In the context of recent developments, this paper reviews US President Donald Trump’s Iran strategy and explores possible pathways to a new nuclear agreement with the Islamic Republic.
6. Getting to a Deal
President Trump made clear his opposition to the JCPOA during his election campaign, describing it as the ‘worst deal in history’. He has also made clear his willingness to strike a ‘bigger and better’ new deal that would address all outstanding issues in one process, though more recently he has given higher priority to nuclear non-proliferation. To that end, the Trump administration has supported a policy of maximalist pressure, which it believes will lead Tehran to reopen negotiations and expand the terms of the JCPOA. Of course, one should note that it was the US that withdrew from the deal and that Iran so far has remained a party to it.
The findings of this research paper suggest that, at best, the signatories to the 2015 agreement will only be able to renegotiate aspects of the deal to accommodate concerns that have arisen among all parties, including Iran, and that any successful outcome will consist of a JCPOA+ agreement rather than a so-called ‘grand bargain’.
There is little to suggest that the Trump White House’s policy on Iran will do more than follow the template established vis-à-vis North Korea, which involved Trump promising a breakthrough (which he characterized as ‘the deal of the century’) in resolving the nuclear stand-off with that country but delivering little, if anything, in the way of substance.
Very few respondents were willing to entertain the idea of a grand deal, but it was welcomed by some interviewees, notably a number from Iran and the US. A number of structural factors certainly work against a move towards a bigger and better deal, frustrating US efforts to kick-start negotiations. Nonetheless, this paper has explored potential pathways back to negotiations, and has given consideration to areas in which the parties involved can find common interests.
This chapter assesses which of the pathways to a deal is most likely to prove productive. Before making any recommendations, however, it is first necessary to reconsider some of the obstacles that must be overcome, and to re-examine some of the working assumptions that have informed the approaches of the different parties.
Mistaken assumptions
As mentioned, the Trump administration’s policy of maximum pressure on Iran is unlikely to succeed. Despite this, the current US administration remains steadfast in its belief that the only way to engage Tehran in a new round of negotiations is by increasing sanctions. Furthermore, the Trump White House appears to have calculated that time is on its side, and that the more it pressures Iran, the more likely it is that it will be able to extract important concessions. In other words, Trump may be prepared to ‘squeeze’ Iran throughout his current presidency, and then pursue new negotiations if he is re-elected in 2020. In the climate of current regional tensions and President Macron’s diplomatic initiatives, there could be scope for a deal before November 2020; such a deal would require Iranian nuclear compliance in exchange for sanctions relief.
While Trump has made clear that his end game is a deal, not regime change, he has yet to adjust or moderate his strategy to meet his objectives. This failure or unwillingness to adapt to changing realities will mostly likely serve as a major constraint on kick-starting negotiations. Steadfast adherence to a simple, linear strategy will frustrate efforts at building consensus between the US and its international partners.
Rather than completely isolating Tehran, Trump’s unilateral policy has created openings for US allies and adversaries. The E3 countries continue, albeit limitedly, to pursue multilateral efforts to save the JCPOA. The continued efforts to operationalize INSTEX in 2019 and sustained diplomatic traffic between European capitals and Tehran confirm the validity of this agenda. Transatlantic tensions continue to frustrate wider coordination on Iran policy between Europe and Washington. Russia and China also continue to provide Tehran with strategic support and marginal economic engagement, further obstructing Washington’s goals of isolation. Israel, Saudi Arabia and the UAE – while publicly supportive of Iran’s containment – remain privately anxious that in any negotiation the US administration will sacrifice their interests, as they believe Obama did.
Iran is highly unlikely to return to negotiations simply because of maximalist pressure. One interviewee stressed that Iran’s calculations were not based on the state of the economy: ‘There was no magic number or economic statistic that would drive decision-making.’115 While sanctions played a role in pushing Iran to reach agreement in 2015, the decisive factor was the Obama administration’s willingness to agree a limited uranium enrichment programme as part of the JCPOA.
Restoring full diplomatic relations with the US government and opening up to US businesses is not the objective of the Iranian government. Tehran wants access to the US financial system, the withdrawal of US forces from the region, and above all security guarantees.
Nonetheless, Iranian leaders have said repeatedly that the removal of sanctions would constitute an inducement to reopen negotiations. Many analysts now also believe that Tehran would require the Trump administration to acknowledge Iran’s regional security concerns or defence asymmetry.
Despite sanctions that have restricted economic growth and inflicted pain on the government and population, Tehran’s regional policy has not changed since Trump was elected. Its willingness and ability to strike out, not only against regional targets but also against international players, have increased.
Restoring full diplomatic relations with the US government and opening up to US businesses is not the objective of the Iranian government. Tehran wants access to the US financial system, the withdrawal of US forces from the region, and above all security guarantees. It would consider regional agreements on security issues only if its neighbours made similar concessions. The current US administration has yet to appreciate this, and simply believes that the promise of business will be enough to persuade Iran to sign up to a new deal.
