August 21, 2014

TSG IntelBrief: Iran Positions Itself for Next Nuclear Talks

• Ahead of talks on a final nuclear deal with the P5+1 (US, UK, France, Russia, China, and Germany), Iran is reaffirming its commitment to assist the International Atomic Energy Agency (IAEA) investigation of its past nuclear research

• Iran’s support for the US move to replace Iraq’s Prime Minister Nuri al-Maliki, while also in Tehran’s own interests, sets a positive tone for the nuclear talks that resume in earnest in September

• The US Congress is seeking to assert a role in approving any final deal; some want to link sanctions relief to non-nuclear issues, such as an end to Iran’s support for Hamas

• The international sanctions regime has remained intact, but many countries and companies are already attempting to position themselves for post-sanctions opportunities in the Iranian market.

The search for a “comprehensive solution” to Iran’s nuclear program has continued since the July decision to extend the terms of an interim agreement, the “Joint Plan of Action” (JPA), until November 24, 2014. The P5+1 – Iran talks will intensify in late September, particularly during the UN General Assembly (UNGA) meetings in New York, at which many world leaders will be present, including Iran’s President, Hassan Rouhani.

Ahead of the UNGA sessions, Deputy Secretary of State William Burns and Vice President Biden’s National Security Advisor, Jake Sullivan, met with Iranian negotiators in early August in an effort to close gaps on the main outstanding issue–the size and scope of Iran’s uranium enrichment program. No breakthroughs were announced, but the talks were assessed as useful. It is a widespread assumption that the other P5+1 countries will go along with any final deal that the United States accepts.

A final deal will also hinge on progress in the related IAEA effort to resolve allegations about Iran’s past research on a nuclear explosive device. During an August 17 visit to Tehran by IAEA Director-General Yukiya Amano, Iran reiterated its pledge to furnish new information on several areas on IAEA inquiry by August 25. The two key issues Iran has committed to clearing up are its alleged past work on explosives that could be used in a nuclear detonation, and its computer studies related to calculating nuclear explosive yields. Iran typically complies with such pledges right at the appointed deadline.


Improved Climate for Talks

Iran’s affirmation of cooperation with the IAEA is part of Tehran’s efforts to build support for its positions when negotiations on a final nuclear deal resume in September. Iran’s apparent cooperation with US policy in Iraq also is intended, at least in part, to create a positive climate for the talks. The US conditioned additional military support to Iraq on the replacement of Nuri al-Maliki as Prime Minister, whom the US largely blamed for the successes of the ongoing ISIS offensive. Iran, reaching the same assessment of al-Maliki, used its extensive influence with other Shi'a leaders in Iraq to facilitate his replacement by Haydar al-Abadi. Some in the US Administration also view Iran’s support for Hamas in the latest fighting with Israel as modest—perhaps reflecting the lingering Iran-Hamas differences over Syria but also suggesting that Iran may seek to appear as a reasonable regional actor.

Still, Rouhani faces substantial opposition from hardliners to signing onto a deal with the P5+1, particularly with the US. Attempting to undermine Rouhani, hardliners in Iran’s judiciary have arrested Washington Post reporter Jason Rezaian, a dual US-Iran national. Of perhaps even more concern for future talks, during the visit by IAEA director Amano, Iran reiterated that it would not negotiate about its ballistic missile arsenal, even though limitations are a stated P5+1 requirement of a final deal. To allay hardliner opposition, Iranian nuclear negotiators have said Iran would not “pay any price” to achieve a deal.

On the US side, Congress has been considered a potential hurdle to a deal. Congress has not scuttled a deal by enacting new Iran sanctions while the JPA has been in effect. However, many in Congress are seeking to limit President Obama’s negotiating room by insisting on a congressional vote to approve a final deal–which Congress has defined as requiring the dismantlement of all of Iran’s nuclear infrastructure. Others in Congress want to tie sanctions relief to issues outside the scope of the nuclear talks–particularly that Tehran end material support to Hamas, Hizballah, and Syrian President Bashar al-Assad.

The international community and corporations are anticipating that a nuclear deal can be reached. Major energy firms that exited the Iran market due to sanctions have been visiting Tehran to discuss post-sanctions re-entry into the country. China and other Asian countries have been increasing their purchases from Iran of condensates–a byproduct of crude oil or natural gas production, which can be used to make petrochemicals. Under the JPA, Iran can export condensates without restriction. In August, Iran and Russia inked a $20 billion oil-gas industry deal–likely to be implemented post-sanctions—that will result in Russian investment in Iran’s energy sector. Automotive suppliers from China and from several French automakers are in discussions to expand ties with Iran’s auto manufacturing sector.



The P5+1 and Iran are likely to negotiate nearly non-stop as of September in an effort to reach a final agreement before the November 24 expiration of the extended JPA. With gaps on key issues continuing to slowly narrow, it is possible that a final deal will be reached by then. Iran’s population expects major sanctions relief and the regime will have a hard time explaining to its public why it failed to reach an agreement–particularly as the P5+1 are not demanding Iran dismantle its nuclear infrastructure entirely.

A failure to reach agreement by the deadline would substantially lessen the chances of a deal thereafter, particularly if Republicans win control of the US Senate after the November US midterm elections. A Republican Senate, coupled with near certain continuation of Republican control of the House, would be able to bring to a vote new sanctions legislation. Such an occurrence would likely cause Iran to walk out of the talks, even if the legislation failed to become law.



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