TSG IntelBrief: Forecasting a Comprehensive Iran Nuclear Deal
July 13, 2015

Forecasting a Comprehensive Iran Nuclear Deal

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Bottom Line Up Front: 

• A comprehensive nuclear deal between Iran and the P5+1 negotiating powers is expected to be announced today

• In line with a framework deal agreed on April 2, the 100-page “Joint Comprehensive Plan of Action” (JCPoA) blocks the pathways for Iran to acquire a nuclear weapon for at least ten years

• The finalized deal provides for broad easing of U.S., multilateral, and UN sanctions; U.S. negotiators achieved an ability to “snap back” UN sanctions quickly, should Iran violate the deal

• The agreement apparently retains major aspects of a UN embargo on sales of arms to Iran; the difficulty of enforcing that embargo, however, means that the deal will not prevent Iran from continuing to fund, advise, and arm regional allied governments and movements.

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The nuclear deal is a culmination of two years of negotiations that first produced an interim nuclear agreement in November 2013—essentially freezing Iran’s nuclear program and providing modest sanctions relief—and then produced a framework comprehensive accord on April 2, 2015. In line with the framework, the finalized JCPoA blocks Iran’s pathways to a nuclear weapon by requiring Iran, for at least ten years, to:

• Reduce its stockpile of low-enriched uranium (less than 5% enriched) to an amount insufficient to produce even one nuclear weapon (if enriched to weapons-grade, 90%, levels).

• Reduce the number of installed older-generation centrifuges from about 21,000 (of which about 10,000 are in operation) to about 5,000, and which will enrich uranium to a maximum of only 3.7% purity.

• Re-engineer a heavy-water nuclear reactor at Arak so that it would not produce significant quantities of plutonium, a substance that can potentially be used as fissile material for a nuclear weapon.

• Convert the hardened uranium enrichment site at Fordow to a nuclear research center.

• Allow the International Atomic Energy Agency (IAEA), which will monitor Iran’s compliance with the deal, access to Iranian sites, including military sites, to investigate any suspected violation.

• Procure all materials for its permitted nuclear work through an approved procurement channel that will be monitored by the IAEA and the international community.

• Finish answering IAEA questions about its past research on a nuclear explosive device in time for a final IAEA report on that issue by the end of 2015.

Once Iran has reduced its stockpile of enriched uranium and its installed centrifuges to the prescribed levels, the UN Security Council is to enact a Resolution that ends most UN sanctions on Iran’s economy. The United States and its partners are to suspend sanctions on Iran’s banking, energy, shipping, and automotive sectors. The easing of those sanctions means Iran will have access to about $150 billion in oil revenue that has built up in various banks, primarily in Asia. Iran will also be able to export oil at the pre-2011 level of about 2.6 million barrels a day—substantially more than the current level, set by the interim accord, of 1.1 million barrels a day. The extra oil might come on the market at a time of oversupply, and world oil prices could dip further. Most of the additional Iranian oil will initially go to Asian countries, because the European Union will first need to drop its 2012 ban on Iranian oil imports before its members could resume importing Iranian oil.

The JCPoA also ensures that the re-imposition of sanctions on Iran for violating the accord will not be susceptible to a veto by Russia or China. It also appears that Iran failed to achieve a goal it sought in the final days of talks—a substantial lifting of the UN ban on exporting arms to Iran, on Iran’s exportation of arms, and on Iran’s development of nuclear-capable ballistic missiles. Iran, with some backing from significant arms exporters Russia and China, argued that these restrictions were not related to its nuclear program. The United States argued—it would appear successfully—that lifting these bans outright would run counter to the spirit of the agreement by increasing Iran’s potential to threaten the region. New arms sales to Iran would enable the country to modernize its conventional force, expand its political influence, and threaten to destabilize some of the states of the Gulf Cooperation Council (Saudi Arabia, Kuwait, UAE, Qatar, Bahrain, and Oman).

Lifting the UN ban on Iran’s exportation of arms would have denied the international community the legal authority to intercept Iranian arms deliveries to such regional allies and proxies as the Syrian regime of Bashar al-Assad, Hamas, the Houthi rebels in Yemen, Lebanese Hizballah, and several major Shi’a militias in Iraq. In practice, however, with the exception of U.S. Navy blockages of Iranian shipments to the Houthis, Iran has been able to deliver weaponry to its allies and proxies virtually unimpeded. Because of that lax enforcement, the GCC countries interpret the nuclear deal as adverse to their interests because the sanctions relief will provide Iran ample new funds with which to expand its regional influence.

Israel is almost certain to oppose the deal on many of the same grounds as the GCC states, but with greater emphasis on the fact that the deal does not dismantle Iran’s nuclear infrastructure. Israeli leaders assert that the deal leaves Iran as a “nuclear threshold state.” The deal not only allows Iran to continue enriching uranium but it also allows Iran to research (though not install) new centrifuges.

The U.S. Congress will have 60 days to review the deal. However, overriding a certain Presidential veto of any legislation to block the deal will be extremely difficult for the deal’s opponents to achieve.

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For tailored research and analysis, please contact: info@soufangroup.com

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