjamin Netanyahu and included some Israeli priorities within French positions. Saudi Arabia has become a growing consumer of French weapons and Riyadh’s views were likewise taken into account, and Saudi pressures to prevent or slow Iran’s nuclear capacity have been considered. Some in France hoped for more pragmatic behaviour when Emmanuel Macron became president, but the new foreign affairs minister, Jean-Yves Le Drian, who previously worked as the defence minister, is the guardian of the hawkish line.

Macron occasionally distances himself from his more hawkish advisers. He opposed ousting Syrian President Bashar al-Assad by force before a political solution could be reached, and Macron has stated that he wants an end to a neocon policy. Macron showed his independent streak when he invited Zarif to the 2019 G7 Summit in Biarritz, bringing a four-point plan to Trump and genuinely attempting to arrange a phone conversation between the US president and Iranian President Hassan Rouhani on the sidelines of the UN general assembly later in the year. The conversation did not end up happening because Trump did not take the opportunity and Rouhani did not have the necessary political support. But the facilitation efforts were sincere and significant.

Short-Term Gains but Long-Term Costs?

French officials have repeatedly stated that they want to see the JCPOA survive. But their messages can appear to contradict that mission. In a phone call on Tuesday, Macron told Rouhani that Iran must make “clear gestures” to revive the nuclear deal. In an interview last month with the French weekly newspaper Journal du Dimanche, Le Drian said that tough discussions on ballistic proliferation and regional destabilisation by Iran will be necessary in the course of new negotiations. While the content of the message does not differ much from that set out by the Biden administration, the tone is more aggressive—an ultimatum rather than an offer to negotiate. Unsurprisingly, Iranian responses were harsh, but France’s top diplomats do not seem to understand—or do not want to understand—that posing diktats to a nationalist state is a big miscalculation.

Another miscalculation was made when Macron participated in an interview hosted by the Atlantic Council on February 4. Macron stated that Iran is closer to the atomic bomb now than before the 2015 agreement, that concerns about ballistic missiles, and the new negotiations should be global and inclusive—including even Saudi Arabia and Israel.

Macron added that the nuclear agreement cannot work if regional governments are not satisfied, but his vision of potential Saudi and Israeli involvement in the future of JCPOA is ambiguous. Is the involvement limited to consulting these “partners,” or will they be invited to the negotiation table? Biden will likely consult his regional partners without inviting them to the negotiation room—Washington is under no illusions as to the impact such a move would have. Officially inviting the Saudis and Israelis to be consulted is itself an affront to Iran. Unsurprisingly, Saeed Khatibzadeh, the spokesperson of the Iranian foreign ministry, immediately rejected the idea of new participants in nuclear deal talks after Macron’s comments were publicised.

Categoric opposition from Tehran was certain, so why did Macron make such a statement? According to Al-Quds Al-Arabi, a pan-Arab newspaper, the French president is set to visit the Saudi capital of Riyadh soon and may discuss the Iranian nuclear program with King Salman and Crown Prince Mohammed bin Salman. This will certainly please the Saudis, who will appreciate receiving France’s political support, but the Iranians see this move as deliberately provocative. On 9 February, François Nicoullaud, a highly respected expert and France’s former ambassador to Iran, commented on Macron’s proposals, saying that the mediator’s job is listening to and exploring opinions from both sides and then developing a step-by-step solution in a manner that’s as neutral as possible and that’s acceptable to everyone. Al-Quds Al-Arabi reports that talks would include reinforcing bilateral cooperation, notably military. If this is true, it might indicate that Paris is seeking advantages from Biden’s intention to review US military cooperation and weapons deliveries to the Saudis. France is likely to see this as an opportunity for juicier military contracts.

France’s flirtation with Saudi Arabia undermines its bilateral relations with Iran, depriving Macron of his claimed ambition of being a major facilitator of a “demanding dialogue” between Iran and the United States. During his interview with the Atlantic Council, Macron reiterated the role he is willing to play as a mediator. The French-Saudi alignment, even if France does not agree with all of the Kingdom’s actions and policies, will convince Iran that Paris cannot mediate impartially. If Le Drian distrusts Iran, the reciprocal is also true.

Repairing Bilateral Relations

Bilateral relations are in bad shape, and polite diplomatic language cannot hide the cracks. But it is not too late for a fix. The priority now is to safeguard the possibility of an orchestrated return to the JCPOA. Zarif has suggested that Josep Borrell, the European Union’s High Representative, could “choreograph the actions that need to be taken” by the United States and Iran. Here, France might play a role by showing that as a de facto leader of the E3, it can lend visible support to such an initiative. Macron would have the opportunity to implement its “honest broker” status. Another issue might allow France to gain credibility not only with Tehran but also with other Europeans. The Instrument in Support of Trade Exchanges (INSTEX), which facilitates transactions for European trade with Iran despite limitations in direct banking channels, deserves more attention. France, joined by other Europeans, should press Biden to quietly bless the operation of INSTEX. If France, supported by other EU member states, manages to persuade Biden to make such a step, the impact on bilateral trade between France and Iran could help repair some of the lost bilateral trust.

On regional issues, France should use its influence on Saudi Arabia, Iraq, Qatar and the United Arab Emirates to encourage direct dialogue with Iran. Paris could make suggestions both on confidence-building measures and on the practical steps for a dialogue with Iran on regional concerns, such as ballistic missile proliferation, and particularly Yemen, working in coordination with the UN envoy. First, France should try sharing these views and reactions with Tehran, and later it could present new ideas on a future region-wide security system. Excluding talks on nuclear issues would be more palatable to Tehran, unless all participants, including Saudi Arabia and Israel, start negotiating on regional denuclearisation. However, this move will likely not be seen enthusiastically by all.

France can have a fresh start with Iran, but it will take time, prudence, and humility. France’s policies towards Iran must use strategic criteria when assessing the field and devising a policy. Professional advice from governmental departments and agencies as well as from external experts, including the business sector, should not be neglected, and lessons must be drawn from past mistakes.

Photo: Wikicommons

Why Qatar Wants to Facilitate a US-Iran Breakthrough

On February 15, Mohammed bin Abdulrahman Al Thani, the foreign minister of Qatar, travelled to Tehran in the latest instance of Doha's efforts to act as a facilitator for the resolution of international conflicts.

Al Thani delivered a letter from the Emir of Qatar to Iran's President, Hassan Rouhani. Beyond matters related to bilateral issues, the contents of the letter likely included Qatar’s offer to facilitate dialogue between Iran and the United States on issues related to the Joint Comprehensive Plan of Action (JCPOA).

This trip was not the first time Qatar has attempted to play a role in resolving the conflict between Tehran and Washington. Just over a year ago, a day after the assassination of Iranian military commander Qassem Soleimani, the Qatari foreign minister made an unannounced trip to Tehran to deescalate tensions. Shortly afterward, Emir Tamim bin Hamad Al Thani's made his first official visit to Iran.

Qatar's diplomatic efforts surrounding the conflict between Iran and the United States cannot be characterized as mediation. After all, Qatar does not have direct involvement in the negotiations between Tehran and Washington, nor is it overseeing any meetings or presenting any initiatives. But the less significant role of facilitator is nonetheless important.

Until recently, Oman and, to a lesser extent, Kuwait took on the role of facilitators in the Middle East, be it in between Iran and the United States, or Iran and Saudi Arabia, or between Yemeni factions. Qatar is trying to take a further step in this regard and act as a facilitator for a wide range of international conflicts. The Qatari Foreign Ministry touts that the emirate “hosts negotiations between conflicting parties and contributes as a facilitator of dialogue between them." Examples of diplomatic achievements include "an important role in reaching Doha Peace Agreement in Darfur, releasing of Djiboutian prisoners of war in Eritrea, releasing hostages in Syria, [and] ending the presidential vacuum in Lebanon." Moreover, Qatar is involved in the Palestinian-Israeli conflict through a humanitarian capacity, it is hosting the most recent intra-Afghan talks, and attempted to facilitate the resolution of the issue between Iran and South Korea over the oil tanker in the Persian Gulf just recently. 

