The End of Iran Nuclear Deal

Days before the May 12 deadline, President Donald Trump has withdrawn the United States from the multilateral Iran Nuclear Deal, also referred to as Joint Comprehensive Plan of Action (JCPOA), with an objective to find a different method of dealing with the so-called Iranian threat to the Middle East.

The Trump administration has announced that “the highest level of economic sanctions” will be imposed on Iran, warning that “[a]ny nation that helps Iran in its quest for nuclear weapons could be strongly sanctioned.”

President Trump had repeatedly threatened to undo the “insane” nuclear deal, which was concluded after nearly 20 months of hectic diplomatic efforts. The Trump administration’s unilateral withdrawal from the JCPOA is likely to trigger a nuclear arms race and further exacerbate the Iranian-Saudi rivalry in the already turbulent Middle East.

Apart from the United States, there are five more signatories to the deal – China, France, Russia, the United Kingdom and Germany. As a rule, President Trump’s administration should have taken these parties on board before leaving the historic deal. It seems that the recent visits of French President Emmanuel Macron and German Chancellor Angela Merkel to Washington (to implore Trump to adhere to the deal) dismally failed.

Under the JCPOA, the Vienna-based International Atomic Energy Agency (IAEA) is entrusted with the responsibility to inspect whether the Islamic Republic is seriously following the nuclear-related provisions of the deal. The UN nuclear watchdog has continually judged Iran to be in full compliance with the commitments it had made in the deal. More importantly, some top US security officials too have confirmed that Iran has been complying with all aspects of the JCPOA.

Under this accord, Iran stopped uranium-enrichment at Fordow for 15 years; reduced 20,000 centrifuges to 5,000 at the Natanz facility; decreased its stockpile of uranium by 98 percent to 300 kilograms for 15 years, and redesigned the Arak heavy water nuclear reactor. According to some careful estimates, Iran possessed uranium in such amount that was adequate to make ten nuclear devices before July 2015. On account of the restrictions imposed by the JCPOA, Iran now cannot produce even a single bomb with the existing 300 kilograms of uranium.

The Rouhani government has conscientiously abided by the deal as it wanted to get the crushing sanctions on the Iranian economy removed so as to resuscitate it. The Iranian leadership is fully aware of the fact that the crippling sanctions imposed by the US, the UN and the EU to force Iran into halting the uranium-enrichment have stultified its economy – they cost the Islamic Republic over $160bn in oil revenue from 2012 to 2016 alone. The nuclear deal had provided Iran access to over $100bn in assets frozen overseas.

What is worrying is that despite the IAEA’s confirmations of Iran’s full compliance with the deal, President Trump walked away from the accord. President Trump had stated time and again that the deal must be renegotiated so as to limit Iran’s advancing ballistic missile programme and its role in the simmering civil wars in Yemen and Syria. Although Iran repetitively warned that any US move to renegotiate the deal would compel the Islamic republic to abandon it, yet Tehran has decided to remain in the deal, for now.

The Trump administration seems to have forgotten that the JCPOA is strictly about Iran’s nuclear programme – it does not address other issues. Moreover, the accord allows Iran to pursue a peaceful nuclear programme for commercial, medical and industrial purposes in line with the international non-proliferation standards.

It goes without saying that President Trump was under mounting pressure from Saudi Arabia and Israel – Iran’s archrivals in the Middle East – to repeal the deal. Both Riyadh and Tel Aviv have been apprehensive that the JCPOA has allowed Tehran to capitalise on the unfreezing of billions of dollars to expand its sway in Iraq, Syria, Yemen and Lebanon. Since Saudi Arabia is a key US arms importer, Washington could not annoy Riyadh by keeping the nuclear deal without renegotiation; the US also badly needs Saudi Arabia’s support to counterbalance the rapidly rising ascendancy of Iran in the region and keep a check on Russia’s increasing influence and engagement with the Middle-Eastern countries.

This unilateral withdrawal from the deal is likely to create economic complications also for the other five signatories to the deal. They will not be able to conduct their trade relations with Iran because the US would consider such activities a violation of its economic sanctions against Iran. Some European countries such as France and Germany have lately cultivated strong economic ties with Iran in order to reap rich economic dividends from Iran’s sanctions-hit economy.

