RA Posts Spring 2022

Deal or no deal for Iran?

By Shriya Kosuru

April 1, 2022

Since coming to power, one of the top goals of the Biden administration has been to set the Iran Nuclear deal in place again. After 11 months of negotiations, the deal appeared to be finally nearing an end a few months ago. However, on Sunday, March 27, U.S. Special Envoy for Iran Robert Malle said he was not confident that a nuclear deal was imminent. In this piece, I argue that a deal would be in the best interests of both Iran and the global community, as it would focus on removing sanctions on Iran, halting Iran’s nuclear program, and an opportunity to re-establish diplomacy in the Middle East

Overview of the Iran Nuclear deal 

The 2015 Iran Nuclear deal focused on slowing Iran’s nuclear program development which has been ramping in the last decade. The Joint Comprehensive Plan of Action (JCPOA), also known as the former Iran Nuclear deal, put restrictions on Iran’s uranium stockpile and its ability to produce enriched uranium and plutonium, in return for lifting economic sanctions on Iran. The agreement heavily focused on enriched uranium and plutonium because they are the main components in the production of nuclear weapons. To produce these radioactive materials, uranium can be used in centrifuges in a process called enrichment or irradiated in a nuclear reactor to make plutonium. The deal aimed to reduce the usage of these radioactive materials by 98% and commit Iran to redesign its nuclear reactor, so it could not be used to produce weapons-grade plutonium. 

The goal of the deal was to halt the nuclear race in the Middle East, specifically between countries like Iran, Saudi Arabia, and Israel. Moreover, as an incentive for compliance, the deal lifted economic sanctions put in place by the UN on Iran to help recover its economy. In 2018,  President Trump withdrew from the Nuclear deal, which he had criticized as a ‘horrible one-sided deal’ during his campaign. However, new rounds of negotiations began in 2021 to put a new deal in place. In the last few months, the talks have surrounded bringing a new deal in place, which would look different from the original, since Iran’s nuclear program has advanced dramatically and any limits on uranium would add no value in halting the nuclear race. It is expected that Iran has a stockpile of enriched uranium larger than allowed under the original deal, as well as advanced centrifuges. Alongside restricting Iran’s ability to produce nuclear weapons, the negotiations have also focused on sanctions. On one hand, Biden’s administration only wants to remove sanctions imposed on Iran by President Trump, which are in violation of the 2015 deal. Whereas, Iran is demanding the removal of all sanctions. Additional discussions, such as the release of US prisoners by Iran, have caused a delay in setting a new deal in place. However, whether a future for the deal exists or not will become clear in the next few rounds of talks. 

Timeline of the deal  

2015: P5+1 which consists of the US, UK, France, China, Russia, and Germany, proposed the JCPOA with UN support. This led to the preparation and implementation of the deal, as well as the removal of sanctions placed on Iran. This deal aimed to reduce the use of installed enrichment centrifuges from twenty thousand to five thousand kilograms during a 10 year period. Additionally, it intended to limit uranium enrichment to 3.67% to halt nuclear development. One of the key conditions of the deal was that Iran had to convert its Fordow facility into a physics research center for up to fifteen years. In return, the US would release Iran’s frozen assets of 100-150 billion dollars and equip them with 4 S 300 air defense systems.

2016: The JCPOA went into implementation on January 16, lifting heaving sanctions off Iran.

2018: The Trump administration withdrew from JCPOA and imposed drastic sanctions on Iran, leading to a poor economy and regional instability in the Middle East. The Trump administration viewed the Iran Nuclear deal as heavily flawed. One of the flaws explained by the Trump administration was Iran’s political and military leaders’ access to huge assets, which could make Iran a stronger threat in the Middle East. 

2021: The Biden administration re-opened the conversation with Iran for a new deal through negotiation rounds between the two countries, using intermediaries in Austria. The negotiations have been going on since late April 2021 with increasing demands from Iran, placing pressure on the Biden administration to get an effective deal. 