The focus on the US-Iran tensions reflects not just the significant security issues these tensions pose for the Persian Gulf region, but also the appreciation of Qatar’s leadership for Iranian assistance during the blockade imposed by fellow members of the GCC. The recent détente between Qatar and the other GCC states marked by the Al Ula Summit are unlikely to negatively impact the deeper relations built with Iran over the past years. This is despite the fact that curbing diplomatic and economic ties with Iran was one of the conditions set when the blockade was first imposed. Qatar did not comply with these demands.  

In contrast, the blockade propelled Qatar's post-conflict regional approach to enhance its relations with Iran. While Qatar had recalled its ambassador from Tehran in solidarity with Saudi Arabia following the January 2016 incidents at Saudi diplomatic facilities in Iran, Doha restored its diplomatic representation in Tehran by reinstating its ambassador soon after the blockade was imposed. Furthermore, to guarantee the food security of its population, to ensure an air-route for its leading international airline, and to secure regional diplomatic support, Qatar continued to deepen its relations with Iran. 

Iran and Qatar share the largest gas reserves in the world—a unique feature in the bilateral relationship between the two countries that has provided a basis for constructive relations. Along with expressing a desire to bring Iran and the United States back to the negotiating table, Qatar has repeatedly called for an inclusive GCC-wide dialogue with Iran. Statements from Qatar's Emir, foreign minister, and defence minister have described Iran as "our neighbor" and "part of [the region’s] fabric" and noted that Iran’s stability is "[Qatar’s] stability." 

In an interview a day before Joe Biden's inauguration, Foreign Minister Al Thani stated that he hopes that Iran and the United States "will reach a solution with what has happened with the JCPOA" and that Qatar will welcome the invitation if it is asked by the stakeholders to play a role. Additionally, according to Al Thani, resolving the issues around the JCPOA "will help relations between the GCC and Iran" as everything is "interconnected at the end of the day." He has further argued that "the time should come when the GCC will sit on the table with Iran and reach a common understanding between the countries that we have to live with each other, we cannot change geography." 

The Emir of Qatar was among the first world leaders to welcome the JCPOA, calling it "a positive and important step" in his address during the 2015 United Nations General Assembly, not long after the deal was struck. Since then, Doha has been vocally supportive of the agreement—it even tried to persuade the Trump Administration to stick with the deal.

The diplomatic outreach has picked-up since the election of Joe Biden. The Qatari foreign minister has been in contact with the U.S. National Security Adviser, Jake Sullivan, and the Special Representative for Iran, Robert Malley. It can be expected that he will speak to Secretary Anthony Blinken in the coming days as well. Iran is likely to be high on the agenda for this call.

In the end, the European parties to the nuclear deal—France, Germany, and the United Kingdom—are best positioned to formally mediate between the US and Iran in any period before direct talks. However, Qatar’s diplomacy may help facilitate this subsequent stage of mediation, in a role similar to that played by Sultan Qaboos of Oman in 2013. 

While in Tehran, Al Thani made clear his hopes for renewed diplomacy, stating, "We hope that with the return of the US to the nuclear deal as soon as possible, challenges and sanctions can be alleviated within the framework of the deal and Qatar will not spare any efforts to make that happen." Doha is certainly eager to notch another diplomatic success.

Photo: IRNA

Verification and the Credibility of Sanctions Relief for Iran

Following a week of speculation about the Biden administration’s foreign policy priorities, Iran’s Supreme Leader, Ali Khamanei, gave an important speech today in which he outlined Tehran’s “final” stance on US re-entry into the nuclear deal. Khamenei kept the door open for the US to rejoin the Joint Comprehensive Plan of Action (JCPOA), while declaring that the Biden administration must “completely lift” US sanctions before Iran returns to its nuclear deal commitments in full. 

Despite this stance, it appears likely that the US and Iran can find a way to “choreograph” a mutual restoration of their obligations under the nuclear deal. What was significant about Khamenei’s speech was not his declaration on sequencing, but rather the introduction of a new requirement for any choreography that would enable the US to re-enter the agreement. 

While the sequencing tango was a major part of the negotiations that led to the JCPOA and of Iranian concerns over the optics of that sequencing, Khamenei’s specific concern over the verifiability of sanctions relief is new. To understand the context of this concern speech, it is useful to refer back to a speech made by then Treasury Secretary Jacob Lew five years ago, just a few months after the implementation of the JCPOA. 

Taken together, these two speeches point to a fundamental—if overlooked—asymmetry within the JCPOA. Iran’s commitments under the nuclear deal are subject to extensive verification. The International Atomic Energy Agency (IAEA) has in place the world’s most extensive inspection regime to keep tabs on Iran’s nuclear program. In return for compliance with limitations on its nuclear program, the JCPOA parties committed to the lifting of a wide range of UN, EU, and US sanctions. But there is no verification mechanism in place to ensure that sanctions relief has been implemented “in practice,” and not just “on paper”—a distinction Khamenei highlighted today. 

Iran’s experience with sanctions relief under the JCPOA has been bitter. Even prior to the Trump administration's reimposition of secondary sanctions in May 2018, Iran had felt that it was not receiving the full benefits of sanctions relief. There were a number of reasons for this, but the primary barrier to increased trade and investment was the reluctance of major banks to facilitate transactions or provide financing for Iran-linked projects. As a result, most of the milestone deals signed around the time the JCPOA was implemented—including orders for Boeing and Airbus aircraft, joint ventures with automakers Renault, Peugeot, and Daimler, energy deals with Total and CNPC, and rail projects with Siemens and Alstom—hit a roadblock even before Trump was elected to office and the future of the nuclear deal was thrown in doubt. Obama administration officials acknowledged these challenges at the time. Lew and Secretary of State John Kerry were even drafted in to provide reassurances to global banks and economic actors about the reliability of US sanctions relief commitments. But their efforts largely failed. 

In March 2016, just a few months after the implementation of the JCPOA, Lew gave a major speech on the future of US sanctions policy—sanctions lifting was a key focus. He noted how the “experience with Iran demonstrates how difficult [sanctions lifting] can be, essential as it is.” Commenting on the quid-pro-quo of the nuclear deal, Lew noted that “since Iran has kept its end of the deal, it is our responsibility to uphold ours, in both letter and spirit.” He cited the “global outreach” that the Treasury Department was undertaking to provide guidance to foreign business and governments on how to conduct compliant trade with Iran. But reading Lew’s remarks today, it’s clear that he knew at the time that this guidance would prove insufficient and that a dilemma had presented itself for US foreign policy. “Since the goal of sanctions is to pressure bad actors to change their policy, we must be prepared to provide relief from sanctions when we succeed. If we fail to follow through, we undermine our own credibility and damage our ability to use sanctions to drive policy change,” he warned. Not only would the Obama administration fail to deliver sanctions relief in the manner envisioned, but the Trump administration would take the betrayal one step further, reimposing secondary sanctions despite Iran’s verified compliance with its commitments under the deal. 

It is the Biden administration’s undermined credibility, five years in the making, that led the Supreme Leader to insist that the US must lift sanctions “in practice, not verbally or on paper” and that Iran would seek to “verify” the implementation of sanctions lifting before fulfilling its own commitments. Importantly, the Supreme Leader believes that verification is possible, stating that if the international community wants “Iran to return to its obligations under the JCPOA,” it will do so after the US verifiably lifts sanctions.

The focus on verification suggests that Iranian leaders see dealing with the United States as a technical challenge. Iran is not going to take it on faith that the Biden administration will make good on its obligations—it will seek to ascertain that obligations have been met. This is an interesting echo of how President Obama justified the nuclear deal to the American public in July 2015, insisting that the deal was built “not on trust, but on verification.” The key difference, of course, is that the US had the means by which to perform its verification—the authority and access afforded to IAEA inspectors put American stakeholders at ease that Iran was making good on its commitments. It would seem that some effort needs to be made to give Iran similar tools of verification, both for its own sake, but also for the sake of Europe, Russia, and China, whose economic relations with Iran so vastly outweigh those of the United States. It is through these relations that the economic benefits of the deal must flow. 

The Biden administration should work closely with the other JCPOA parties to devise new mechanisms to verify that sanctions relief is being successfully implemented and identify where relief may be following short. One option might be to establish a new panel of experts or special rapporteur at the United Nations responsible for gathering, interpreting, and assessing evidence on the implementation of sanctions relief. 

