US-Iran Deal


The United States and Iran, in conjunction with the P5+1 world powers, have struck an historic accord that paves the way for a final settlement of the long-running dispute over Iran’s nuclear program. On the fourth day of the most recent round of talks, in bargaining that lasted until 3 am, the P5+1 and Iran concluded an interim agreement, as widely expected, to freeze Iran’s nuclear program at roughly its current state. In exchange, the United States and the P5+1 have agreed on a modest but significant relaxation of economic sanctions on Iran. The next step, which the parties expect to take up to six months, is to complete a deal in which an end to sanctions is exchanged for a continued freeze and partial rollback of Iran’s program, in a way—guaranteed by more intrusive inspections by the International Atomic Energy Agency (IAEA)—that provides clear assurances that Iran is not on the path toward nuclear weapons.

The substance of the accord reached in Geneva is a breakthrough, but the politics of the agreement is equally important. President Obama and Secretary of State Kerry signed the deal in explicit, full-frontal defiance of American hawks, neoconservatives and hardliners, the Israel lobby, and anti-Iran partisans in Congress. Foreign Minister Javad Zarif and his team, backed by President Hassan Rouhani—elected in June with a mandate to do exactly this—have similarly defied their own country’s hardliners and skeptics, led by the Islamic Revolutionary Guard Corps and by what Zarif calls Iran’s own Tea Party. And the United States struck the deal despite outright hostility, bordering on hysteria, from its two chief allies in the Middle East, Israel and Saudi Arabia.

According to the terms of the agreement, Iran has agreed to halt all uranium enrichment above the range of 3.5 to 5 percent purity, which is low-enriched, fuel-grade uranium. Its stockpile of medium-enriched, 20 percent purity uranium will be neutralized by conversion into a product that cannot be used for weapons. It will not produce any new centrifuges except those needed to replace ones that break down, and it will not start spinning those now in place, including advanced centrifuges, that aren’t currently in use. It will not add to its current stockpile of low-enriched uranium, either, although it can continue to refine uranium to 5 percent purity as long as some of it is converted to fuel rods and other, nonmilitary product. Its heavy water reactor at Arak, which could produce material to process into plutonium, will be frozen. And Iran has agreed to far more intrusive IAEA inspections, including daily inspections at Natanz and at the underground facility at Fordow.

Both President Rouhani and Ayatollah Ali Khamenei, the supreme leader, have endorsed the accord, in part because for the first time the United States and the P5+1 have tacitly recognized Iran’s right to enrich uranium under the terms of the Nonproliferation Treaty, which Iran has signed, by agreeing to permit Iran’s continuing enrichment to 5 percent. Rouhani said that the deal seals Iran’s “nuclear rights,” and, according to Al Arabiya, Khamenei said: “The nuclear negotiating team should be thanked and appreciated for this achievement. God’s grace and the support of the Iranian nation were the reasons behind this success.”

Obama, speaking from the White House early Sunday, said:

While today’s announcement is just a first step, it achieves a great deal. For the first time in nearly a decade, we have halted the progress of the Iranian nuclear program, and key parts of the program will be rolled back. Iran has committed to halting certain levels of enrichment, and neutralizing part of its stockpile. Iran cannot use its next-generation centrifuges—which are used for enriching uranium. Iran cannot install or start up new centrifuges, and its production of centrifuges will be limited. Iran will halt work at its plutonium reactor. And new inspections will provide extensive access to Iran’s nuclear facilities, and allow the international community to verify whether Iran is keeping its commitments.

Interestingly, a statement from the White House early today explicitly rules out the imposition of additional sanctions, which is a direct message to leaders of the US Senate, including majority leader Harry Reid and Chuck Schumer (D-NY), who’d hinted that they’d move ahead with yet another round of sanctions in December. The accord, says the White House, commits the parties of the P5+1, including the United States, to “not impose new nuclear-related sanctions for six months, if Iran abides by its commitments under this deal, to the extent permissible within their political systems.”