2022: The discussion for a new deal has continued into 2022. These negotiations take into account new developments in Iran’s nuclear program, which has advanced drastically since 2018, along with the concern of the oil supply crisis. If a deal is put in place, then it is expected that Iran will provide much-needed relief to the oil price crisis by becoming one of the biggest oil exporters.

Why Iran is better off with the deal than economic sanctions

A deal would be in the best interests of Iran because it will help their shattered economy to recover from the effects of sanctions. It would also give the international community a chance to restore regional stability in the Middle East. 

The sanctions imposed after the JCPOA crumbled have destroyed Iran’s economy, as it has alienated them from the global economy and shut them from trade opportunities with countries across the world. When the deal took place in 2015, Iran substantially increased oil exports to about 2.1 million barrels, helping them reach their pre-sanctions levels. This had a large impact on Iran’s economy, as it was 80% dependent on oil exports. Additionally, the US and European countries unfroze about $100 billion worth of Iranian assets, pumping money into Iran’s economy and bolstering their trade relations. This set a strong example that Iran was far better off with a deal rather than with the sanctions, as they had the freedom to rebuild their economy with oil exports. 

In 2018, President Trump backed out from the Iran Nuclear deal. The Trump administration viewed this deal as poorly structured, as it provided Iran the autonomy to fund proxy wars and further regional instability. The administration advocated for a deal that would focus on having better relations with Israel and put a complete stop to the ballistic missile program of Iran. 

With the US withdrawal, Iran was left with the freedom to continue its uranium enrichment under no supervision or accountability, strengthen its nuclear facilities for more than just civilian research purposes, and go beyond the previously established stockpile limits of uranium. Following this, a set of economic sanctions were imposed upon Iran to prevent the exploitation of their nuclear facility, isolating Iran from the world. These sanctions directed Iran’s economy down a crippling path. 

The 2018 economic sanctions led to a halt in the export of oil from Iran to Russia, France, Spain, and the rest of Europe. Iran’s economy drastically declined as its oil exports fell from 1.9 million barrels per day in 2018 to 400,000 million barrels per day in 2020. This was a huge setback for Iran as it created a roadblock for them to monetize their oil. Moreover, in 2020, the US sanctioned over 18 Iranian banks, leading to a complete shutdown of Iran’s financial sector and causing Iran’s rial to fall even lower to the US dollar. Following the initial 2018 sanctions, inflation surged from 10% in 2017 to 30% in 2018, peaking in 2019 at 40%, and has since remained constant at about 30%. In 2021, Iran established trade relations with China by exporting oil, causing backlash from the US and European countries. 

At the moment, Iran is better off with a deal because, without one, it does not have access to the US and European oil markets, which are necessary to pump money into its economy through oil exports. Additionally, a deal would relieve some pressure over the international influence through sanctions on Iran’s government. According to TRIP’s Snap Poll VII, more than half of international relations scholars believed that the economic sanctions placed prior to 2015 were somewhat effective in their effort to change Iran’s government behavior. 

TRIP Snap Poll VII

With the Biden administration’s ‘carrot diplomacy’, Iran has increased its demands, pushing for a more autonomous deal. Iran is reaching a point of no return in its nuclear program and is shifting away from the deal. One of the big reasons Iran is moving away from the deal is because of the concerns over regional stability in the negotiations, such as Iran’s role in Yemen and Syria. From the US perspective, ensuring regional stability in the Middle East is only possible if Iran agrees to a deal. Therefore, talks of regional matters should be separate from the nuclear deal to ensure the purpose of the deal is intact. Even if a deal is reached, it faces pressure in the US Congress where there is strong opposition from Republicans .

It is in the best interest of the international community and Iran to put a nuclear deal in place, focused on integrating Iran with the rest of the world through trade and involvement in international organizations. This deal would help Iran revive its economy and give the international community a chance to restore regional stability in the Middle East.