Game of Isotopes: Are Iran’s prospects looking up?

Birthing the nuclear deal.

A nuclear winter is (not) coming…just yet. Iran’s prospects are looking up

By Roshanak Taghavi 

LAST YEAR, the world of fantasy, much like reality, concerned itself often with the struggle for power: its use, abuse, and the mediation thereof.

In the epic series Game of Thrones, petrified dragon eggs served as the weaponry of choice to attain this power; quietly nested sources that must be deterred at all costs, lest they birth monsters that lend those who command them unmitigated dominion.

In the real world, such power is of the nuclear variety; and on Sunday, Oct 18, the P5+1 group of world powers — the United States, France, Britain, Russia, China plus Germany — formally adopted the Joint Comprehensive Plan of Action, or JCPOA: an agreement inked with Iran last July to halt the potential threat posed by the country’s long-contentious nuclear program.

To date, Iran has honored an initial Oct 15 deadline to provide the International Atomic Energy Agency (IAEA) with additional information on components of its past nuclear work.

The dragons seem, for the moment, to slumber yet.

But Iran and the P5+1 have a long march on the road to cooperation. Over the next months, Iran must prove that its nuclear program is exclusively peaceful by cutting its uranium enrichment program. In exchange, it will receive sanctions relief, including renewed access to the global banking system, as well as the ability to export oil without penalty.

INSIDE IRAN: FEARS OF DRAGON SLAYERS ALLAYED

As in the U.S., where the JCPOA survived a Congressional review, it underwent debate in Iran. Parliament reviewed and debated and approved it; Iran’s Supreme Leader, Ayatollah Ali Khamenei, endorsed it; and the Guardian Council, an oversight panel with critical veto power over parliamentary measures, ratified it.

For Iran’s leadership, the deal has allayed the long-harbored existential fear that the U.S. wants to overthrow the current regime. (This is not without merit: the United States and United Kingdom executed a coup d’état in 1953 to re-instate a “pro-Western” Shah, Mohammed Reza Pahlavi.)

Its narrow scope — focused exclusively on the nuclear file — has convinced leaders that there is no threat of regime change for the time being.

Saeed Laylaz, a Tehran-based analyst close to President Hassan Rouhani’s government who was jailed during the previous Ahmadinejad administration, says this will engender acts of good faith. “The U.S. no longer wants to disrupt the Iranian regime, so Tehran’s behavior as a whole will change.”

Yet while fears have been allayed, a full détente has yet to be reached. “Cooperation with Iran [in other areas] will be what it would have been without a deal,” says Hossein Askari, an economist at George Washington University who has advised both the Saudi and Iranian governments. “Namely, when it is in both sides’ interest to cooperate, the U.S. and Iran will do [so].”

THE ECONOMICS OF COOLING REACTORS

In the coming weeks, observers will carefully watch if Iran implements its end of the deal in order to receive the sanctions relief its economy so desperately needs.

Among the most vital sanctions to affect the economy have been U.S. financial sanctions and a European ban from SWIFT — the Brussels-based private financial clearing and communication system — which have hindered access to the international banking system. This has affected both average Iranian citizens and businesses, which have found it increasingly difficult to finance imports, even for staples like equipment and food permitted by the U.S. Treasury.

Once implemented, the JCPOA will allow Iran’s Central Bank to access tens of billions of dollars in foreign exchange holdings locked up in accounts overseas.

Oil will also receive a boost. In addition to financial sanctions, the European Union oil embargo and American penalties against the purchase of Iran’s oil slashed exports to half their figures since the embargo was imposed in 2012, contributing to a severe decline in Iran’s national currency.

Iranian oil officials tell Newsweek Middle East they expect to be able to add half a million more barrels of oil per day to current production within one month of the deal’s implementation. This boost will be key to shuttle much-needed cashflow to local businesses and citizens, as well as boost market share it has lost to competing oil producers.

AN UNEASY KINGDOM WATCHES FROM AFAR

Yet while the deal is considered a game-changer inside Iran, other nations aren’t so happy. The nuclear accord marks the start of a new chapter in a competition for regional influence, with Iran now positioning itself as a regional power broker. The deal offers its allies — Syria, Iraq and Russia — more leverage with Saudi Arabia, Kuwait and Jordan in security and energy matters.

Saudi Arabia in particular has been long-opposed to Iran’s growing influence, and has said it intends to serve as a vital bulwark against a potentially nuclear Iran. “The disengagement of the West from the Middle East has shown us that nobody is going to come to your rescue,” Prince Sultan bin Khaled Al Faisal, former Commander of the Royal Saudi Naval Forces, told a panel in Washington earlier this month. “Saudi Arabia feels that we are going to need to take care of ourselves.”