There are several reasons why the United Nations may be the ideal organisation to establish such a verification mechanism. First, the nuclear deal is enshrined as a matter of international law in United Nations Security Council Resolution 2231, establishing an obligation for “promoting and facilitating the development of normal economic and trade contacts and cooperation with Iran.” Second, a United Nations agency, the IAEA, is already involved in verifying half of the nuclear deal’s quid-pro-quo. Third, Iran has itself turned to United Nations bodies to seek recourse for the failure of the United States to hold up its end of the nuclear deal, for example by filing suit at the International Court of Justice against the US. Fourth, the issue of sanctions relief impacts Iran’s relationships with the wider international community, and not just its relations with the United States or the other parties to the JCPOA. Countries which are not parties to the deal may not wish to raise politically sensitive concerns over the impact of sanctions on their bilateral economic relations with Iran in a forum that will be dominated by the United States. The UN offers as much impartiality as is possible in the international system. Finally, the issue of credible sanctions relief is not relevant to the Iran nuclear deal alone, but will be of concern for the growing number of economies subject to restrictive measures. A UN verification capacity could prove important for countries such as Venezuela, Cuba, Syria, and North Korea should a political breakthrough lead to the prospect of sanctions relief in any of those cases. 

Of course, setting up a new verification mechanism for sanctions relief won’t be possible in the short period of time that Tehran and Washington have to save the nuclear deal. But should the Biden administration acknowledge this concern and set in motion steps to create a verification mechanism, it may reassure stakeholders in Tehran that the bitter experience of the JCPOA is not bound to be repeated. This would also be consistent with the interim step of “freezing” Iran’s moves away from the nuclear deal—an approach that is reportedly being considered by the Biden administration. The provision of economic relief, whether in the form of oil waivers or eased access to foreign exchange reserves, would offer an instance where Iran could “verify” that the US has made good on a promise of sanctions relief prior to the delicate choreography of mutual restoration of the nuclear deal. Such a step would enable Khamenei and other voices in Iran to suggest that a new condition of JCPOA re-entry, set by Iran, had been provisionally met, opening the door to talks around fuller sanctions relief.

What’s clear is that Iran to wishes to build a deal not on trust, but on verification. The international community ought to afford Iran the means to do so.

Photo: IRNA

The Plan to Save the Iran Deal Needs Private-Sector Buy-In

With the election of Joe Biden to the US presidency dialogue, between Washington and Tehran appears to once again be possible. Both Tehran and the Biden team have expressed a willingness to consider a “clean” return to the terms of the Joint Comprehensive Plan of Action (JCPOA, better known as the Iran nuclear agreement) if the other does the same. Namely – Iran would revert its nuclear activities to within the limits set out in the JCPOA, which it began breaching in May 2019, and the US would once again lift sanctions on Iran as prescribed by the agreement.

Reality, of course, will be more complicated. Securing economic benefits will be a priority for Tehran in any dialogue on the future of the deal, or any agreement that may succeed it. However, as became clear following the initial removal of US and international sanctions on Iran in 2016, the degree to which sanctions-lifting on paper translates to economic relief in practice depends in no small part on the willingness of the private sector to engage with the Iranian market. If the US and E3 hope to present renewed trade and investment as a credible and meaningful incentive for Iranian cooperation, it will be necessary to both address private sector concerns and manage Iranian expectations.

At the moment, many businesses around the world have opted out of engaging with Iran. The scope and complexity of US economic measures against Iran, as well as the high costs of potentially losing access to the US market and financial system in case of an accidental breach, is sufficient to turn even the most well-resourced compliance departments off of engaging with Iran. Iran is also one of only two countries—alongside North Korea—on the “blacklist” put forth by the Financial Action Task Force (FATF), the global standard-setter on countering financial crime. As a result of Iran’s failure to address “strategic deficiencies” in its financial crime regime the FATF currently requires jurisdictions to apply “enhanced due diligence” to their transactions with Iran, leading many banks to opt out of transacting with the country altogether. This means that businesses struggle to access financial infrastructure necessary for doing business with Iran.

There is some indication that, even if US sanctions on Iran were lifted, the uptake for private sector engagement with Iran would remain slow and limited. A few weeks ago, Iranian president Hassan Rouhani reportedly requested that Iran’s Expediency Council reprise its review of legislation that would address the deficiencies in Iran’s financial crime legislation called out by the FATF, which may help address some private sector concerns. However, persistent challenges in relations between Iran and the US and E3 will continue to create uncertainty for businesses. On December 17, the European Parliament passed a resolution condemning Iran’s detention and execution of human rights defenders and prisoners of conscience and called for the application of targeted financial sanctions on the Iranian individuals responsible. A few days earlier, a European Union-funded virtual business conference was postponed following the execution in Iran of journalist Rouhollah Zam.

Furthermore, some key US economic measures against Iran—for instance, sanctions on the Central Bank of Iran and on the Iranian Revolutionary Guard Corps (IRGC), as well as the designation of Iran as a jurisdiction of primary money laundering concern—are not related to Iran’s nuclear activities and may not be lifted as part of a return to the nuclear deal. These sanctions will continue to create complexity for banks and other businesses and will factor into private sector risk calculus. The possibility of another snap-back of US nuclear-related and secondary sanctions on Iran under a future change of administration in Washington will also discourage businesses investment. Persistent concerns over exposure to US sanctions within the financial sector in particular will complicate renewed economic engagement with Iran, as businesses will have trouble finding banks willing to support financial transactions with Iranian counterparts. Efforts by the incoming Biden administration to figure out the legal and regulatory logistics of sanctions-lifting, while ensuring that sanctions remain an effective tool of US foreign policy, will therefore also have to address challenges in the practical  implementation of sanctions-relief.

Reversing the economic impacts of private sector reticence to engage with Iran will be top of mind for the Islamic Republic as it engages with the new Biden administration. Tehran has previously called for compensation for “damages” to the Iranian economy caused by US sanctions – although Iranian leadership appears to have dropped such demands as a pre-condition for an Iranian return to compliance with the JCPOA in recent statements. And while Iran’s Supreme Leader Ali Khamenei expressed support for seeking sanctions-removal in recent marks directed at Iranian officials and the Iranian public, he also stressed the importance of “nullifying” the impact of sanctions on the Iranian economy. He distinguished “neutralizing” sanctions from sanctions-lifting and seemed to express scepticism over US and European ability to deliver on the former.

Assessing business’ levels of interest in re-engaging with the Iranian market and addressing concerns where possible will lend greater weight to US and European incentives of economic relief, hopefully encouraging greater cooperation from Iran in any future diplomacy—whether on its nuclear programme or more broadly. Relaying to Tehran the results of these private sector consultations may also help manage Iranian expectations on the level of foreign economic interest it can expect following sanctions lifting while also stressing the need for Iran to get its financial regime in order. On the part of Washington, this may include preparing comfort letters, granting sanctions exemptions, updating general licenses and expanding the guidance issued via the Office for Foreign Assets Control “Frequently Asked Questions” on Iran sanctions.

By consulting with their private sectors, the European governments can also better-understand business concerns and uncertainties around engagement with the Iranian market and how these may shift—or fail to do so—with the lifting of US sanctions. In October 2020, the European Commission launched a “Due Diligence Help Desk” aimed at supporting European companies in navigating European sanctions on Iran. While the platforms are well-intentioned and may provide businesses with helpful guidance, it is unclear how effective they will be in practice. The platforms do not address some of the key challenges raised earlier, including the lack of financial infrastructure to support transactions with Iran and concerns over exposure to US sanctions. The UK and European governments may wish to identify and reach out to specific sectors that are likely to be of greatest importance to renewed trade with Iran—for instance, the banking sector or those engaged in energy trade—to ensure they have the assurances, guidance, and infrastructure they need to proceed with confidence. Coordinated efforts across capitals—for instance, through the issuing of joint guidance by American, British, and European financial regulators, as well as dialogue with the US on the concerns of UK and European businesses—will also be valuable.

