November 25, 2014

TSG IntelBrief: An Elusive Agreement: Iran Nuclear Talks Extended

• Iran and the P5+1 failed to reach a comprehensive nuclear accord by the November 24 deadline, but have extended the talks until June 30, 2015

• The long extension gives critics in Iran and in the P5+1 countries opportunity to mobilize against an agreement

• Without a final accord, Iran will not receive broad sanctions relief while the effect of the sanctions is amplified by the recent fall in oil prices

• The lack of a final agreement postpones Iran’s reintegration into the region and hinders prospects for increased U.S.-Iran cooperation against the so-called Islamic State.

The interim nuclear agreement known as the “Joint Plan of Action” (JPA) between Iran and the five permanent members of the UN Security Council plus Germany (P5+1), signed one year ago, halts Iran’s nuclear progress in exchange for modest sanctions relief. The JPA gave the two sides time to negotiate a comprehensive accord that would ensure Iran’s nuclear program is for purely peaceful purposes, lift most international sanctions on Iran, and set the stage for Iran’s reintegration into the international community. In July, the P5+1 and Iran extended the JPA until November 24, asserting that progress was sufficient to justify additional months of talks.

After intensive negotiations in Oman and Austria throughout the autumn, the P5+1 and Iran announced on Monday that they had made substantial progress but had not yet closed remaining significant gaps. The two sides set a new deadline of June 30, 2015 for a final accord, with the intent of reaching a broad political outline by March 2015. The parties announced that all provisions of the JPA will continue: the “standstill” of Iran’s nuclear program, $700 million per month in Iranian access to hard currency, and a one million barrel per day cap on Iranian oil exports. The parties will reconvene their technical experts in December, either in Muscat or Vienna.

The key points that prevented reaching agreement by Monday are largely the same issues that have eluded closure for the past year, primarily:

Iran’s program to enrich uranium: The P5+1 were apparently willing to allow Iran to cut its operating centrifuges only modestly, to about 6,000 (from the 9,000 now operating), if Iran also agreed to hold no stockpile of 5% enriched uranium. Iran was willing to have Russia store its stockpile, but balked at dismantling any operating centrifuges and restrictions on installing upgraded centrifuges.

Duration of the agreement: The P5+1 continue to demand that the final agreement apply for at least 15 years. Iran still insists on a time frame of about five years, after which it would be held to standards no stricter than any other party to the Nuclear Non-Proliferation Treaty.

Unwinding of sanctions: Iran is insisting that comprehensive sanctions relief will be effective as soon as the accord takes effect. The P5+1 have largely acceded to broad sanctions lifting, but insist that sanctions relief will be “stepwise” as Iran implements its commitments under the agreement.

Whereas U.S. Secretary of State John Kerry and other P5+1 officials attempted to portray the extension as warranted by progress on even the most difficult issues, critics of the potential deal are likely to re-emerge in force. A prominent reflection of the failure to reach agreement by Monday was Iranian Supreme Leader Ali Khamenei’s firm insistence that no part of Iran’s enrichment program will be dismantled. There is broad agreement that no deal is sellable in the United States Congress or to Israel or the Arab Gulf states unless he moves from that position.

The United States and other P5+1 critics assert that Khamenei will not shift by the new June 30 deadline, if he has not done so already. The six Gulf Cooperation Council (GCC) members (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) are apparently betting there will be no eventual deal and joint security planning against Iran needs to remain active. In preparing for the GCC annual summit to be held in December in Doha, council foreign ministers are conferring today on a Saudi plan to bolster indigenous defense capabilities, and discussing regional security issues with their counterparts from Jordan, Morocco, and Yemen.

In his statement announcing the extension, Secretary Kerry argued that, even though no final accord was reached, it would be unwise to discontinue the negotiations. The JPA freezes Iran’s nuclear program in place and that standstill makes the region and the world safer than an unconstrained Iranian program. Kerry’s statement appeared at least partly directed at the incoming Republican-led Congress, some of whom signaled on Monday that they would push for new sanctions. Additional sanctions would almost certainly cause Iran’s supreme leader to insist that the P5+1 cannot be trusted, and to mandate that Iran end negotiations entirely.

Yet, on the part of Iran, the underlying drivers of a deal remain. Without the dramatic sanctions relief that would result from a final accord, Iran’s economy will not return to growth nor put unemployed Iranians back to work. Furthermore, the effect on Iran’s economy is worsened by falling oil prices; the one million barrel per day cap on Iranian oil exports means Iran cannot compensate for falling prices with increased export volume. Public opinion does play a role in Iranian decision-making, and Iran’s President Hassan Rouhani will likely cite public sentiment to convince the supreme leader to consider further Iranian concessions. And, the absence of a final accord means Iran-U.S. cooperation against the so-called Islamic State will likely not coalesce. Iran is particularly intent on ensuring that the United States does not expand its anti-Islamic State mission to include an effort to oust Syrian President Bashar al-Assad.


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