July 14, 2016

TSG IntelBrief: One Year Since the Iran Nuclear Deal

• International hopes that the July 14, 2015 nuclear agreement would reshape the Middle East region have not been realized

• Regional countries accept that the deal has reduced the threat of a nuclear-armed Iran, but see Iran’s economic revival as enhancing Tehran’s ability to project influence

• Iran is complying with its nuclear commitments under the agreement, but is demanding more sanctions relief than was promised by the United States and its negotiating partners

• Iran’s continued testing of ballistic missiles represents the single greatest threat to the agreement by calling into question Iran’s long-term intentions. 


UN Secretary-General Ban Ki-Moon issued a report in early July assessing that Iran has fully complied with the nuclear commitments it made one year ago in the 'Joint Comprehensive Plan of Action' (JCPOA) with the P5+1 countries (United States, Russia, China, Britain, France, and Germany). The UN report matches recent assessments by the International Atomic Energy Agency (IAEA), which is monitoring Iranian compliance, as well as testimony by U.S. officials. Even regional states who were skeptical of the deal, including Israel and the Gulf Cooperation Council countries (GCC: Saudi Arabia, Kuwait, United Arab Emirates, Bahrain, Qatar, Oman), acknowledge that the agreement has postponed the likelihood of a nuclear-armed Iran by at least a decade. These countries argue that sanctions relief has given Iran additional financial wherewithal to spread its influence in the region. The lifting of sanctions in January gave Iran immediate access to a net amount of about $60 billion in foreign exchange in various banks around the world, particularly China, Japan, South Korea, and Turkey, that was previously inaccessible. However, regional perception perhaps exceeds reality: it is not clear that Iran has actually used—or needs to use—any newly accessible funds to enhance its regional activities. Iran was easily able to project influence in the region despite the crippling sanctions in force between 2011-2016.    

The nuclear agreement has not reshaped the geo-strategic architecture of the region. The United States and its partners hoped that the agreement would cause Iran to cooperate with the U.S.-led coalition in combating the so-called Islamic State, and in finding political solutions in Syria and Yemen. Instead, Iran has aligned with Russia to keep President Bashar al-Assad in power in Syria through military action against anti-Assad rebels, including by facilitating additional deployments of Lebanese Hizballah and other foreign Shi’a fighters to try to encircle rebel-held parts of Aleppo. Iran also has continued to arm the Zaydi Shi’a Houthi rebels in Yemen, further antagonizing GCC leader Saudi Arabia. The UN Secretary-General’s new report highlights Iranian arms shipments to Assad and the Houthis as violations of UN Resolution 2231, which enshrines the JCPOA and bans Iran from exporting any arms. Not only has Iran continued to support its key allies and proxies but, since it signed the JCPOA, Iran has apparently stepped up support for radical Shi’a militants in Bahrain, according to the State Department’s annual terrorism report released in June.    

As further evidence of Iran’s growing strategic alignment with Russia, Iran has sought to purchase additional major combat systems from Russia since the agreement went into effect. The equipment sought includes advanced combat aircraft, modern tanks, and various naval vessels. Resolution 2231 stipulates that any such sales to Iran would require Security Council approval, for up to five years. The United States, a veto-wielding Security Council member, has said it would not support such sales. Yet, ongoing Iran-Russia discussions of the arms deal suggest the two countries might pursue it nonetheless. Proceeding with the sale could set up a crisis not only for the Iran agreement, but for broader U.S.-Russia relations.  

The latest UN report also calls Iran’s series of ballistic missile tests ‘inconsistent' with Resolution 2231, which 'calls on' Iran not to test missiles designed to carry a nuclear warhead. Iran’s vows to continue such tests, despite universal criticism, constitute perhaps the greatest potential threat to the agreement. Critics say the tests prove that Iran is developing the means to deliver a nuclear weapon after the JCPOA restrictions begin to expire in ten years. The tests could prompt the passage of new U.S. sanctions laws, which in turn could cause Iran to react by abrogating the agreement.    

The imposition of any new sanctions would further embolden Iran’s hardliners, led by Supreme Leader Grand Ayatollah Ali Khamenei, to accuse the United States and its partners of failing to uphold their JCPOA sanctions relief commitments. Khamenei and other Iranian figures argue that sanctions have been lifted 'only on paper,' and that remaining sanctions on Iran for its terrorism support, missile and other proliferation, and human rights record are deterring European and other international firms from re-entering the Iranian market. Iranian officials are demanding that the United States loosen its sanctions further—and beyond what is committed in the JCPOA—to allow for a greater number of transactions to be conducted in U.S. dollars. Iran is not threatening to abrogate the agreement if that specific demand is not met, but the request itself indicates that hardliners will benefit politically if sanctions relief does not improve the Iranian economy to the degree that President Hassan Rouhani and his allies have advertised. For his part, Rouhani, who is up for re-election in June 2017, seeks to obtain as much sanctions relief as possible to ensure that the population’s economic expectations are met.



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