The Iran nuclear deal cannot be expected to last long after the US withdrawal. Trump’s decision could compel Iran to resume and expedite its nuclear activities, albeit secretively. What is more alarming is that hardcore conservatives in Tehran will probably rely on the unfolding situation to pressurise the moderate Rouhani government into withdrawing from the Non-Proliferation Treaty (NPT), as North Korea did in 2003.

Iran will also ratchet up its military support to Houthi rebels in Yemen, Hezbollah in Lebanon and a tottering Assad regime in the war-torn Syria. This could, therefore, make Israel and Saudi Arabia further cement their secret military cooperation so as to counteract Iranian sway in the region. Thus, such a heightened ideological and security competition in the volatile Middle East could be a frightening omen of a dangerous all-out war.

The total unravelling of the JCPOA in the future could culminate into a dangerous nuclear arms race in the region. Both Saudi Arabia and Egypt have recently increased their efforts to purchase nuclear reactors from China and Russia. This will, presumably, embolden Israel to expand its clandestine nuclear programme and increase the number of its nukes beyond 200 warheads. The possibility of a catastrophic nuclear war will be higher in the Middle East as non-democratic and monarchical governments have little or no constraints in terms of employing deadly nuclear devices against their adversaries.

While making this unwelcome decision, President Trump was also unmindful of the fact that his final decision on the nuclear deal would actually determine the unpredictable behaviour of the North Korean leader toward any serious agreement on complete de-nuclearisation of the Korean peninsula. President Trump’s decertification of the JCPOA will make North Korean President Kim Jong-un sceptic of Trump’s sincerity in terms of bringing lasting peace on the Korean peninsula.

Lastly, the resumption of sanctions on Iran will have adverse impacts on South Asian security and economic situation. Both Iran and Saudi Arabia will increase their support to their proxies, which could result in more sectarian conflicts and bloodletting; the Iran-Pakistan (IP) gas pipeline could be further delayed.

If President Trump had really wished peace and stability to prevail in the region, he would have certified the Iran nuclear deal. Trump’s unilateral withdrawal from the Iran deal will now push the Middle East toward more civil wars, chaos, mayhem and instability.

What is the Iran Nuclear Deal?

The Joint Comprehensive Plan of Action (JCPOA) was a two-year-long diplomatic initiative from Iran and a group of countries known as the P5+1 – the members of the United Nations Security Council (the US, UK, France, China, Russia) along with Germany.

The deal, reached in Vienna in July 2015 and later ratified by the UN, lifted crippling international sanctions in place on Iran in return for curbs on the country’s nuclear programme. It ensured that Tehran would abandon any attempts at creating a nuclear arsenal and ended 12 years of deadlock over the issue.

International Atomic Energy Agency (IAEA) monitors have consistently verified that Iran is complying with the terms of the deal.

What is the EU’s Response?

The UK, France and Germany alongside the EU are dismayed by Mr Trump’s actions and have vowed to keep the deal alive without the United States.

The EU is also seeking so-called carve-outs to insulate European companies from the sanctions, but it is not clear whether the Trump administration will agree. The US Treasury said the state department would “evaluate and make determinations with respect to significant reduction exemptions,” but that countries seeking such exemptions were advised to reduce the volume of their crude oil purchases from Iran during the 180-day wind down period.

If that fails, the EU has previously said it would seek legal protection for European companies that have business relations with Iran. However, it is not clear whether such an effort would sufficiently protect entities from US sanctions actions. Sanctions experts said that even if legal protections existed, foreign financial companies would be unlikely to risk US action and that loans and investment into Iran would probably dry up.

What sanctions are being put back in place?

As part of its withdrawal from the deal, the Trump administration has reimposed sweeping sanctions against Iran with immediate effect. That effectively blocks new contracts with Iran and business operations in the country.

But the US has gone further by saying it will also require companies to “wind down” existing contracts with Iran in either 90 days or 180 days.

After August 6, the US will reimpose curbs on Iran’s purchase or acquisition of US dollars, as well as any global trading in Iran’s gold, coal, steel, cars, currency and debt, plus imports of Iranian carpets into the US.

After November 4, the US will reimpose sanctions on Iran’s oil exports, shipping, port operators, central bank dealings, insurance and the rest of its energy sector.

The US also halted airline deals with Boeing and Airbus (whose aircraft include US components) that were specifically permitted under the 2015 accord. In addition, the US could reimpose sanctions on about 600 individuals.

The US, however, said it would allow non-American, non-Iranian persons with existing loan agreements with Iran to continue to receive debt repayments indefinitely.