As renewed diplomacy on the Iranian nuclear question gets underway, it will have to be supplemented by consultations with businesses to assess whether the private sector will be able to make good on economic promises made at the negotiating table, as well as to manage Iranian expectations. At the same time, understanding and, where possible, addressing private sector concerns will help businesses do what they do best—moving goods, people, and capital to ensure that the lifting of sanctions on paper translates into real economic uplift for Iran.

Photo: IRNA

How Biden Can Stop Iran’s Conservatives From Undermining the Nuclear Deal

By Saheb Sadeghi

U.S. President-elect Joe Biden has so far spoken sparingly on Iran, including an op-ed on the CNN website and in an interview with the New York Times. As part of a step-by-step strategy, he has said that he would return to the nuclear deal as the first step and then address other concerns about Iran’s regional influence and missile capabilities. But how will the Iranian government react to the United States’ demand that the regional issues and the missile capabilities should be part of the negotiation?

There are two different approaches in Iran to handling comprehensive negotiations with the United States.

There is broad consensus within the Iranian establishment that Iran will not make any concessions regarding its deterrence and defense strategy.

Iran has traditionally used a deterrent strategy to strengthen its national security and defend its territorial integrity in recent years. This strategy has two prongs. The first is strengthening and supporting regional allies and militant movements in Lebanon, Iraq, Syria, Yemen, and elsewhere; the second is enhancing its missile capabilities and building and testing short- and long-range missiles, as well as ballistic missiles.

This strategy has expanded since the U.S.-led wars in Iraq and Afghanistan, which brought hundreds of thousands of U.S. troops into the region just a few miles from Iran’s eastern and western borders, dramatically increasing the risk of an imminent military strike on Iranian territory. Tehran has pointed to security threats in its vicinity and the fact that it is not a member of any regional military coalitions as the reasons it needs to develop missile capabilities and expand its influence in the Islamic countries in the Middle Eastern region.

Despite this general consensus on deterrence strategy, the Iranian government’s approach to Biden’s call for comprehensive negotiations can be divided into two camps.

The first group is made up of conservatives, who recently gained an absolute majority earlier this year in parliamentary elections and are expected to win the next presidential election. The conservatives strongly reject any talks with the United States on non-nuclear issues and their position has been further strengthened by the assassinations of the commander Gen. Qassem Suleimani in early 2020 and more recently the prominent nuclear scientist Mohsen Fakhrizadeh.

In their view, these assassinations were an attempt by Iran’s enemies to paralyze Iran’s deterrence, and now is the time to revive this deterrence, rather than negotiate. Reflecting this view, Saeed Jalili, a senior member of Iran’s Supreme National Security Council (SNSC) and the former nuclear negotiator during the presidency of Mahmoud Ahmadinejad, harshly criticized President Hassan Rouhani for discussing the missile issue with French President Emmanuel Macron in a telephone conversation. (He called for the refusal of such talks on the part of Rouhani, declaring that non-nuclear talks are prohibited and unacceptable.)

Conservatives believe that just as the West sought to limit Iran’s nuclear capabilities in past nuclear talks with the country, any negotiations on missile and regional issues would inflict a crushing blow to Iran’s national security. The hardline speaker of the parliament, Mohammad Baqer Qalibaf, recently said, “Negotiations with the United States are absolutely harmful and forbidden.” During Ahmadinejad’s presidency, when conservatives were in power, the world witnessed six years of fruitless negotiations between Iran and the West from 2008 to 2014, and this trend could repeat itself if the conservatives win the next presidential election.

The other group is made up of pragmatists and moderates who, despite emphasizing the need to strengthen Iran’s deterrence strategy, do not see non-nuclear negotiations as a threat to Iran’s national interests. Even so, they will not accept that the implementation of the nuclear agreement should be conditional on regional and missile negotiations.

In their view, if Biden’s foreign policy team focuses on the alleged need for so-called Middle East security and arms control talks instead of insisting on countering Iran’s regional influence and the need for limiting and disarming its missiles, it will be possible to reach an agreement between Iran and the West with the cooperation of countries in the region.

To them, when “countering Iran’s regional influence and its missiles,” is on the U.S. agenda, it means an aggressive approach toward Iran that does not consider the country’s legitimate security concerns. Such an approach will not be effective as the Iranians have shown with their resilience in the face of unprecedented U.S. sanctions, resulting from outgoing President Donald Trump’s maximum-pressure campaign.

The pragmatists believe that Iran’s missile policy is entirely defensive and deterrent in nature; Tehran has already stated that its missiles’ range will not exceed 2,000 kilometers (1,240 miles) while some Arab states in the region such Saudi Arabia have purchased missiles with a range of 5,000 kilometers (3,100 miles).

The pragmatists believe that in potential future region-wide negotiations, if pressure is put on Iran to limit its missile capabilities, Iran could rightfully bring up the issues of Saudi Arabia’s missiles, Israel’s nuclear warheads, and modern arms purchases by the Persian Gulf states as a justification for its insistence on keeping its own missile capabilities. The purchase of F-35 fighter jets by the UAE and Israeli nuclear weapons could be on the agenda of the possible future talks, which will give Iran the upper hand in those negotiations.

In such a situation, the United States and regional actors must decide whether to move toward a broader arms-control process in the Middle East or to recognize Iran’s right to have a missile capability. The pragmatists think that there should not be any fear of negotiation; instead, they argue that the opportunity of negotiations should be used to consolidate Iran’s regional and defense achievements. They see Biden’s victory as an opportunity to resolve Iran’s regional and international problems and see his approach to solving the Middle East’s problems as balanced in contrast to Trump’s.

This pragmatists’ view is even more relevant given Biden’s talk about reconsidering the U.S. position on Saudi Arabia. During his presidential campaign, he vowed to reassess the U.S. relationship with the Saudis and put an end to U.S. support for Saudi Arabia’s war in Yemen.

The pragmatists argue that former President Barack Obama was moving in that direction, and now Biden could step into Obama’s shoes and continue along that unfinished path. In an interview with the Atlantic in May 2015, Obama emphasized that an approach that rewards Arab allies while presenting Iran as the source of all regional problems would mean continuing sectarian strife in the region. Obama stressed that Saudi Arabia had to learn to share the Middle East region with its sworn enemy, Iran.

Biden’s pick for national security advisor, Jake Sullivan, said in a lengthy interview with The Center for Strategic and International Studies that the Biden administration will stop Trump’s maximum pressure campaign against Iran and would not hold the nuclear deal hostage for regional and missile talks, but by returning to deal it would put pressure on regional actors—including Iran and Saudi Arabia—to undertake regional talks. He also said that the United States will hand over these negotiations to regional countries and will not take the lead. Such a position aligns with Iranian Foreign Minister Mohammad Javad Zarif’s recent statement reiterating Iran’s readiness to hold talks with countries in the region on security and stability in the Middle East.

Even China’s foreign minister has recently called for Middle East security talks. Russian Foreign Minister Sergei Lavrov recently reiterated Putin’s proposal for talks between the U.N. Security Council permanent members and Iran to establish a collective security order in the Persian Gulf.

Iran’s readiness to use the influence it enjoys over the Houthis to end the Yemeni war—which Biden has insisted on and which lies at the core of Saudi Arabia’s national interests and security—seems to be a golden starting point. Iran can persuade its Yemeni allies to sign a peace agreement with Saudi Arabia.

However, there are serious barriers to regional and missile negotiations, the resolution of which will depend on the approach of the Biden foreign policy team. The atmosphere of mistrust between Iran and the United States, influenced by Trump’s maximum-pressure campaign and the assassinations of Suleimani and Fakhrizadeh, is the primary obstacle.

The second obstacle is the short period that Rouhani is still in office. With Biden taking office on Jan. 20, 2021, the two countries have only five months before Iran’s upcoming presidential election to revive the nuclear deal and work on other issues.

If the Biden administration’s plans to revive the JCPOA and lift sanctions do not go ahead as predicted, the two sides will be in serious trouble in early February, when the deadline included in a bill pushed by hardliners as an intentional spoiler and recently passed in the Iranian parliament expires.