It is not clear that the US administration has considered what concessions Iran would seek in any forthcoming agreement. While the US has set out 12 challenging conditions, it appears to have done little preparation for getting beyond the current impasse. Iran, on the other hand, is already engaged in its own domestic process of coalition-building and bargaining. This means that an internal consensus will be reached over the timeline, terms and process of any future negotiations. Therefore, should negotiations begin, Iran will be better prepared than the US.
While a trust deficit between the governments of the US and Iran is not new, Trump’s decision to withdraw the US from the JCPOA may have irrevocably damaged prospects for future talks. Domestic opposition prevented President Obama from negotiating the JCPOA as a treaty – a process that would have required the support of two-thirds of the US Senate. Consequently, the Iranian leadership has lost further trust in the US system, and would therefore be unlikely to accept a deal on the promise of a president.
The lack of US government unity on Iran has also deterred Tehran from investing in negotiations with what it perceives to be a divided and disorganized administration. The Iranians have made it clear that they would prefer to wait out the current impasse until the next US presidential election in 2020.
However, it is not clear whether the JCPOA will survive the remainder of the Trump presidency. With a continued escalatory pattern of tensions between Washington and Tehran, a danger of miscalculation looms large. While nearly all respondents to our survey expected talks of some kind to begin in 2021, the interregnum presents a major challenge to the integrity of the JCPOA. Without immediate remedial care, the nuclear deal is unlikely to survive, which makes the prospect of negotiations in 2021 that much more remote. In other words, all original parties to the deal, including the US, need to keep the current nuclear agreement alive. They need to invest time now, ahead of any future negotiations, to lay the groundwork for what comes next.
Policy recommendations
Based on the findings of this paper, it is clear that a grand bargain is highly unlikely, given the nature of the challenges. In fact, seeking to address all the issues as part of a comprehensive deal would likely frustrate progress in individual areas where there remains a greater likelihood of reaching new agreements.
While Iran’s nuclear programme, ballistic missiles and regional dynamics are all issues that need addressing to satisfy the national interests of different countries, as well as to enhance regional stability, the majority of interviewees agreed that the approach most likely to achieve results is either a JCPOA+ model or individual deals on each of the three issues.
JCPOA+
The goal of the JCPOA was to limit Iran’s breakout time to building a nuclear weapon from an estimated few months to one year. An equally important and little-discussed aspect of the JCPOA is its procurement channel, which provides a legitimate and controlled pathway for Iran to obtain needed nuclear-related goods while controlling dual-use procurement. All US interviewees pointed to nuclear issues as the most important priority for the US, with 36 per cent seeing the JCPOA+ model as the most viable scenario for protecting American interests. Therefore, strengthening the nuclear provisions of a follow-up agreement should be a priority for the Trump administration. The US objective is to guarantee that Iran will never obtain nuclear weapons. Therefore, the goal of extending Iran’s breakout time should be the primary objective of a JCPOA+ agreement. Seventy-one per cent of US respondents saw an extension of the sunset provisions as the most viable way to achieve this aim.
Drawing from the findings of this paper and recommendations from interviewees, the basic contours of an improved deal could include the following points:
- The sunset provisions should be extended by at least 15 years, as this would provide a basis for confidence-building.
- IAEA access to military and non-military sites, such as those listed in the atomic archive, should be increased. This would provide certainty and transparency over Iran’s activities. The IAEA has visited Iran’s military sites in the past, and allowing further inspections could allay fears of nuclear activity at military sites. Empowering the IAEA could also provide assurances regarding the PMD of Iran’s nuclear programme, thereby providing greater security for regional actors such as Israel.
- Clarification of Section T should be provided, as this would allow for stronger IAEA verification and monitoring authority.
- Iran should ensure early ratification of the Additional Protocol, and codification in law of Khamenei’s 2005 fatwa confirming Iran’s commitment against the production, accumulation and use of nuclear weapons.
Ballistic missiles
- Iran’s unilateral decision to limit the range of its missiles to 2,000 km should be codified. This would be a concession to the US and Europe that would not compromise Iran’s defence posture.
- An agreement should be reached on regional range limitations.
- The validity period of UNSCR 2231 should be extended beyond 2023, and Iran’s compliance with it ensured.
- The issue of proliferation should be addressed in a separate regional deal.
Sanctions
- Iran should be granted incremental sanctions relief and provided with qualified access to the US financial system. At the outset of such an arrangement, the US would be highly unlikely to unwind existing sanctions to secure a smaller deal. However, a designated trade mechanism could facilitate permissible international transactions. Over time, based upon compliance, verification and trust, incremental sanctions relief could be granted.
- Penalties should be imposed for failure to comply with the deal. Iran will look for guaranteed long-term commitments that the deal will be respected either through US Congressional approval or through penalties for lack of compliance.
- The US and Iran would need to agree to a clear, definable and verifiable pathway that would guarantee and institutionalize the process and insulate it from political interference. While this would be difficult to implement, it would be important for all parties to begin providing forward-looking solutions. Requests for Office of Foreign Assets Control (OFAC) licences by EU businesses should be fast-tracked.
