Will Iran Strike A Nuclear Deal by July?

The most recent round of nuclear talks in Vienna between Iran and six major world powers was a sticker-shock moment. For the first time, negotiators presented Iran with the specific bill of nuclear concessions it would have to make in exchange for comprehensive sanctions relief. Despite all the happy talk about a nuclear deal being imminent—much of it encouraged by Iran to lure Western companies to sign contracts ahead of the scramble to resume business if sanctions are lifted—the U.S. team was well aware of the tough bargaining ahead and cautioned against excessive optimism. However, from my discussions with officials involved in the negotiations, they entered this critical phase of the talks confident of their strong bargaining position.

Most important, the interim agreement, or Joint Plan of Action, which went into effect on Jan. 20, 2014, is performing as expected. Under the agreement, Iran has frozen or capped key elements of its nuclear program, which has limited further development of Iran’s capacity to produce fissile materials for nuclear weapons. According to the most recent report by the International Atomic Energy Agency (IAEA), Iran has diluted or converted most of its stockpile of 20 percent enriched uranium, ceased any additional enrichment above 5 percent, halted installation of additional centrifuges and suspended major construction at the Arak heavy water research reactor. A new facility to covert low-enriched uranium from hexafluoride to oxide, which cannot be further enriched unless it is converted back to hexafluoride, is near completion. It’s true that Iran is allowed to continue centrifuge research and development under the Joint Plan of Action, but this is unlikely to significantly improve Iran’s capabilities over the time frame of the interim agreement, as some critics of the deal have charged.

In exchange for Iran’s nuclear constraints, the United States and the European Union have eased some trade sanctions and released some frozen funds from Iran’s oil exports. But the overall sanctions regime has remained intact, mainly because U.S. and European officials have actively warned companies and other governments not to take actions that would erode sanctions. To reinforce the message, Washington has continued to impose sanctions against companies that have violated the existing sanctions even while the interim agreement is in effect. Private organizations like United Against Nuclear Iran (of which I am president) have also helped by calling on specific Western companies not to engage in business with Iran that violates existing sanctions.

It’s true that Iranian oil exports have averaged about 1.2 million barrels per day since January—slightly higher than the 1 million that U.S. officials estimated when the Joint Plan of Action was negotiated—but not enough to make a huge difference to the Iranian economy, especially because financial sanctions restricting Iranian access to its oil revenues remain in place. In short, the United States and the EU have demonstrated that they can manipulate and fine-tune sanctions relief as a powerful bargaining tool.

So, on balance, the decision by the P5+1 (as the five permanent members of the Security Council plus Germany are known) to pursue an interim agreement as a first step toward a comprehensive agreement has been successful. In fact, the status quo is probably more acceptable to the P5+1 than it is to Iran because they are essentially freezing Iran’s nuclear program without giving up very much in sanctions leverage. The question now is whether conditions are ripe to complete a comprehensive agreement by July 20, 2014, the near-term deadline set by the Joint Plan of Action.

Since leaving the White House, I’ve had the chance to discuss this question with Iranians who claim to represent the views of Iranian President Hassan Rouhani and his chief negotiator, Foreign Minister Javad Zarif. No doubt, Tehran is highly motivated to complete an agreement. My Iranian friends tell me that President Rouhani is under tremendous pressure to produce economic results or face a counterattack by hardliners, charging that he has shackled Iran’s nuclear program without getting much economic relief in return. In fact, some Iranians warn that Iran will walk away from the talks if an acceptable deal is not achieved by the end of July, but I suspect this threat is mainly a bargaining tactic. With soft international oil markets, if Tehran abandons the negotiations, Washington can retaliate by pressuring and persuading Iran’s remaining major oil customers (China, India, Japan and Korea) to reduce their purchases of Iranian oil even further.

President Obama is also eager for a diplomatic victory, keen to silence critics of his foreign policy. To paraphrase Obama’s recent statements in Manila about foreign policy, a good nuclear deal with Iran would be more than a single or a double. It would be a home run—removing (or at least postponing) one of the most significant security threats facing the United States and its allies in the Middle East. And as a practical matter, a nuclear deal in July would be easier to defend in Congress before the midterm elections, in which the Republicans may take the Senate and be in a better position to block any agreement.