Iran’s parliament has given European countries and the United States two months to lift sanctions. The Rouhani administration has expressed its opposition to the bill, describing it harmful to diplomatic efforts. However, because it has become law, they cannot prevent it from being enforced. Zarif has said the government will be forced to implement the law, according to which Iran will abandon almost all its nuclear obligations.

If such a law is implemented, it is possible that the JCPOA—which has survived four years of Trump administration’s immense pressure—would die in the first month of Biden’s presidency. Biden could lift the sanctions that were suspended by the nuclear deal with several executive orders, and then, as Rouhani recently announced, Iran will return to its nuclear obligations.

Saheb Sadeghi is a columnist and foreign-policy analyst on Iran and the Middle East. Follow him at @sahebsadeghi.

Photo: Wikicommons

What Archaeology Can Achieve in US-Iran Relations

This article is the fifth in a five-part series.

• Read Part 1 here

• Read Part 2 here

• Read Part 3 here

• Read Part 4 here

In the 1920s, relations between the United States and Iran had reached a low point, marked by the failure of Arthur Millspaugh’s financial mission (1922-27), the murder of Vice Consul Robert Imbrie (1924), and the withdrawal of American financiers from a railroad syndicate (1928-29), among other imbroglios. According to historian James F. Goode, the American chargé d’affairs at the time, Hugh Millard, wrote to the US State Department’s Near East Bureau Chief, Wallace Murray, stating that there had been “one flub after another in American efforts in Persia” but that ‘‘archaeology is about the only thing [the United States] are likely to be interested in which stands much chance of bringing results.” Perhaps the situation today is not so unlike that of the early 1930s, when—despite the accumulated ill will of the previous decade—American interest in Iran’s heritage brought the two countries into more sustained diplomatic engagement with each other.

***

Clearly, the past four decades have seen much more acrimonious relations between the US and Iran than the 1920s, with much higher stakes. As historian John Ghazvinian writes in America and Iran: A History, 1720 to the Present, for the past forty years, the United States and Iran have had few official relations at all. Between America’s support for the Shah, its arms sales to Saddam Hussein, and its policy of isolating Iran on the world stage since the Israel-Palestine Madrid Conference of 1991, a gulf in mutual understanding has opened that appears insurmountable. Decision makers on both sides operate in a context of severe and deleterious ignorance of each other’s motivations and aspirations. Indeed, bilateral relations between the two countries are so strained that they must be mediated indirectly by third parties: Switzerland (American affairs in Iran) and Pakistan (Iranian affairs in America). As Ghazvinian points out, even at the lowest depths of the Cold War, the chasm between American and Soviet leadership was not as wide as that between the US and Iran today.

More concerning still, according to Ambassador John Limbert—who was one of the diplomatic staffers held in the Embassy Seizure of 1979-81—is the fact that, since the 1980s, the American government has lost its cadre of diplomats with Iran expertise. In the past four decades, the US has trained few Persian speakers, and those it has trained have had almost no opportunity to use the language in an immersion setting. As Limbert writes, “those with both language and country expertise have aged and retired, leaving a gap that, with the best will in the world, will take at least a decade to fill.” Even prior to the embassy seizure, however, American foreign policymaking vis-à-vis Iran was sclerotic and ineffective. According to James A. Bill, a professor of international relations and government at William and Mary and an expert on US-Iran relations, the ineptitude of American diplomacy towards Iran in the late 1970s, leading to the deterioration of US-Iranian relations, was due to an institutionalized system of organizational conflict within the State Department. This allowed America’s Iran policy to be captured by special interests, and to be unduly influenced in equal measure by both ideology and ignorance.

William J. Burns—one of the diplomats who ran the Oman backchannel that led to the negotiation of the JCPOA—argues that the Trump administration has repeated and exacerbated many of these mistakes. For Burns, however, Trump’s Iran policy is a bellwether of a broader and more concerning trend. In his view, American diplomacy has slid adrift at a moment in history when American leadership is needed more than ever.

How might America regain its position of moral authority and respect on the world stage in the post-Trump era? Burns argues that American diplomacy will need to be reconstructed, from the individual on upward, requiring years of investment in the fundamentals of the craft: “smart policy judgement, language skills, and a sure feel for the foreign landscapes in which they serve and the domestic priorities they represent.” Wendy Sherman—the chief American negotiator in the P5+1 process that led to the signing of JCPOA—concurs. Sherman contends that diplomacy is most likely to succeed when its agents are not only deeply experienced, but also deployed in positions where they can draw on and that experience and put it to work. For Sherman, negotiation is not a set of stratagems, but rather comprises authentic person-to-person engagement. Unfortunately, as made clear by Limbert and Bill, for too long, the United States government has neglected to honor this principle in its dealings with Iran.

For some observers, renewed engagement with Iran is in fact key to the revival of American diplomacy. As Flynt Leverett and Hillary Mann Leverett write in “Going to Tehran,” American strategic recovery must start with a thoroughgoing revision of the US Government’s Iran policy. Similarly, Ghazvinian writes there is no problem that the US faces in the Middle East that cannot be tied one way or another to its haphazard and ineffective Iran policy. He argues that the only way that the US and Iran can resolve their differences once and for all is through an unconditional, sustained, and high-level set of negotiations. Like the Leveretts, he believes that what is most needed is an historic summit meeting between the two countries’ leaders, an international peace conference of the same magnitude as Reagan and Gorbachev’s meeting in Reykjavik or Nixon and Mao’s in Beijing. As the Leveretts argue, if America does not do this, it runs the risk of condemning itself to a future as an “increasingly flailing—and failing—superpower.”

While I am sympathetic to these calls for rapprochement through a grand bargain, an October 2019 white paper by Chatham House researchers Sanam Vakil and Neil Quilliam found that foreign policy experts from the US, Europe, Russia, the Middle East, and China were highly skeptical of the possibility of such an agreement under present conditions. A year later, however, with the coming administration of Joe Biden, it appears that good-faith engagement is back on the table.

In this series, I have shown how heritage management—in the form of cultural tourism, museum exchanges, and international scientific cooperation—have suffered under American sanctions. Clearly, renewed diplomacy and sanctions relief would benefit those whose livelihoods have been impacted by these policies. I would like to suggest here that American diplomats attempting to reestablish cordial exchanges with Iran have something to learn from the experiences of archaeologists and cultural heritage professionals. The precedents set by the University of Pennsylvania Museum of Archaeology and Anthropology and the Oriental Institute of the University of Chicago—in keeping positive relations between the US and Iran alive even during dark times—should be followed and honored.

Cultural heritage is one of the only fields in which person-to-person contacts between Americans and Iranians have been sustained through these four decades of hostility. For this reason alone, the Biden administration should create space for and leverage cultural exchanges as part of its reengagement strategy. More broadly, however, as all of the experts quoted above make clear: when those with deep knowledge of and investment in each other’s culture and history are involved in diplomatic negotiations, all stand to benefit. On whatever time-scale, no matter the form that renewed engagement between the US and Iran takes—whether a grand bargain, a direct meeting between heads of state, or some other expression of goodwill toward repairing broken ties—it can only be for the good of the people of our two countries.

My hope is that no matter the forum, American leadership chooses to call on envoys who speak Persian, or at the very least have some degree of appreciation for Iranian culture, rather than under-qualified appointees with an axe to grind. May our two governments recognize—as Hugh Millard so presciently did in the 1930s—the special role that archaeologists have played and can continue to play in improving ties between America and Iran and follow our lead in delving into a shared past to bring about a better future.

 Click here to read Part 5 of this five-part series.

Photo: Wikicommons

The Optimistic Case for Biden and Iran

“It’s over.”

So reads the November 8 headline of Hamshahri, one of the leading newspapers in Iran. The past four years have been brutal for ordinary Iranians. The Trump administration waged an economic war on Iran that exacerbated the political and social tensions endemic to the country. Iranians are hoping that the election of Joe Biden and Kamala Harris will enable a return to the optimism they experienced in the short period between the implementation of the Joint Comprehensive Plan of Action (JCPOA) in January 2016 and the dismaying election of Donald Trump in November of the same year.

