Nuclear Issues

On March 31,  the Project on Europe and the Transatlantic Relationship and the Minda de Gunzburg Center for European Studies hosted a discussion with Wolfgang Ischinger, former Chairman of the Munich Security Conference, Joseph S. Nye Jr., Harvard University Distinguished Service Professor, and Daniela Schwarzer, Executive Director for Europe and Eurasia at the Open Society Foundations, on how Russia’s invasion of Ukraine as well as the brutality of its action has caused an unexpected reversal of Germany’s long time security policy and led to strong reactions in the rest of Europe, NATO, and the posture of the Biden administration. The seminar examined the dimensions and consequences of these developments for the future of the EU and the West. Karl Kaiser, Senior Fellow at the Project on Europe, moderated.

In light of Russia’s annexation of Crimea and its current threat to Ukrainian sovereignty, it’s fair to ask: What is the significance now of the Budapest Memorandum?

In the past 10 years, oil exports have averaged about $67 billion in Iran. Last year, they dropped by two-thirds, and they are expected to drop below $30 billion this year.  There are reasons to believe that, with appropriate policies, the country can live with this level of oil exports, albeit at a reduced standard of living, and even do itself some good in the long run by reducing its dependence on oil.

Iran has been there before. In 2012, when President Obama ratcheted up U.S. sanctions against Iran, oil exports dropped by 27.5 percent, and GDP fell by 6.2 percent. In 2015, sanctions and the collapse of oil prices further reduced oil exports to $32 billion, a decade-long low, and GDP declined by 1.6 percent. If Iran’s leadership is to successfully resist U.S. demands, it must do more than find ways to evade sanctions. A lot depends on its ability to adopt a plan that reduces the economy’s dependence on oil, while distributing the burden of restructuring equitably across social groups.

For the Islamic Republic, resistance to Washington has become a cultural norm, and it considers independence (esteghlal) as the main achievement of the 1979 revolution.  According to Secretary of State Mike Pompeo, Iran would have to meet 12 conditions before the United States will renegotiate the nuclear deal and consider removing its sanctions. These conditions, which are nothing short of surrender on Iran’s part, are either set to force Iran out of the nuclear deal and therefore trigger the return of UN sanctions, or they are a thinly veiled call for regime change.