End of the deal: Iran signals no capitulation

Iranian Supreme Leader Ali Khamenei in a speech on Wednesday night took an unprecedented jab at the moderate administration of President Hassan Rouhani, saying he had never truly condoned concessions entailed in the landmark nuclear deal – a deal that now appears destined for collapse.

For nearly two decades, Tehran’s quest for nuclear power has unnerved the “international community” – namely Washington and its allies. Although its nuclear program was set in motion in 1957 as part of the US government’s Atoms for Peace program, the anti-American 1979 revolution turned the tide, and Iran’s uranium-enrichment undertakings became a thorn in the side of the United States and its European allies. They punished Iran with rigorous unilateral sanctions and United Nations Security Council resolutions, yet Iran refused to reconsider its posture.

The Islamic Republic has paid a dear price for refusing to abandon its nuclear ambitions.

In July 2015, after years of futile squabbling, Iran and six world powers – the US, China, Russia, Germany, the UK and France – as well as the European Union, reached an agreement that came to be known as the Joint Comprehensive Plan of Action, commonly referred to as the Iran nuclear deal. Iran agreed to limit certain aspects of its nuclear program and the permanent members of the Security Council, plus Germany, vowed to lift their nuclear-related sanctions. The highly detailed deal made up a 159-page document.

The JCPOA was negotiated in an atmosphere of mistrust and over an extended period of time, and thus includes the minutest details about the commitments each side has undertaken. Those arrangements were encapsulated in Security Council Resolution 2231, and the deal itself was widely lauded for the willingness of previously intransigent interlocutors to make significant compromises.

Fall of deal?

That robust agreement now appears on the brink of collapse.

The May 2018 withdrawal of the United States from the JCPOA and the Donald Trump administration’s subsequent imposition of draconian economic sanctions on Iran have made the survival of the nuclear deal a far-fetched prospect.

Regardless of whether Iran ever intended to build an atomic bomb, its nuclear program has developed into a matter of national security, elevated as an insignia of pride for a nation that has hardly bargained its ideological pillars since 1979.

The most significant incentive Iran had for curtailing its nuclear activities was the promised economic dividends of the JCPOA. The agreement was meant to allow Iran to do business with the outside world – most notably export its oil and petrochemical products – without the restrictions that previous economic sanctions had put in place.

Beginning in November 2018, the Trump administration reimposed sanctions on Iran, also threatening the Persian Gulf nation’s trade partners and oil clients to stop doing business or face penalties. Little incentive is left for Iran to remain in the nuclear deal and stick to its commitments while the remaining signatories cannot or do not reciprocate.

The Rouhani government pinned its hopes on the European Union salvaging the moribund deal, calling on Brussels to resist US political pressure and secondary sanctions that target countries and entities engaged in trade with Iran.

In August 2018, the EU announced an updated Blocking Statute, which allows European operators to “recover damages arising from US extraterritorial sanctions … and nullifies the effect in the EU of any foreign court rulings based on them.”

Then in January, France, Germany and the UK set up an Instrument in Support of Trade Exchanges (INSTEX) special purpose vehicle to facilitate non-dollar trade with Iran as a channel to bypass US sanctions and allow for humanitarian trade.

Those measures, Iran responded, were cosmetic and insufficient.

This month, Tehran announced it would scale back its commitments to the JCPOA and no longer ship excess low-enriched uranium and heavy water abroad.

President Rouhani further threatened to scrap the deal altogether after 60 days if the EU was not able to protect banking transactions and the oil trade.

The EU rejected the 60-day ultimatum.

Under the table

The US has meanwhile sought total capitulation from Iran. Its “maximum pressure” campaign aims to drive Iran’s oil exports to zero so that the petroleum-dominated economy runs out of cash and is forced to accept American terms.

The US State Department announced in April that it would halt waivers to eight major importers of Iran’s oil — China, India, Japan, South Korea, Taiwan, Turkey, Italy and Greece.

However, it is unlikely that Washington can choke off Iran’s oil revenues completely, according to William Beeman, a professor of anthropology at the University of Minnesota and the author of The Great Satan vs the Mad Mullahs: How the United States and Iran Demonize Each Other.

“There is no international prohibition on Iran to stop selling oil or other petroleum products, so the ‘driving exports to zero’ talk is just a rhetorical threat. I expect that Iran will continue to have buyers for its oil and petroleum products in China, Russia, Turkey and India as well as other nations,” he said.

Beeman says the two Eurasian powerhouses China and Russia, already facing their own trade wars and sanctions from Washington, will be vital to the survival of the nuclear pact – or Tehran itself should the deal fall apart.

“The US is already punishing them for other reasons. If I were China or Russia, I would thumb my nose at the US, and tell them to first remove the existing trade sanctions, and then talk to them about curtailing Iran oil sales,” the professor said.

Should Iran sell its oil under the table, he added, there is little Washington can do to inflict economic pain on Tehran that it has not already done.