In a CNN op-ed published in September, Biden made clear his intention to “rejoin the [JPCOA] as a starting point for follow-on negotiations” so long as “Iran returns to strict compliance with the nuclear deal.” Here, Biden is accepting the basic premise of “compliance-for-compliance.” In response to Trump’s withdrawal from the nuclear deal, Iran has reduced its own commitments to the deal, particularly by increasing its levels of uranium enrichment beyond what is permitted by the JCPOA. These moves, which have dismayed the remaining parties to the agreement—France, Germany, the United Kingdom, Russia, and China—are nonetheless perceived as tactical and reversible. The administration of Iranian president Hassan Rouhani remains committed to the JCPOA and appears ready to welcome the U.S. back into the deal so long as the U.S. policymakers accept “to be held responsible for damages” caused to “the people of Iran” as a result of Trump’s withdrawal, while also providing “guarantees” that such an event would not be repeated. Notably, Iranian foreign minister Javad Zarif has described the stance of the Biden administration as “promising.”  

Despite these encouraging statements by both the Biden camp and officials in the Rouhani administration, there is a remarkable degree of pessimism surrounding the prospect of a U.S. reentry to the JCPOA. These assessments highlight pressure, particularly from U.S. allies in the Middle East, to build on the nuclear deal and achieve diplomatic breakthroughs on issues such as regional security and Iran’s missile program. They also point to the ascendency of Iran’s hardliners, a loose coalition of politicians who savaged Rouhani and his moderate bloc as the nuclear deal faltered. The vocal anti-Americanism of these conservative politicians and their labeling of figures such as Rouhani and Zarif as either naïve or knowing traitors, has furnished dire predictions for the future of U.S.-Iran diplomacy under the hardline president expected to prevail in Iran’s elections next year. 

In a recent piece, Ariane Tabatabai and Henry Rome seek to account for the likely victory of a hardliner president, arguing that “the United States shouldn’t rush to secure a deal in the hopes of shaping Iran’s domestic politics, or for fear that the window of opportunity will close.” They observe astutely that “the new administration shouldn’t assume that without Rouhani, diplomacy wouldn’t stand a chance.” Tabatabai and Rome explain that the next Iranian president “will almost certainly be more conservative,” but note that the decision to engage in diplomacy with the United States will not be the prerogative of this hardline figure. Rather, such decisions require “buy-in from the whole system.” So long as Iran’s national security interests would be advanced by negotiations, it is reasonable to expect a receptiveness to talks, even with the U.S.

According to Tabatabai and Rome, it follows that the new Iranian administration will “have no choice but to negotiate” with the U.S. principally because of the country’s weak economic position. But this assessment likely underestimates the ability of the Iranian economy to limp along under sanctions pressure—even for four or more years. Before the COVID-19 pandemic hit the country, the Iranian economy was already returning to growth despite two years under Trump’s maximum pressure sanctions. High inflation has emerged as the single most significant challenge facing Iranian policymakers, but as the case of Venezuela shows, even the most extreme circumstances of hyperinflation can prove insufficient to coerce policymakers to the negotiating table.

Trump’s national security advisor, Robert O’Brien, recently conceded that the administration was seeing diminishing returns from economic coercion, having imposed “so many sanctions” that there was little pressure to add. This view reflects the assessments of the U.S. intelligence community, which is developing a more sophisticated understanding of the Iranian economy and its adaptability to sanctions pressure. The takeaway is that Trump’s sanctions offer Biden no real leverage on Iran and that it will not be possible to coerce Rouhani nor his successor into talks.

Despite this, Tabatabai and Rome are still correct to claim that Biden will have a shot at diplomacy—a very good one at that. To understand why, it is important to look beyond Trump’s withdrawal from the nuclear deal as the critical political act of the last three years. Far more significant is the fact that Iran remains in the agreement. Sure, Iran has reduced its compliance with key aspects of the deal. But the extraordinary political price paid by the Rouhani administration, spurred by a creditable commitment to diplomacy for its own sake and also by the strategic considerations of the wider Iranian “system,” suggests that understanding the logic of Iran’s persistence with the deal is the key to understanding the prospects for U.S.-Iran talks.  

Back in 2018, on the eve of John Bolton’s appointment to lead the National Security Council, it appeared that the writing was on the wall for the Iran deal. As I wrote at the time, “by any conventional assessment, then, the Iran deal is dead.” Implementation of the deal was already faltering, and Bolton was hellbent on killing the agreement outright. But I foresaw a different outcome, arguing that “the Iran deal cannot be killed” because of a set of “several undeniable truths about Iran and its place in the world.” My argument focused on three structural factors that underpin Iran’s diplomatic engagement: the geopolitical influence of Iran, the demographic and economic drivers of the Iranian policy of engagement, and the fact that the United States has limited leverage because there is no credible or affordable military threat behind diminishing sanctions pressure.  

Each of these structural factors is even more pronounced today. The Islamic Republic is less isolated diplomatically than ever before because it opted to remain in the JCPOA following the U.S. withdrawal. In the face of reduced oil revenues, the Iranian economy is more dependent on economic diversification, including in its trade partnerships. The combination of sanctions overuse and the American public’s calls for a pullback from the Middle East will leave Biden with less scope to coerce or threaten Iran.  

The notion that Iran’s commitment to engagement (and the nuclear deal) is structural was underscored in a November 3 speech by Iran’s Supreme Leader, Ali Khamenei. Addressing the possible impact of U.S. elections on U.S.-Iran relations, Khamenei stated, “We follow a sensible, calculated policy which cannot be affected by changes of personnel.” Many took the statement to be Khamenei’s way of pouring cold water on the prospect of a Biden victory revitalizing the JCPOA. But again, in the Iranian assessment, the deal is not yet dead. The calculated policy to which Khamenei is referring is the policy of keeping the nuclear deal alive in accordance with Iran’s strategic interests.

This structural commitment means that the Biden administration does not need to rush to make a deal with Iran—the window of opportunity will not close when Iran elects a new president next summer. However, that does not mean Biden will not need to make some early gestures to signal the depth of his own commitment to diplomacy. In an excellent report envisioning a roadmap for the Biden administration’s reengagement of Iran, Ilan Goldenberg, Elisa Catalano Ewers, and Kaleigh Thomas, point to the importance of an early “de-escalation” phase, stating that the Biden administration “should start with immediate, modest unilateral confidence-building measures” in order to achieve both compliance-for-compliance on the nuclear file and “calm-for-calm” when it comes to regional tensions.

As Edoardo Saravalle has convincingly argued, the Biden administration can use executive orders to implement its sanctions relief commitments under a compliance-for-compliance framework in under sixty days. These moves can be made tangible by coordinating moves with European allies and international bodies to deliver tangible economic benefits to Iran. For example, this coordination can ensure that sanctions relief enables the unfreezing of foreign exchange reserves and the provision of Iran’s requested COVID-19 relief loan by the International Monetary Fund—moves that would ease inflation, delivering appreciable economic relief for ordinary Iranians. Should the Biden administration choose incentivization over coercion and thereby prove itself a credible counterparty for follow-on negotiations by the time of the Iranian election in the early summer of 2021, it is more than likely that any Iranian president elected—even a so-called hardliner—will take up the mantle of new talks.

The fierce opposition of hardliners to the nuclear deal was far more about the stakes of domestic politics than the terms of the deal itself. Even before talks had concluded, hardline politicians were gripped by anxiety that the successful implementation of the nuclear deal would grant Rouhani, a savvy political operator, a diplomatic and economic triumph that would consolidate the dominance of reformist politics in Iran for a generation. The opposition to the nuclear deal, which extended to efforts to undermine the deal itself, was intended to take Rouhani from the heights of popularity—he won two stunning mandates in high-turnout elections—to the depths of disgrace. The hardliners succeeded in this cynical mission and Rouhani was battered. But tellingly, the nuclear deal, as a product of Iran’s largely apolitical strategic decision-making, has survived.

A hardline president in Iran can be confident of his ability to run the country for an initial four-year term without needing a détente with Biden. The economy will limp along, regional tensions will remain high, and domestic unrest will simmer. But the presidential administration will be able to coordinate with state organs to keep Iran resilient to external and internal pressure—even as the Iranian people continue to suffer from the country’s stagnation.

