July 22, 2014

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TSG IntelBrief: Iran-P5+1Talks Extension: Gaps and Interests

On July 18, Iran and the negotiating countries of the P5+1 (US, UK, France, Russia, China and Germany) announced that the interim nuclear agreement (“Joint Plan of Action,” JPA), would be extended four months, until November 24, 2014 (the one-year anniversary of the JPA’s signing).

In general, all provisions of the original JPA are extended, although Iran has made an additional commitment to convert all of its stockpile of 20% enriched uranium into fuel for a research reactor—a form that cannot be enriched further into weapons-grade uranium. During the six months of the JPA, Iran had already diluted that stockpile into forms that are difficult, but not impossible, to enrich to weapons grade levels. The sanctions relief for Iran will continue at a “pro-rated” amount of $700 million in hard currency for each of the four months of the extension—the same monthly amount as the first six months of the JPA.

The extension announcements indicated that talks will soon continue in different formats, including in technical talks and discussions among senior P5+1 diplomats to unify their positions. Intense high-level Iran-P5+1 efforts to finalize an agreement are to resume in September, according to diplomats. This likely indicates that the US and Iran will meet at senior levels during the UN General Assembly meetings in New York in an effort to overcome the remaining political hurdles to a deal.

Implications

The four-month extension suggests that US officials perceive that a final nuclear deal with Iran might be obtainable. An extension of up to six months was provided for under the JPA, but an extension that long could have suggested that a deal was far away. The US and its partners justified the extension on the grounds that Iran had fully complied with all the terms of the JPA, and that differences had been narrowed on some key issues. US Secretary of State Kerry noted “tangible progress” including: limiting the potential of a plutonium route to a nuclear weapon from the heavy water reactor at Arak; converting the hardened uranium enrichment site at Fordow into a non-nuclear research site; and enhancing the monitoring and verification arrangements for any final nuclear deal.

There has also been some progress in the International Atomic Energy Agency (IAEA) investigation into Iran’s alleged past research into a nuclear explosive device. Tehran appears to have accepted that it will not obtain all sanctions relief immediately after a deal is reached.

No progress has been cited on curbing Iran’s development of nuclear-capable ballistic missiles, but this issue is not considered a dealbreaker.  The one issue that prevented reaching a deal within the original JPA timeframe has been the sticking point for the past decade—Iran’s uranium enrichment program at Natanz. Yet, had there not been some movement on that issue, it is likely that the talks would not have been extended at all.

Iran’s supreme leader Grand Ayatollah Ali Khamenei appeared to limit his negotiating team’s maneuvering room with his July 7 speech asserting that Iran requires a long term industrial-level enrichment capability involving 190,000 centrifuges. That is about ten times the amount currently installed, although only about 9,000 centrifuges are in operation. Khamenei’s figure is manifold more than the P5+1 demands that Iran reduce its operating centrifuges to about 3,000—a symbolic capability that allows Iran to claim it preserved its “right to enrich.”

As the July 20 expiration of the JPA approached, Iran’s chief negotiator Mohammad Javad Zarif proposed that, for up to seven years, Iran would freeze its centrifuges at the 22,000 already installed and convert any low-enriched (5%) uranium produced to a form that could not be easily enriched further.

The Zarif proposal—particularly the relatively short duration of the limits—was clearly unacceptable to the P5+1, but did show Iran moving off maximalist positions. The proposal was even further from the US Congress’ demands that Iran’s nuclear infrastructure be dismantled entirely. Congress might move off this maximalist stance, but requires that any final deal, at the very least, eliminate the possibility of a nuclear-armed Iran indefinitely. Congressional support for any deal is crucial because legislative action is required to make sanctions relief permanent. President Obama can only suspend sanctions by issuing waivers of US sanctions on foreign firms that conduct business with Iran. Iranian hardliners, particularly in the Islamic Revolutionary Guard Corps (IRGC), back Khamenei’s stated opposition to any limits on enrichment, but the IRGC will fall in line with any deal the supreme leader accepts.

Outlook

A final deal is not certain but is within reach, because Iran is no longer diametrically opposed to the P5+1 position on the core outstanding issue, and additional Iranian concessions are likely. Iranian leaders have built up a domestic expectation that a deal will be reached, sanctions lifted, and the economy will rebound. It would be difficult for the Iranian leadership to explain to its public that no deal was reached, no matter how firm P5+1 positions remain.

Negotiations are likely to intensify in October and November to try to close remaining gaps. Still, a deal is not likely before the US midterm elections in early November. Extension of the talks beyond those elections was, at least in part, an Administration effort to take any final deal out of the US political arena going into the midterms. To signal a willingness to work with Congress on the Iran issue, the Administration has said it would support a new round of Iran sanctions if the talks do not produce a deal by the November 24 expiration of the extension. A new round of US sanctions is likely to cause Iran to resume the spectrum of nuclear activities it was pursuing before the JPA was in place.

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