Prospects for a deal by July, however, are dim. On one hand, the P5+1 and Iran seem to have agreed—at least in principle—to modify the 40-megawatt Arak heavy water research reactor (which is still under construction) to reduce the power level and alter the reactor core and fuel type so that it cannot produce a significant amount of plutonium. The details of these modifications still need to be determined—in particular how extensive and how reversible the changes will be—but this seems to be a bridgeable set of issues. In fact, Iran is more willing to trade away Arak because its pathway to produce plutonium for nuclear weapons is much more challenging and distant than its uranium enrichment program. As one of my Iranian contacts said—half joking—“We’ll give you plutonium if you give us uranium.”

On the other hand, the negotiators seem far apart on at least two crucial issues. The first is physical constraints on Iran’s enrichment program. Currently, Iran has installed about 20,000 IR-1 (first generation) centrifuge machines, of which about 9,000 are actually enriching. In addition, Iran has installed about 1,000 more powerful IR-2 (second generation) centrifuges that are not yet operational. The P5+1 are demanding that Iran significantly scale back the numbers and types of centrifuges, reduce its stockpile of low enriched uranium, limit research and development of more advanced centrifuges and close or convert the Fordow enrichment facility. Presumably, the P5+1 want surplus centrifuges to be removed, disassembled and stored under IAEA supervision. Excess low-enriched uranium could be converted to oxide and exported for fabrication into fuel elements for the Bushehr nuclear power plant. The Fordow enrichment facility could be converted to store surplus centrifuges or to conduct limited research and development. Finally, the P5+1 are demanding that these restrictions on Iran’s enrichment program remain in place for more than a decade.

These constraints on Iran’s enrichment program are designed to increase “breakout time”—the time required for Iran to produce enough weapons-grade uranium for a single bomb from its known enrichment sites under IAEA inspections. I think breakout time is a very artificial and arbitrary way to measure a nuclear deal because Iran is very unlikely to dash toward nuclear weapons from its declared facilities. The IAEA would quickly detect such an attempt, and the facilities would be highly vulnerable to military attack before breakout could be completed. Much more likely, Iran will try again (as it has twice before) to build a covert enrichment plant and produce a small arsenal of nuclear weapons in secret before revealing its capability. Therefore, in addition to extending breakout time, the P5+1 negotiators are seeking additional monitoring and verifications arrangements that would enhance international efforts to detect future Iranian attempts to construct clandestine enrichment facilities.

Nonetheless, as a political fact of life in Washington, any nuclear agreement with Iran will be measured in terms of breakout time. No matter how artificial, this is a relatively concrete and simple yardstick that both opponents and proponents of any deal can cite in the inevitable political debates that will follow an agreement. On paper, Iran’s current breakout time—if it used all of its available centrifuges and stockpile of low-enriched uranium—is about two months. Based on conversations I’ve had with knowledgeable Israelis and congressional staffers, a deal that pushes Iran’s breakout time back to a year or more and remains in place for a decade or more is politically defensible. This translates to about 3,000 IR-1 centrifuges with a small, working stock of low-enriched uranium in the form of hexafluoride, or as many as 6,000 IR-1 centrifuges if all of Iran’s low-enriched uranium in the form of hexafluoride is eliminated.

Here’s the problem: As far as I can tell, this is far more than Iran is willing to accept at this point. President Rouhani has publicly rejected any dismantlement of its current enrichment program and any long-term constraints on the size of enrichment program. Instead, I understand that Iran is willing to consider short-term constraints on the size of its enrichment program, such as freezing at the current level of 9,000 operating IR-1s for a few years before gradually expanding to an industrial scale of 50,000 or more IR-1 centrifuge machines. Iran claims it needs an industrial-scale enrichment plant to produce low-enriched uranium to fuel the Bushehr nuclear power plant if Russia reneges on its commitment to provide fresh fuel, but such a facility would also enhance Iran’s options to produce high-enriched uranium for nuclear weapons. Moreover, Iran wants enrichment limits to be defined in overall “separative work units” rather than any specific number of particular machines so it can gradually replace IR-1s with more advanced machines as they come online.

The second big sticking point is the pace and scope of sanctions relief. In my conversations with Iranians, they insist that the existing nuclear-related sanctions be repealed—not just waived by presidential authority—because they don’t want to accept long-term nuclear restraints without more confidence that sanctions relief will be permanent. Of course, repealing sanctions would require a positive act by a majority of both houses in Congress, which seems implausible in today’s political climate in Washington, especially if the nuclear deal allows Iran to retain even a limited enrichment capacity. In addition, U.S. sanctions against Iran are a thicket of many different laws, which mix nuclear-related sanctions with sanctions imposed on Iran for terrorism or human rights reasons, and it would be extremely difficult and contentious to craft legislation that would lift some sanctions and retain others in place.

