Insights into Editorial: Unravelling of the Iran deal

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Insights into Editorial: Unravelling of the Iran deal


Unravelling of the Iran deal

Context:

US President announced that he was “decertifying” Iran’s compliance with the Joint Comprehensive Plan of Action (“JCPOA”). By itself, this action does not mean that the United States has withdrawn from the JCPOA, nor does it reinstate sanctions that were lifted under the JCPOA.

What it does do, however, is to hand the matter over to the US Congress for a 60-day review period in which Congress must decide whether the sanctions relief under the JCPOA will remain in effect

Congress is also reported to be considering new laws that would automatically re-impose US sanctions if Iran violates existing and new restrictions on its nuclear program

Against this uncertain US political backdrop, both Iran and US allies have reaffirmed their clear commitment to Iran’s compliance with the JCPOA. International Atomic Energy Agency (IAEA) Director General publicly stated that Iran is in full compliance with the deal and subject to the world’s most robust nuclear verification regime.

Why were sanctions imposed on Iran?

In 2004, Iran had around 1000 centrifuges, and by 2015 the number had grown to 20,000. The U.S. concluded that Iran had recovered from the Stuxnet debacle and was barely months away from producing enough highly enriched uranium (20-25 kg) to produce a nuclear device.

As a result, the UN, EU and several individual countries have imposed sanctions in an attempt to prevent it from developing military nuclear capability.

The rationale behind the sanctions was that a nuclear armed Iran would be more threatening. Therefore the JCPOA focussed exclusively on rolling back Iran’s nuclear activities.

What is JCPOA?

The P5+1 (China, France, Germany, Russia, the United Kingdom, and the United States), the European Union (EU), and Iran reached a Joint Comprehensive Plan of Action (JCPOA) to ensure that Iran’s nuclear program will be exclusively peaceful.

Under the JCPOA,

  • Iran ended converting the underground Fordow enrichment facility into a research centre and dismantling of the Arak heavy water research reactor)
  • Accepted restraints on reducing the number of operational centrifuges to 5060 at Natanz for 10 years.
  • Accepted a highly rigorous inspection regime.
  • In return, about $100 billion of Iranian assets were unfrozen and Iran was allowed to resume sales of oil.

The International Atomic Energy Agency (IAEA) has verified that Iran has implemented its key nuclear-related measures described in the JCPOA.

The UN Security Council (UNSC) unanimously adopted Resolution 2231, endorsing the JCPOA and lifting the UNSC sanctions.

Why “decertify” the JCPOA now?

U.S. sanctions relief was more complicated because of a multiplicity of sanctions relating to nuclear and missile activities, human rights violations and terrorism.

Sanctions also had extra-territorial application, implying that third country companies would be penalised if they engaged in activities from which U.S. companies were barred.

The President’s announcement was made in anticipation of an October 15 deadline under the Iran Nuclear Agreement Review Act of 2015 (“INARA”). The objective of the Act was to constrain presidential authority to waive sanctions on Iran.

Under the INARA, every 90 days, the President is obliged to certify to the US Congress that

  • Iran is in compliance with the terms of the JCPOA and
  • The suspension of sanctions under the JCPOA is appropriate and proportionate to measures taken by Iran to terminate its illicit nuclear program
  • It continues to be vital to the national security interests of the United States.
  • INARA also obliged the President to provide a report on Iran’s support to terrorism, human rights violations and ballistic missile activities.

The President has made this certification twice and also continued to renew the periodic waivers of US sanctions since he was sworn into office in January 2017, although each time reluctantly.

President would like Congress to make JCPOA permanent and also establish new benchmarks on missile activities and regional behaviour for continuing sanctions relief. However, President’s announcement was made due to the deteriorated relations between President and Senator recently.

Only two countries have applauded US decision — Saudi Arabia praised the U.S.’s firm strategy and Israeli Prime Minister conveyed his congratulations.

What has the response been from the EU so far?

In response to US President’s announcement, UK Prime Minister, German Chancellor and French President, issued a joint statement expressing concern for the potential implications of President’s decision and encouraging the US Congress to consider the effects on the security of both the US and its allies.

  • While the leaders also acknowledged a shared concern regarding Iran’s ballistic missile program and a willingness to take appropriate measures in cooperation with the US and other allies, the statement makes clear that they will look to resolve these concerns through negotiations and constructive dialogue with Iran.
  • Subsequently, the European Council (“EC”) issued a statementdeclaring the EU’s continued commitment to the JCPOA and stressing that the JCPOA is a “key element of the nuclear non-proliferation global architecture and crucial for the security of the region.”
  • EC statement notes that since the implementation of the JCPOA, the IAEA has verified Iran’s continued compliance with all of its nuclear-related commitments under the JCPOA eight times.
  • In line with the joint statement above, the EC reiterated that while it remains concerned with Iran’s development of its ballistic missile program, it contends that such concerns ought to be addressed outside of the JCPOA.
  • The European Union (EU) foreign policy chief said that the world cannot afford “to dismantle a nuclear agreement that is working.

What are the implications of US sanctions on Iran?

Other countries have promised to uphold it but their ability to do so will depend on how their companies can be firewalled from U.S. sanctions if they continue their engagement with Iran.

The sanctions often referred to as “secondary sanctions”, which primarily target non-US companies engaging in business in or with Iran entirely outside US jurisdiction.

However, implications of the breakdown are not limited to U.S.-Iran relations.

  • Iran can make things difficult for the U.S. in Afghanistan as also in Iraq and Syria.
  • The U.S.’s ability to work with Russia in Syria or with China regarding North Korea will also be impacted.
  • And sooner or later, questions may be asked in Iran about why it should continue with the restrictions and inspections that it accepted under the JCPOA, which would have far-reaching implications for the global nuclear architecture.
  • Coming after the rejection of the Trans-Pacific Partnership (TPP), the Paris climate change accord and the North American Free Trade Agreement, President’s decision further diminishes U.S. credibility.