But the White House, trying to sell the accord to domestic skeptics, including the hawks, risks sounding a little triumphant by touting the sanctions relief provided to Iran as “limited, temporary, targeted, and reversible.” That’s all true—but, of course, Iran’s commitments are equally “reversible.” In fact, the sanctions relief is important in its own right, but it also provides the first movement in the opposition direction in regard to economic sanctions on Iran since the mid-1990s. Under the terms of the accord, Iran will gain access to billions of dollars in frozen accounts over the next six months; it will gain specific relief for its suffering auto and aviation sectors; and the accord will “allow purchases of Iranian oil to remain at their currently significantly reduced levels.” That last phrase means that although the onerous oil and banking sanctions will remain in place, there will be no more pressure to reduce Iran’s oil exports further.

Israel’s reaction is, predictably, apoplectic. Naftali Bennett, Israel’s economic minister, said, “If five years from now a nuclear suitcase explodes in New York or Madrid, it will be because of the deal that was signed this morning.” But Prime Minister Benjamin Netanyahu will have trouble playing that card for long, since Israel is drastically isolated from the rest of the world and risks an open break with Washington. Already, some Israel leaders, such as President Shimon Peres and the newly installed leader of the Israeli Labor Party, have issued mild to moderate statements that undermine Netanyahu’s bluster. And, ironically, though, the harsh reaction from Israel will help Rouhani and Zarif sell the deal in Iran, since they can point to Israel’s criticism of the deal as a sign that it was, indeed, a victory for Iran’s “nuclear rights.”

In a background briefing, a senior US official laid out the sanctions relief that Iran will get via the accord. It’s an impressive list:

The components are as follows: We will pause efforts to further reduce Iran’s crude oil sales. This means Iran’s oil exports will remain steady at their current level of around 1 million barrels per day, which is down 60 percent since our oil sanctions took effect in late 2011. And with one exception, the revenue that Iran earns from these sales over the next six months will continue to be restricted by our sanctions, meaning that those funds will not be available to Iran for repatriation or cross-border transfer.

The one exception is that we will allow Iran to transfer $4.2 billion in revenue from these sales in installments over the six-month period.

We will suspend U.S. sanctions on Iran’s petrochemical exports. This could allow Iran to generate some revenue, which we estimate to be a maximum of a billion dollars in new revenue over the six-month period. We will suspend U.S. sanctions on Iran’s trade in gold and precious metals. There is no economic value to Iran from this provision because Iran will have to spend its limited unrestricted foreign currency for any gold purchases. Iran cannot use restricted oil earnings to buy gold.

We will suspend U.S. sanctions on exports to Iran’s auto industry. This could provide Iran some marginal benefit on the order of about $500 million if Iran is able to resume its prior levels of production and revitalizes its auto exports. However, Iran’s auto industry suffers from many problems beyond sanctions, many of which would have to be solved for Iran to benefit from this provision. Moreover, Iran would need to use some of its limited foreign currency to pay for car kits it would import from abroad.

We will allow $400 million in governmental tuition assistance to be transferred from restricted Iranian funds overseas directly to recognized educational institutions in third countries to defray the tuition costs of Iranian students. We will license safety-related repairs and inspections inside Iran for certain Iranian airlines, and we will establish a financial channel to facilitate humanitarian trade in food, agricultural commodities, medicines, and medical devices for Iran’s domestic needs. Humanitarian transactions have been explicitly exempted from sanctions by Congress, so this channel will not provide Iran access to any new source of funds.

Finally, to the extent permissible within our political system, we have committed to refrain from imposing new nuclear-related sanctions. That does not prevent us from implementing and enforcing our existing nuclear-related sanctions, which, of course, we will do, or from imposing new sanctions targeting Iran’s sponsorship of terrorism or its abysmal human rights record. 

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