Russia and Global Security Risks
The JCPOA Puzzle Under the New US Administration

An analysis of the Iranian agenda in the general context of the set of American foreign policy statements made over the course of the last month shows that the most significant task of the US administration today, given the failure of a quick solution to the problem and the fading relevance of the preceding presidency’s overall policy objectives, is not resolving the Iranian problem as such, but restoring the coalition with Washington’s allies, primarily the European ones, writes Valdai expert Anastasia Likhacheva.

During the Valdai Club discussion, titled “Return to the Deal? The New US Administration and the Prospects for the JCPOA”, several poignant questions were raised at once: about the motivation of the parties, the implicit constraints, and the prospects of the current sanctions. Despite the significant number of unknowns, the discussion confirmed that due to the fact that the JCPOA had not been a rapid and decisive success, as with the extension of the New START Treaty, all parties today have moved from vocal statements to the development of negotiating positions.

Return to the Deal? The New US Administration and the Prospects for the JCPOA. An Expert Discussion
16.03.2021


Anamnesis

The position of the new administration and especially its Iranian team, which included almost all the key architects of the JCPOA from the American side (William Burns and James Sullivan), is very complex. In 2018, Donald Trump unilaterally withdrew from the JCPOA, renewed unilateral sanctions against Iran, and even made certain aspects of the reintroduced sanctions more coercive. These include a ban on the purchase of Iranian oil, sanctions against Iranian ports, industry and finance, a ban on trade in precious metals, etc. In general, the current restrictions are among the most severe in the entire period of sanctions pressure, despite the absence of consolidating UN resolutions such as those seen in 2013-2014. Given the introduction of improvements to the mechanisms used to supervise sanctions, not only American, but also European business left Iran, and trade and economic cooperation with Asian countries — India, South Korea, and even China, became far more complicated. Large PRC-based technology companies became themselves subject to sanctions precisely for violating these sanctions against Iran. Russia also encountered certain dangers — in 2019, the United States announced the possibility of imposing sanctions against civilian nuclear projects, which complicates the implementation of the Russian-Iranian nuclear power plant project in Bushehr.

Both Biden’s pre-election statements and the first steps of the new administration confirm the intention, if not to reverse this policy towards Iran, then certainly to play it down. The United States has already rescinded its demand that the UN restore international sanctions against Iran.

However, there is no plan for the return of the United States to the JCPOA, nor is it clear what Tehran’s position is on the sustainability of the deal. The remaining parties to the agreement are in a somewhat suspended and even ridiculous position, since they are the only ones to have continued to comply with it in full.

Current state of the JCPOA

The US strategy to restore relations at lightning speed did not work. There was no unilateral lifting of sanctions in the first fifty days of the new administration. The sanctions remain in place, and the United States remains outside the agreement.

While Iran, in turn, expects compensation from the other partners, it is simultaneously gradually reducing its obligations under the deal, given the current economic situation. By almost all indicators prescribed in the framework of the nuclear agreement, Iran has exceeded the permissible values, including with respect to the enrichment of uranium. However, it would be premature to interpret such a position as a deliberate step towards the creation of nuclear weapons. Rather, they are signs that Iran is developing its own negotiating position, and not just “waiting for the prodigal son”, i.e. — the lifting of sanctions. In addition to the sanctions, an unfavourable economic situation has developed against the backdrop of the pandemic crisis. There is still no understanding of how the Iranian economy will emerge (this is not a purely Iranian problem). The strategic question remains whether the Iranian economy will be able to make a qualitative new leap recovering in the wake of the pandemic under the current restrictions.

Since a conciliatory “blitzkrieg” of the JCPOA did not happen, today it seems that inside Congress they are thinking about whether the deal in its current incarnation is needed at all. We can assume that the United States will wait for the results of the elections in Iran: the arrival of the conservatives would clearly not contribute to the improvement of relations. On the other hand, the pre-election situation may make Iran a more difficult negotiating partner due to the resonance of the deal for domestic politics. An election campaign during a crisis may require quick and high-profile decisions.

The negotiation process on the return of the United States to the deal is also complicated by the asymmetry of the position of the parties.

For the United States, the costs lie in the political plane, while for all the other nations, the costs are economic.

In addition, the other parties to the deal will tend to integrate rather than isolate the negotiation process into other regional security objectives so that their interests are taken into account.

An analysis of the Iranian agenda in the general context of the set of American foreign policy statements made over the course of the last month shows that the most significant task of the US administration today, given the failure of a quick solution to the problem and the fading relevance of the preceding presidency’s overall policy objectives, is not resolving the Iranian problem as such, but restoring the coalition with Washington’s allies, primarily the European ones. The withdrawal from the deal hurt these relations for two reasons. First, it undermined all prior diplomatic efforts. No less importantly, it took a reputational toll on European political leaders by confirming the limits to their sovereignty, causing them to lose face in front of the European business community. One can expect the United States to make great efforts to harmonise negotiating positions and adopt confidence-building measures: with the Europeans, not with the Iranians.

Regarding Iran, it is important to understand that, when it comes to the deal, the United States is not talking about restoring any elements of trust, but only about facilitating the conditions for pursuing Biden’s foreign policy objective of assessing diplomatic assets according to the formula “allies are nearby, serious rivals are not aggressive”.

Prospects for the deal

So far the most ambitious task, according to Washington, is a rollback to the previous level. However, the logic of the political process requires a superstructure to the previous decision, and it will most likely lie in the political field.

The restoration of the JCPOA in any form will not affect additional economic incentives; the United States will not lift all sanctions — only the “Trump legacy”. This is no small affair — the removal of restrictions on the turnover of precious metals will make Iran’s barter trade easier, the exemption from the sanctions of logistics and ports is important for international projects, including prospects for the North-South project.

However, even in the event of a diplomatic miracle and the conclusion of a deal, a quick return of German, French and Italian companies to the industrial market of Iran is highly unlikely: the cost of European business pursuing a third relocation of production amid an on-going crisis are very high.

Rather, a deal in the 2015 design would open up opportunities for the Iranian economy to breathe a little and for external partners to increase exports to Iran, but it would be too optimistic to talk about significant effects for investment cooperation. This is especially true given the changing role of China in the region and the PRC’s greater susceptibility to US sanctions compared to the JCPOA period. The chance that China will step in to lead Iran out of the crisis is lower today than it was a year or two ago.

Finally, the deal will not affect the strategic perception of sanctions in Iran, nor will it affect the planned work of the United States to strengthen the image of Iran’s toxic jurisdiction. This means that the movement towards the fragmentation of the international political and economic system will continue, at best, in a slightly safer environment.

Iran’s Nuclear Superposition
Andrey Baklitskiy
The biggest positive factor is that the JCPOA is still alive and can be revived at anytime. Tehran has stated more than once that it will reciprocate as soon as the United States resumes its obligations. It is simpler to stop an undeclared war, pretending that it was never waged. On the negative side, the superposition could “implode,” resulting in one of two possible variants. Both the US and the Israeli authorities would prefer the JCPOA to be “dead,” writes Valdai Club expert Andrey Baklitskiy.
Expert Opinions
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.