Given the big differences on these two related issues, I assume the P5+1 negotiators will propose some kind of phased resolution: a staged drawdown of Iran’s enrichment program in exchange for a staged removal of sanctions, leading ultimately to the repeal of international and national nuclear-related sanctions once Iran has reduced its enrichment program to a new baseline.

The problem with this approach is that Iran wants large-scale sanctions relief up front in exchange for a gradual buildup of centrifuges while the P5+1 are offering large-scale sanctions relief down the road in exchange for a gradual builddown of centrifuges.

In addition to these twin central issues of enrichment and sanctions, a final agreement will also need to address several other important issues, such as monitoring and verification arrangements beyond the IAEA’s Additional Protocol, resolution of questions about Iran’s previous weaponization program and restrictions on Iran’s ballistic missile program. While Iran seems relatively open to accepting additional monitoring arrangements as part of an overall deal, it refuses to admit that it was conducting a program to design nuclear weapons before 2003 (which the IAEA euphemistically calls the “possible military dimension” of Iran’s nuclear program).

Given all of these complex and contentious issues, I think it will be very difficult to reach a comprehensive deal by July. Nonetheless, both sides have a strong interest to keep the diplomatic process alive because neither wants to return to previous cycle of escalation of increased sanctions and increased nuclear activities with an increased risk of war. And both sides will be able to make a good case that sufficient progress is being made in the negotiations even if a final agreement has not been reached. Therefore, I expect that the two sides will agree to extend the interim agreement for an additional six months, until January 2015. Although there will be strong opposition in both Washington and Tehran, I don’t think either side can afford to take the blame for walking away from the table if the other side is prepared to continue.

Whether a comprehensive deal can be reached by January 2015, I can’t say at this point. It seems to me that the smartest move for Tehran is to accept significant limits on its enrichment program in order to lift sanctions and restore the economy, while preserving its option to cheat or renege on the deal. The reality is that Iran has mastered the basic technology for enriching uranium and it will retain this capability no matter how many centrifuges are actually operating. However, Iran’s very complicated domestic politics may restrict Tehran’s freedom of action. Even more than Washington, the nuclear issue in Iran is part of a larger political struggle between contending factions over the direction of the country, with moderates hoping that a nuclear deal will empower Rouhani to make further political, economic and social reforms and hardliners hoping to use diplomatic failure to challenge Rouhani’s position. As always, Supreme Leader Ayatollah Ali Khamenei is sitting back, waiting to see what Rouhani can deliver before deciding whether to endorse or overrule a deal.

Even if an agreement is reached, I don’t expect to see a dramatic improvement in bilateral relations because Washington and Tehran will continue to be at odds over many issues, including Iranian support for Hezbollah, opposition to Israel, support for Bashar Assad in the Syrian civil war and, most important, competition for military dominance in the Persian Gulf. In fact, even if it cuts a politically defensible nuclear deal, the Obama administration will need to emphasize that Washington will continue to oppose Iran in other areas.

As far as I can tell, the supreme leader wants it that way. He sees a nuclear deal as a way to relieve the immediate threat of economic sanctions, but not as an opening to improve overall U.S.-Iranian relations, much less a strategic decision to abandon Iran’s longstanding nuclear weapons program. Other Iranians, of course, have different hopes. Some Iranians whisper that the United States should be lenient on nuclear terms to help President Rouhani achieve a victory so that he can defeat hardliner factions in the November 2015 legislative elections and ultimately shift Iranian foreign policy in a more moderate direction. Even if true—and it might be—President Obama cannot sell a nuclear deal on the basis of secret promises from closet reformers. He needs to be able to demonstrate real, long-term constraints on Iran’s ability to produce fissile material, and so far there’s no sign President Rouhani can deliver, even if he wanted to. If a deal is to be had, the supreme leader will have to be convinced to sacrifice his nuclear achievements to save the economy.

Which is not to say that the dual-track strategy of diplomacy and sanctions that President Bush began in his second term and President Obama then intensified and expanded is failing. At a minimum, it is slowing down Iran’s nuclear clock in exchange for limited sanctions relief. Whether Iran will agree to substantial long-term constraints on its nuclear program in exchange for more comprehensive sanctions relief is less certain, but I could imagine a series of interim or partial agreements that continues to slow down Iran’s nuclear activities, without sacrificing our main sanctions leverage. In other words, we can still buy time—and that may be the best that diplomacy can achieve while the current Iranian leadership remains in power.

Read more: http://www.politico.com/magazine/story/2014/06/will-iran-strike-a-nuclear-deal-by-july-107250.html#ixzz33sphFJkv