- Iran must approve Financial Action Task Force (FATF) legislation bringing it into compliance with international anti-money-laundering and anti-terrorism financing standards.
- The European Investment Bank (EIB) should be authorized to underwrite European investment in Iran.
- The sequencing of sanctions relief would need to be complemented by a financing mechanism, such as an ‘INSTEX 2.0’, and underwritten by the EU with the US as an ultimate guarantor. INSTEX 2.0 would need to guarantee oil purchases and revive energy partnerships and trade. In order to restore business confidence, the US government would need to embark on a diplomatic roadshow.
Region
- The issue of regional missile proliferation and regional tensions would not be included in a JCPOA+ scenario because regional issues remain too difficult and time-consuming to address. Linking a deal to resolution of regional issues – which in many cases, such as in respect of Syria and Yemen, cannot be delivered by Iran alone – risks halting progress on the nuclear file.
- A JCPOA+ model should prioritize more achievable compromises in order to safeguard the JCPOA, stave off a wider crisis vis-à-vis Iran, and establish a platform for confidence-building measures between Iran, the US and other signatories. However, as part of a JCPOA+ agreement, an EU-led commitment to begin regional discussions should be developed.
- The EU should lead and manage a strategy to create a wider regional security framework that could include commitments to non-aggression and non-interference by regional actors. This could be advanced through the establishment of a multilateral process, closely resembling the Madrid Conference and peace process.
- All regional actors should be invited to participate. Unlike with the Madrid process, participants must include Iran and Israel, at least in the opening plenary session. Once an agreement among all parties on the principles of a regional security framework has been agreed, then separate negotiating tracks can be established that pertain to multilateral and bilateral issues. Given the complexity of regional issues, specific deliverables could be agreed among the parties within each negotiating track, but progress towards each set of goals should be delinked from other issues. Progress will be non-linear, and artificial timelines should therefore not be imposed. In fact, while short-term progress is essential, the overall approach should be informed by a desire to address and resolve long-term issues. This will require a long-term investment from the sponsors. The full weight of the EU and the US, plus other international actors, will be required to make this happen. This research paper has highlighted areas where agreement is likely to be reached.
- Regional actors including Israel, Saudi Arabia and the UAE should acknowledge that maximum pressure has had little effect. Containment and sanctions strategy should be coupled with policies that include engagement, confidence-building and discussions on regional security issues.
Figure 14: Should the JCPOA be saved?
— Source: Chatham House interviews.
Figure 14: Should the JCPOA be saved?
To arrive at negotiated outcomes, policymakers in Washington, Tehran and Europe should consider the following recommendations as they work towards new, achievable agreements:
- Negotiations above all should be multilateral in orientation. The Trump administration’s unilateral approach has done nothing but frustrate and delay potential progress on addressing the issues. Transatlantic cooperation in the context of a strategy of ‘carrots and sticks’ is more likely to yield results than Washington’s current unilateral path. Moreover, Europe retains unrivalled knowledge, expertise and relevant experience in negotiating and engaging with Iran.
- Due to the complexities of US and Iranian politics and domestic challenges in European capitals, all sides should consider appointing a non-partisan special envoy to define, coordinate and manage negotiations.
- The over-personalization of policy and the focus on the personality of individual leaders, such as President Trump, Supreme Leader Khamenei and even Foreign Minister Zarif, are not productive for negotiations. All parties would be wise to avoid focusing on individuals, and would do better to seek to understand national issues and final decision-making processes.
- The JCPOA remains the best foundation and framework to build on for a new deal. Rather than starting new negotiations, the structure of the JCPOA should therefore form the basis of a new agreement. Moreover, the JCPOA Joint Commission already provides an institutional mechanism for multilateral discussions. The mandate of the Joint Commission could be adjusted to allow for broader discussion and negotiations.
- The release of dual nationals detained in Iran, alongside a commitment to halt such detentions, must be obtained from Tehran. This step would not only improve trust, but also would send important signals to strengthen Iran’s business ties with the international community.
- Washington and Tehran should each begin building an internal consensus on a new agreement. Acquiring legitimacy from political establishments in both countries, and building non-partisan support, will be essential to the success and outcome of negotiations.
- Any new agreement should include a commitment and timeline to begin a European-led regional dialogue. In spite of current tensions, conditions are ripe for such a dialogue.
- Washington should prepare regional partners for the prospect of new negotiations, while committing to include them in regional discussions. This should include providing reassurances as to the US’s commitment to these partners’ security.
- Europe should take the lead in defining the terms of, and managing, a regional dialogue with Iran and key players in the Middle East. Missile proliferation, procurement limits and regional interference should form the foundational pillars of discussion. Talks should include wider regional alignment, compromises on ballistic missiles, and acceptance of the Hague Code of Conduct on Ballistic Missile Proliferation (HCOC) and the Comprehensive Nuclear-Test-Ban Treaty.
115 In-person interview, 5 May 2019.