But what president would choose to preside over a constant slow-moving crisis, particularly one that was not of his own making? For hardliners, 2021 represents an extraordinary political opportunity. For the first time since 1989, Iran and the United States will have first-term presidents at the same time. Meanwhile, Iran’s conservative politicians are increasingly concerned about the political legacy and legitimacy of the Islamic Revolution as it enters its fifth decade. Negotiations with the Biden administration offer Iran’s next president, and his political backers, the opportunity to give to the Iranian people that long-awaited gift—a robust, transformational deal with the world powers, chief among them the United States.   

The impact of Biden’s election on U.S.-Iran relations has been the subject of strategizing for months. Today, what was once a hypothetical has become a reality. The impetus for U.S.-Iran talks arises from both an emergent political opportunity and the unchanged structural factors that push both sides towards engagement. The mechanics and sequencing of an American reentry into the JCPOA remain to be determined, but it will not be harder than when the deal was originally struck, when taboos needed to be broken in Tehran and Washington alike. Much has been learned over the last four years about what it takes to implement an “Iran Deal” successfully. We ought to be optimistic about comes next.

It’s a beginning.

Photo: Wikicommons

Europe Can Preserve the Iran Nuclear Deal Until November

By Ellie Geranmayeh and Elisa Catalano Ewers

The United States just lost the showdown at the United Nations Security Council over extending the terms of the arms embargo against Iran. The U.S. government was left embarrassingly isolated, winning just one other vote for its proposed resolution (from the Dominican Republic), while Russia and China voted against and 11 other nations abstained.

But the Trump administration is not deterred: In response to the vote, President Donald Trump threatened that “we’ll be doing a snapback”—a reference to reimposing sanctions suspended under the 2015 nuclear deal from which the United States withdrew in 2018.

The dance around the arms embargo has always been a prelude to the bigger goal: burning down the remaining bridges that could lead back to the 2015 deal.

The Trump administration now seeks to snap back international sanctions using a measure built into the very nuclear agreement the Trump White House withdrew from two years ago. This latest gambit by the Trump administration is unsurprisingly contested by other world powers.

On the one hand, Russia and China are making a technical, legal argument against the U.S. move, namely that the United States forfeited its right to impose snapback sanctions once it exited the nuclear deal. This is based on Security Council Resolution 2231 that enshrined the nuclear agreement, which clearly outlines that only a participant state to the nuclear deal can resort to snapback. This is a legal position that even former U.S. National Security Advisor John Bolton—an opponent of the nuclear deal and under whose watch Trump left the agreement—has recently endorsed.

In the end, however, this is more a political fight than a legal one. The political case—which seems to be most favored by European countries—is that the United States lacks the legitimacy to resort to snapback since it is primarily motivated by a desire to sabotage the multilateral agreement after spending the last two years undermining its foundations. 

The main actor that will decide the fate of the nuclear deal after snapback sanctions is Iran itself. Iran has already acted in response to the U.S. maximum pressure campaign, from increasing enrichment levels and exceeding other caps placed on its nuclear program, to attacking U.S. forces based in Iraq and threatening to exit the Nuclear Nonproliferation Treaty.

But the calculations of decision-makers in Tehran will be influenced by the political and practical realities that follow snapback sanctions. And here, the response from the remaining parties to the nuclear deal—France, the United Kingdom, Germany, China, and Russia—will be critical. These countries remain committed to keeping the deal on life support—at least until the U.S. presidential election in November.

Seizing on its failure to extend the arms embargo, the United States now claims it can start the clock on a 30-day notification period, after which U.N. sanctions removed against Iran by the nuclear deal are reinstated. This notification will be timed deliberately to end before October—when the arms embargo is set to expire, and also when Russia takes over presidency of the U.N. Security Council: a time when Washington could face more procedural hurdles.

What is likely to follow snapback is a messy scene at the U.N. in which council members will broadly fall into three groups. First, the United States will seek to build support for its case—primarily through political and economic pressure—so that by the end of the 30-day notice period some U.N. member states agree to implement sanctions. The Trump administration will likely use the threat of U.S. secondary sanctions, as it has done successfully over the last 18 months, if governments don’t move to enforce snapback sanctions.

Even if most governments around the world disagree that the United States has any authority to impose snapback sanctions, some countries may be forced to side with Washington given the threat that the United States could turn its economic pressure against them.

The second group will be led by China and Russia, both of which have already started to push back. Not only will this group refuse to implement the U.N. sanctions that the U.S. government claims should be reimposed, but they likely will throw obstacles into the mix, such as blocking the reinstitution of appropriate U.N. committees that will oversee the implementation of such sanctions. This group may also see it as advantageous to seek a determination by the International Court of Justice on the legal question over the U.S. claim.

The third grouping will be led by the France, Britain, and Germany, who remain united in the belief that the deal should be preserved to the greatest extent possible. In a statement in June, the three governments already emphasized that they would not support unilateral snapback by the United States. But it is unclear if this will translate into active opposition—and their approach will certainly not include the obstructionist moves that Russia and China may make.

This bloc will look to stall decisions to take the steps necessary to implement the U.N. sanctions. This is a delicate undertaking, as European countries are not in the habit of blatantly ignoring the binding framework of some of the U.N.’s directives, and will want to balance their actions against the risk of eroding the security council’s credibility further. But they will also take advantage of whatever procedural avenues are in place to delay full enforcement of the sanctions, buying time to urge Iranian restraint in response to the U.S. moves.

Countries such as India, South Korea, and Japan are likely to favor this approach. These governments may even go so far as to send a significant political signal to Iran and back a joint statement by most of the security council members vowing not to recognize unilateral U.S. snapback sanctions.

As part of this approach, the 27 member states of the European Union could embark on a prolonged consultation process over how and if to implement snapback sanctions. The separate EU-level sanctions targeting Iran’s nuclear program are unlikely to be reimposed so long as Iran takes a measured approach to its nuclear activities.

Reimposing EU sanctions against Iran will entail a series of steps, the first of which requires France, Britain, and Germany, together with the EU High Representative, to make a recommendation to the EU Council. The return of EU sanctions would then require unanimity among member states, a goal which will take time to achieve in a context where Washington is largely viewed as sabotaging the nuclear deal.

In this process, the EU should seek to preserve as much space as possible to salvage the deal and avoid the reimposition of nuclear-focused sanctions against Iran—at least until the outcome of the U.S. election is clear. The U.K., in the run-up to Brexit, may well lean toward a similar position rather than tying itself too closely to an administration in Washington that may be on its way out.

Until now, the remaining parties to the nuclear deal have managed to preserve the deal’s architecture despite its hollowing out. The aim has been to stumble along until the U.S. election to see if a new opening is possible to resuscitate the agreement with a possible Biden administration in January.

While a Trump win could spell the end of the deal and further dim the prospects of diplomacy between the United States and Iran, the two sides could come to a new understanding over Iran’s nuclear program at some point during the second term that is premised on the original deal. Judging by the pace of the Trump administration’s nuclear diplomacy with North Korea, this will be a Herculean process with no certain outcome.

In Tehran, there will be some sort of immediate response to the snapback—most likely involving further expansion of its nuclear activities. However, Iran may decide to extend its strategic patience a few weeks longer until the U.S. election. A legal battle by Russia and China against snapback, combined with non-implementation of U.N. sanctions by a large number of countries and continued hints from the Biden camp that Washington would re-enter the nuclear deal could provide the Rouhani administration with enough face-saving to stall the most extreme responses available to Iran.

But with Iranian elections coming in the first half of 2021, there will be great domestic pressure from more hardline forces to take assertive action, particularly on the nuclear program, to give Iran more leverage in any future talks with Washington.

If Iran takes more extreme steps on its nuclear activities, such as a major increase in its enrichment levels or reducing access to international monitors, it will make it nearly impossible for the Britain and the EU to remain committed to the deal in the short term. There are also factors outside Iranian and U.S. control that could have an impact, such as a potential uptick in Israeli attacks against Iranian nuclear targets.

Over the course of the Trump administration, Europe and Iran have managed to avert the collapse of the nuclear deal. Having come so far, and just 11 weeks away from the U.S. election, they will need to work hard to prevent the total collapse of the agreement. Even if Biden—who has vowed to re-enter the deal if Iran returns to compliance—is elected, the remaining parties will need to continue the hard slog to preserve it until January.

