Iran nuclear talks may have stalled, but there’s scope for optimism
1 Apr 2022|

Despite media reporting last month that an agreement enabling the US to rejoin the Iran nuclear deal was close, negotiations have stalled. What’s not clear, at least publicly, is why. Are there lingering differences over previously identified issues, new demands or side effects of Russia’s invasion of Ukraine?

In early February, before the Russian invasion began, well-informed and reliable reporting claimed that both sides expected to resolve the remaining sticking points, and that the US would rejoin the nuclear agreement (officially the Joint Comprehensive Plan of Action or JCPOA) very soon. The implication was that it would all be done in less than a month. But more than a month has now passed.

Although specifics of the negotiations have not officially been made public, two major points of contention were likely: agreement on which sanctions would be lifted and establishment of a process to verify that sanctions had, in fact, been lifted.

Iran wanted sanctions lifted across three categories: those directly related to the JCPOA; those indirectly identifiable with the agreement (such as sanctions allegedly rebadged under other pretexts, including human rights, to blur the direct relationship); and unrelated sanctions imposed for other reasons on individuals (such as the Iranian leadership), organisations (such as the Islamic Revolutionary Guard Corps (IRGC), which the US designated as a foreign terrorist organisation in 2019) and businesses (such as those in defence industries).

It’s unlikely for domestic political reasons that the US could, or would, cede many, if any, concessions on the unrelated sanctions, but there’s scope for progress on the first category and for some inroads on the second.

As for verification of the lifting of sanctions, Russia’s invasion of Ukraine should enable that to be quickly tested. An immediate indicator would be the readiness of the West, especially the Europeans, to pay hard cash for Iranian oil and gas in order to reduce the large shortages they’re now experiencing due to sanctions on Russia.

The Iranians have no known new demands. They had sought to include a new clause in the agreement that would have prohibited a member country from unilaterally withdrawing, as the US had done in 2018 under Donald Trump’s administration. Iran wanted this because the Republicans had made it clear that they’d rip up any new nuclear agreement if they won the US presidency in 2024. Former vice president Mike Pence confirmed that publicly on 8 March during a visit to Israel. My understanding is that Iran dropped this demand given the political and legal realities.

The only new card on the table was an apparent optimistic attempt by Russia earlier this month to leverage the nuclear negotiations to exempt bilateral trade with Iran from Russian sanctions. The tactic was firmly rejected by the US and Western allies, and Iran. Iran’s foreign minister, Hossein Amirabdollahian, stated clearly on 15 March that ‘developments in Ukraine’ (Russia’s invasion and related sanctions) wouldn’t have an impact on the nuclear negotiations.

A subsequent Russian ‘clarification’ on ‘written assurances’ was interpreted as a reference to existing Russian JCPOA-related contracts, which include importing Iran’s excess enriched uranium and spent nuclear fuel. Senior US White House and State Department officials indicated last week that if Russia resumed those imports, related contracts would be exempt from sanctions. That effectively put the issue to bed.

The only possible wild card in the pack was an Iranian missile strike against what Tehran said was an Israeli operational base in Erbil in northern Iraq on 8 March. Some Western media initially reported it as an attack on a new US consulate in Erbil. Had that been the case, the US would have immediately denounced the attack and ceased all nuclear negotiations. It didn’t. The IRGC publicly took responsibility for the attack, claiming the target was a Mossad base responsible for mounting physical attacks and other operations against Iran. It was also described as retaliation for recent lethal Israeli attacks against IRGC personnel in Syria.

Senior Iranian embassy officials in Canberra, who described the attack as ‘defensive’, claimed the Mossad compound was adjacent to the US consulate for both ‘cover’ and protective reasons, hence the misunderstanding. They didn’t know if the Iraqi government knew beforehand of the Mossad base’s existence.

However, the absence of any protest or other action by the US, or comment by Israel, suggests the target was Israeli, not the US, and the long-running, covert Israeli–Iranian grey-zone conflict shouldn’t directly affect negotiations.

This strongly suggests the negotiations have stalled over one or two strong sticking points that could be resolved if the political will is there.

The Iranians are aware that the Republicans’ stated intention to again scrap the JCPOA if they win the White House in 2024 is a major deterrent to most foreign investors, and there won’t be the flood of investment and reinvestment Iran is hoping for if sanctions are lifted. That means Iran doesn’t see Europe as a reliable trading partner. Iran sees its economic stability in the foreseeable future to be conditioned by its relationship with member states of the Shanghai Cooperation Organisation. China is expected to remain Iran’s major trading partner and investor, especially in transport infrastructure supporting its Belt and Road Initiative. India is likely to be another significant investor, again primarily in transport infrastructure, supporting its interests in the International North–South Transport Corridor linking India to Europe.

Both routes include transit through Russia, so how sanctions mighty affect routing and profitability remains to be seen.

Despite the limited benefits of a rejuvenated JCPOA, in my opinion they are certainly worth the effort, if the will is there and related compromises are politically acceptable. The short-term benefits should include access to frozen funds and other assets and the opportunity to reposition them. The agreement should also enable investment and reinvestment in key infrastructure, including petroleum and transport. Exploitation of the increased European and global demand for Iranian oil, gas and related products will be a major source, however short term, of much-needed foreign revenue.

Shortages of oil and gas due to sanctions on Russia are expected to be long term, so Iran should benefit from related global dependency on its resources. Potentially, that could provide Iran with leverage to negotiate the lifting of other contentious US and European sanctions.