It seems certain that The Kingdom will take strides to openly secure its place as a leading force in the region. The latest incursion into Yemen typifies its intent. Riyadh, whose relations with Tehran are at their worst since the 1980s Iran-Iraq war, is currently leading a heavy military campaign there to counterbalance what it fears is ascending “Iranian” influence in the poverty-stricken country.

Iran has stayed largely silent due to its satisfaction with the nuclear deal, but that may not last.

Indeed, some Iranian politicians and government figures have publicly lambasted Saudi actions in Yemen. The regime itself, including Iran’s Supreme Leader, has spoken harshly against Saudi Arabia in the wake of Iranian deaths in last month’s Hajj tragedy, in which a reported 465 Iranians died during a crowd collapse in Mina, Mecca.

Richard Nephew, who served as the lead sanctions expert for the U.S. team negotiating with Iran, says that the accord marks the start of heightened tensions. “We’re definitely going to see more adventurousness on the part of the Iranians, and we are going to definitely see provocations and adventurousness from the Saudis,” he says. This will pose challenging for the U.S. if future conflicts should escalate. “[Conflict] will draw the U.S. back in at a time when America wants less to do with the Persian Gulf and the region,” says Askari. “With a larger American presence on the ground, the risk to the U.S. rises,” he added.

INCUBATING AT HOME: HOW LONG CAN A DEAL LAST?

Back in Washington, analysts agree the JCPOA will remain in effect well beyond the presidency of President Barack Obama. The accord has already survived a harsh Congressional review and implementation is slated for next spring; it will be difficult to nullify it in the years that follow.

This is partly because the remaining P5+1 members negotiated the JCPOA with Washington in good faith; they expect the U.S. to stand by its international commitments. Western European countries in particular launched exploratory investment talks with Tehran two years ago. Members of the business community in Tehran are increasingly certain about the deal: while contracts with Iranian firms may not have been signed yet as a precautionary measure against sanctions, they will be once the IAEA verifies Iran’s fulfillment of its commitments and “Implementation Day” kicks in.

Diehard opponents, particularly Republican members of Congress, say they’ll still seek ways to limit the president’s ability to suspend sanctions. But any such legislation will face a tough battle in the Senate as well as the prospect of a presidential veto.  “The deal is done,” says Jim Manley, a former senior aide to Senators Edward Kennedy and Harry Reid. He adds: “There is an attempt on the Hill right now to look for non-nuclear sanctions [instead] that can be applied to the Iranian government.”

LOOKING FORWARD — WHO WILL SIT ON THE IRON THRONE?

Nephew tells Newsweek Middle East that a major challenge for president Obama – and for the longevity of the nuclear deal — will be how to constrain Iran’s other objectionable actions while allowing the economic incentives promised in the JCPOA.

Already, Iran’s successful compliance with the nuclear deal’s initial Oct. 15 deadline has been married by reports that Tehran launched a ballistic missile test, in defiance of a previous UN Security Council resolution. Additional concerns from lawmakers include Iran’s ongoing human rights abuses, its support of militant non-state actors such as Hezbollah, and illicit activities conducted by members of the Iranian Revolutionary Guard Corps.

Sanctions are still possible for such violations. U.S. lawmakers want to make it “very clear that Iran’s actions in the region — separate from the nuclear deal — will continue to be a focus of Congress, and they want it to be a continued focus of the administration,” says Samuel Cutler, policy advisor at DC-based law firm Ferrari & Associates.

Policymakers will look to penalize Iran for actions such as the missile test, which conflict with UN resolutions, but don’t violate the terms of the final accord.

But they will be hard-pressed to do so in ways that don’t appear to re-impose the sanctions suspended by the JCPOA.

“You’re going to find a lot of temptation to consider putting new sanctions in place that the Iranians are going to see as being inconsistent with the terms of the deal,” Nephew says. “The deal itself is potentially at risk if those other challenges can’t be dealt with.”

Over the next few months, the P5+1 will carefully observe Iran’s behavior to determine how closely Tehran abides by the tenets of the accord. Nephew, who until last February served as Principal Deputy Coordinator for Sanctions Policy at the Department of State warns that, “whatever is done between now and a year from today will create the new status quo for the next eight years,” adding that it will take until April 2016 to clearly see what Iran’s nuclear program will look like.

And so while firedrakes have yet to take to the skies, their specter looms in the background of a deal that relies on a tenuous trust — one that can shatter with the slightest crack.

 

 

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