Those opposed to the nuclear deal with Iran may see the last two months of a Trump administration as a window to pursue a scorched-earth policy toward Iran’s nuclear program. That leaves Britain and Europe with the job of holding what remains of the deal together, for as long as they can.

Ellie Geranmayeh is a senior policy fellow at the European Council on Foreign Relations. Follow her at  @EllieGeranmayeh.

Elisa Catalano Ewers is an adjunct senior fellow at the Center for a New American Security and a former U.S. State Department and National Security Council official.

Photo: IRNA

Iran Is Becoming Immune to US Pressure

By Sina Toosi

U.S. President Donald Trump said on June 5 that Iran should not wait until after the presidential election “to make the Big deal,” but can get a “better deal” with him now. Trump’s remarks came after a recent prisoner swap, which saw detained U.S. Navy veteran Michael White released from Iran in exchange for Iranian American doctor Majid Taheri. However, while Trump may want to negotiate with Iran and reinforce his self-avowed reputation as a deal-maker before the U.S. election, his “maximum pressure” policy has all but eliminated the chance for U.S.-Iranian diplomacy in the months to come.

Iran has proven resilient in the face of U.S. pressure. While many ordinary Iranians are suffering, the economy is not in total free fall, as many in Washington hoped for. Instead, the country has shown signs of economic recovery, with domestic production and employment increasing. According to Iran’s Central Bank chief Abdolnaser Hemmati, Iran’s nonoil gross domestic product grew by 1.1 percent last year. Prominent Iranian economist Saeed Laylaz also contends that Iran’s economy can weather the coronavirus pandemic and may experience growth this year despite the virus.

Trump’s bellicose rhetoric and actions have not made Iran more inclined to do a deal, but they have undermined any Iranian officials who supported negotiations with the United States. Whether wittingly or not, Trump’s policy decisions have closed the potential for diplomacy. The political cost one faces in Tehran for arguing in favor of negotiations is now simply too high. This is evident in how Iranian officials have reacted to the recent prisoner exchange.

Ali Shamkhani, the secretary of Iran’s Supreme National Security Council, one of the highest decision-making bodies in Iran, said in response to Trump’s offer for a deal, “The exchange of prisoners is not the result of negotiations & no talks will happen in the future.” Shamkhani’s remarks reflect a consistent line in Tehran: Negotiations with the United States are off the table. Even moderate President Hassan Rouhani’s foreign minister, Javad Zarif, and spokesperson Ali Rabiee now maintain that prisoner swaps can occur without negotiations.

The situation was different just a few months ago. The only other time the United States and Iran exchanged prisoners under the Trump administration was in December 2019, when Iran released Princeton doctorate student Xiyue Wang for Iranian scientist Masoud Soleimani. Unlike the recent White-Taheri exchange, the December swap also saw high-level meetings between U.S. and Iranian officials, a rare instance of bilateral U.S.-Iranian talks under the Trump administration. The United States has called for such a meeting again, but Iranian officials now accuse it of sabotaging diplomatic efforts.

Rouhani’s rhetoric around the time of the December swap also suggested he was more open to a new round of negotiations with the United States. Rouhani explicitly declared in the lead-up to the swap that Tehran had not ruled out talks and that negotiations could be “revolutionary.”

Then, in late December, Rouhani traveled to Japan in a trip that Japanese media said was greenlighted by Washington. There was speculation that the trip could have led to a “small deal” between the United States and Iran, with Iranian media reporting that Japan could get a U.S. waiver for importing Iranian oil and release billions of dollars in frozen Iranian oil revenues. Such a deal could have built confidence and met Rouhani’s precondition of sanctions removal for negotiating with Trump.

However, any hope that the positive diplomatic momentum built in late 2019 would lead to diplomatic progress between the United States and Iran was crushed in early January, with the U.S. assassination of Iranian military commander Qassem Suleimani. Many millions thronged Iran’s cities calling for revenge after the killing. Rouhani defiantly exclaimed in February: “They thought that with maximum pressure they can take us to the table of negotiation in a position of weakness … this will never happen.”

The political climate in Iran has since decisively turned hostile to any talk of negotiating with the United States, reestablishing a taboo that existed for years before the nuclear negotiations during the presidency of Barack Obama.

“Negotiations and compromise with America, the focal point of global arrogance, are useless and harmful,” said Mohammad Bagher Ghalibaf, Iran’s new parliamentary speaker, in his first speech to the body, “Our strategy toward the terroristic America is to complete our vengeance for the blood of the martyr Suleimani.”

Ghalibaf, a former commander in the Islamic Revolutionary Guard Corps and an old friend of Suleimani, unsuccessfully ran against Rouhani in both Iran’s 2013 and 2017 presidential elections. He assumed his parliamentary post in May, after parliamentary elections in February that swept conservatives to power. Importantly, that conservative victory occurred amid record-low turnout in the election and the widespread disqualification of reformist and moderate candidates by the Guardian Council.

Nevertheless, the total capture of parliament by conservatives cements the marginalization of reformists such as Rouhani and his allies that began after Trump scuttled the 2015 nuclear deal. Rouhani had sunk all his political capital into negotiating the accord and promised it would give the Iranian people major economic dividends.

Ghalibaf has now replaced Rouhani’s ally Ali Larijani as parliamentary speaker. Meanwhile, the judiciary, considered one of the three branches of government in Iran alongside the presidency and legislature, is being run by Rouhani’s other former 2017 rival, conservative cleric Ebrahim Raisi.

The changing political winds are significant for the future of Iranian foreign policy. Within the byzantine Islamic Republic system, Rouhani managed to forge necessary consensus on negotiations with the United States during the Obama administration, which included nods of approval from both the Supreme National Security Council and the supreme leader, Ayatollah Ali Khamenei. Unlike his hard-line predecessor, the boisterous and belligerent Mahmoud Ahmadinejad, Rouhani formed a cabinet of many U.S.-educated technocrats and his ambitions laid squarely on securing Iran’s economic integration to the world. For a time, Rouhani was riding high in public opinion polls, but that has dramatically reversed.

Ghalibaf, while not as aggressively ideological as Ahmadinejad, has made it clear that he will do everything in his power to ensure Rouhani remains a lame duck for the rest of his presidency. In his first address as parliamentary speaker, he lambasted Rouhani’s administration for its “focus on the outside [world]” and not believing in “the principles of jihadi management.”

Ironically, Ghalibaf himself has been described as a technocrat, drawing from his 12-year run as mayor of Tehran. During his tenure, he oversaw the construction of major infrastructure projects, voiced support for the nuclear deal, and participated in international summits such as the World Economic Forum in Davos, Switzerland, where in 2008 he called for international investment in Iran.

However, political expediency compels Ghalibaf to oppose Rouhani for the rest of his term, which ends next year. As parliamentary speaker, Ghalibaf presides over disparate conservative factions, ranging from the fundamentalist Front of Islamic Revolution Stability to the free-market-oriented Islamic Coalition Party. Targeting Rouhani and his agenda is an easy and effective way for Ghalibaf to unite conservatives behind him. Above all, the goal will be to obstruct Rouhani’s ability to negotiate with the United States and restore the political fortunes of his camp.

Trump is mistaken if he believes “maximum pressure” is getting him closer to a deal with Iran. The policy is not leading to Iran’s capitulation or collapse, but entrenching U.S.-Iran hostilities and keeping the United States perennially at the cusp of war in the Middle East. Trump, who ran in 2016 on getting the United States out of costly Middle Eastern wars, nearly went to war last June and again in January over his decision to escalate with Iran.

An alternative approach is possible but requires Trump to ditch maximum pressure and rebuild the trust necessary for successful negotiations. International relations and the real estate market are not similar. Bullying and bluster do not win deals; mutual respect and “win-win” compromise do. Trump has styled himself as a deal-maker, but ahead of the November election he has zero foreign-policy victories to his name. If he wants any semblance of a positive foreign-policy legacy, he needs to get off the path to war and on a path to negotiations with Iran.

Sina Toossi is a senior research analyst for the National Iranian American Council. Follow him at @SinaToossi.

Photo: IRNA