INTELBRIEF

July 11, 2019

IntelBrief: Iran Crisis Returns to Nuclear Issues

FILE - In this Jan. 13, 2015, file photo released by the Iranian President's Office, President Hassan Rouhani visits the Bushehr nuclear power plant just outside of Bushehr, Iran. Iran announced Sunday, July 7, 2019 it will raise its enrichment of uranium, breaking another limit of its faltering 2015 nuclear deal with world powers and further heightening tensions between Tehran and the U.S. (AP Photo/Iranian Presidency Office, Mohammad Berno, File).
  • Heightened tensions between the U.S. and Iran have now returned to the core issue of Iran’s nuclear program.
  • Iran’s recent actions, including violating terms of the 2015 multilateral nuclear agreement, are intended to make the Trump administration pay a price for its ‘maximum pressure’ campaign. 
  • There are no easily discernible solutions to the crisis, in part because the Trump administration is unwilling to lift any sanctions on Iran.
  • The European Union (EU) countries have few options to salvage the nuclear accord, even as they scramble in an attempt to save the deal.

The roots of the recent U.S.-Iran tensions are the Trump administration’s May 2018 decision to withdraw the United States from the 2015 multilateral nuclear deal with Iran (Joint Comprehensive Plan of Action, or JCPOA). The administration argued that the agreement failed to explicitly limit Iran’s regional activities that have enabled Tehran to exercise preponderant influence in Lebanon, Syria, Iraq, and Yemen. The administration embarked on a campaign of applying ‘maximum pressure’ on Iran through sanctions, which severely damaged Iran’s economy by driving Iran’s oil exports to lows not seen since the 1980-88 Iran-Iraq War. Iran reacted in May and June by attacking six commercial oil tankers, activating proxies in Iraq and Yemen to threaten U.S. allies in Baghdad and the Gulf states, and shooting down a U.S. unmanned aerial vehicle—the latter action nearly provoking U.S. military retaliation. 

As of late June, Iran has shifted its approach somewhat by undertaking modest and reversible, yet clear violations, of the JCPOA’s nuclear restrictions. In so doing, the pre-JCPOA international concerns about Iran’s slow but steady march toward a nuclear weapons capability have returned in full force. In early July, Iran announced that its stockpile of low-enriched uranium exceeded the 300 kilograms allowed under the JCPOA. On July 8, the International Atomic Energy Agency (IAEA) verified that Iran had enriched uranium to 4.5% purity—still far below the 90% enrichment needed for a nuclear weapon, but more than the 3.67% enrichment allowed under the JCPOA. Iran has threatened to take additional steps in the coming months, in particular enrichment to even higher levels of purity. Iran’s intention to break out of the JCPOA restrictions is to signal to the Trump administration that its ‘maximum pressure’ policy carries costs and risks that the policy did not incur from May 2018-2019. During that year, Iran continued to comply with JCPOA nuclear restrictions, even though it was not receiving the JCPOA’s promised economic benefits.  

The expansion of the spring U.S.-Iran crisis to the nuclear file puts the EU countries front and center. The EU is being pressed by the Trump administration on the one side to declare Iran in breach of the JCPOA and to reinstate all sanctions on Iran. At the same time, Iran is pressing the EU to move quickly to blunt the effects of U.S. sanctions, lest the JCPOA dissolve entirely. The EU leaders blame Trump administration policy for the crisis, but do not want to risk an open rift with the United States to defend Iran’s position. French President Emmanuel Macron has tried to mediate the crisis, but his leverage is limited; he is unable to offer Iran any prospect of a lifting of U.S. sanctions or a Trump administration return to the JCPOA. He and other European leaders have been unable to convince the administration to offer, for example, a restoration of the sanctions exceptions for the purchase of Iranian oil. The cancellation of the exceptions in May has caused Iran’s oil exports to plummet to less than 400,000 barrels per day as of the end of June. Iran’s baseline oil export level, in the absence of sanctions, is nearly 2.5 million barrels per day. FILE - In this Jan. 13, 2015, file photo released by the Iranian President's Office, President Hassan Rouhani visits the Bushehr nuclear power plant just outside of Bushehr, Iran. Iran announced Sunday, July 7, 2019 it will raise its enrichment of uranium, breaking another limit of its faltering 2015 nuclear deal with world powers and further heightening tensions between Tehran and the U.S. (AP Photo/Iranian Presidency Office, Mohammad Berno, File).

Absent a U.S. willingness to lift sanctions, the EU has few remaining benefits to offer Iran. EU government efforts to compel EU companies to remain in the Iran market have failed. In June, the EU declared as operational an Iran trading vehicle that circumvents U.S. sanctions, but the EU insists it limit itself to food and medicine sales to Iran, which are immune from sanctions. The vehicle does not extend to a trade in Iranian oil. EU countries could potentially offer Iran massive amounts of loans and grants to compensate it for the loss of $40 billion per year in oil revenue, but that option would strain European budgets considerably and have potential political repercussions. Still, this EU option might represent the one remaining chance to avert further dangerous escalation, because a Trump administration willingness to lift sanctions, or an Iranian capitulation to U.S. demands for a new JCPOA, are nowhere in sight.

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