Belfer Iran Brief — “Less than even shot” at a deal, and other news

Highlights:

• Additional U.S. sanctions against Iran could result with the “worst of all worlds,” Biden said.

• U.S. officials told a U.N. panel that Iran has increased procurement efforts for its Arak heavy water reactor.

• Rouhani outlined spending cuts and tax hikes to account for drop in oil revenue, but announced large increase in military spending.

Diplomacy and nuclear issue

• At Saban Forum, Vice President Joe Biden said there is a “less than even shot, but it's a shot” at striking nuclear deal with Iran. (Biden remarks, 12/6)
  • Re. negotiations: “The Iranians have begun to show flexibility on some important issues. This progress was not enough to lead to an agreement but it was enough to justify an extension.”
  • Re. new sanctions: “We could end up with the worst of all worlds -- breaking up the coalition, no peaceful resolution of Iran's nuclear programs, and less leverage to achieve one.”
  • Re. Israeli Prime Minister Benjamin Netanyahu’s UN red line: “Remember the prime minister standing up with that famous drawing of the United Nations with the line, standing as he spoke, of Iran's path to the bomb. Before the Joint Plan of Action, Iran was inching up toward that red line, accumulating 20 percent enriched uranium, far closer to bomb grade. Now, Iran has moved in the opposite direction.”

• Secretary of State John Kerry reiterated that “there is not an inch of daylight” between the American and Israeli position that Iran not acquire a nuclear weapon. He added that “in recent weeks, we have seen new ideas surface” in negotiations. (Kerry remarks, 12/7)

• Phillip Hammond, British foreign secretary, said the P5+1 should avoid “unwise concessions” in nuclear talks: “We must choose persistence over convenience ... upholding our principle position on enrichment rather than succumbing to the temptation to make unwise concessions to get a deal done.” (Reuters, 12/6)

• In a confidential report to a U.N. Security Council panel, the U.S. accused Iran of increasing its illicit procurement of equipment for the heavy water reactor in Arak. (Foreign Policy, 12/8)

• A Chinese citizen accused of conspiring to export pressure transducers to Iran was extradited to the U.S. (US Attorney’s Office, 12/5)
  • Sihai Cheng worked with individuals involved in Iran’s nuclear program to “illegally obtain hundreds of U.S. manufactured pressure transducers” from a Massachusetts company that were then shipped to Iran, according to federal indictment.
  • Transducers were photographed connected to centrifuges in Natanz.

• Catherine Ashton will remain as E.U.’s representative to Iran talks, with new E.U. foreign policy chief Federica Mogherini also participating during full P5+1 talks. (E.U., 12/5)

• The American sanctions expert in nuclear talks, Richard Nephew, will leave the State Department at the end of the year. (Al-Monitor, 12/3)

Sanctions and Iran’s economy

• Oil prices dipped below $70 (Brent Crude), meaning Iran is earning $1 billion/month less than prior to plunge. (Quartz, 12/5)

Iranian domestic politics

• Rouhani outlined new spending cuts and tax increases in his annual budget proposal, which seeks to reduce Iran’s reliance on oil revenues. While the budget calls for 6 percent increase in spending, the inflation rate means a budget decrease in real terms. (Financial Times, 12/7; AP, 12/7; Reuters, 12/7)
  • Defense spending increased by 33 percent, while Revolutionary Guards’ budget increased by about half.
  • New budget accounts for recent drop in oil prices, basing its calculations on the price of oil staying at $70.  Oil revenue accounts for only one-third of budget, instead of half for 2014.

• In speech, Rouhani assailed corruption in the government and singled out the Revolutionary Guards: “If guns, money, newspapers and propaganda all gather in one place, one can be confident of corruption there…Even Abuzar and Salman [allies of Prophet Mohammad] would have become corrupt under one organization that has accumulated everything.” (Financial Times, 12/8; AP, 12/8)

• Newly appointed science minister Mohammad Farhadi said universities should be tranquil and students should be protected from “certain political movements.” (Tehran Times, 12/6) Note: Farhadi was Rouhani’s fifth choice to head the ministry; lawmakers rejected Rouhani’s other choices for the politically charged position.

• Iran’s Army will conduct war games in southeast Iran, near border with Pakistan, later this month. Drills will include use of “suicide drones,” according to commander. (Tehran Times, 12/4)

US-Iran relations

• More Congressional sanctions against Iran would “blow up” nuclear negotiations, National Security Adviser Susan Rice said: “P5+1 would fracture, the international community would blame the United States rather than Iran for the collapse of the negotiations, and the Iranians would conclude that there’s little point in pursuing this process at the negotiating table.” (The Hill, 12/2)

• Sen. Bob Corker (GOP, Tennessee), who is slated to succeed Menendez as chair of the Senate Foreign Relations Committee, took cautious approach to Iran legislation in interview.
  • “I mean you have the potential of passing real legislation, and I think there’s going to be a genuine search to figure out the best way that Congress can play a role [in pressuring Iran]. The art of this will be figuring out the appropriate way for Congress to weigh in…Obviously, I don’t think anybody in Congress wants to feel, quote, responsible for this deal falling apart.” (Bloomberg, 12/5)
  • Sen. Rand Paul (GOP, Kentucky) said he opposes passing new sanctions while talks are underway: “I think it would be a mistake to push them away from the table.” (Wall Street Journal, 12/2)

• Washington Post reporter Jason Rezaian — held by Iran since July — faced his first charges in a Tehran courtroom, but the charges were not made public. (AP, 12/7)

Geopolitics and Iran

• Iranian hackers attacked defense and aerospace computer networks in 16 countries, including the U.S., Israel and Saudi Arabia, according to a U.S. cyber defense company. The attacks, which began in 2012, were dubbed “Operation Cleaver.” (Cylance, 12/2)

• Al-Qaeda in Arabian Peninsula claimed responsibility for a car bombing at the residence of Iran’s ambassador to Yemen in Sanaa. A civilian and two soldiers were killed and 17 were injured; no Iranians were hurt. (Reuters, 12/3)

• About 1 million Iranians trekked across border to Karbala, Iraq, as part of an annual Shia pilgrimage. Number of pilgrims doubled this year following waiver of visa fees and the urging of Iranian Supreme Leader Ali Khamenei to make trip, apparently as show of force against ISIL. (AFP, 12/8)
  • Iran also dispatched 25 vehicle convoy to offer “medical services” to the pilgrims inside Iraqi territory. (Tasnim, 12/8)

• Iran confirmed that its F-4 Phantom fighter jets struck ISIL targets in Diyala Province, Iraq.
  • Ebrahim Rahimpour, Iranian deputy foreign minister: “In this matter, we did not have any coordination with the Americans. We have coordinated only with the Iraqi government…In general, every military operation to help the Iraqi government is according to their requests.” (Guardian, 12/5)
  • Stuart Jones, U.S. ambassador to Iraq: “Iran is an important neighbor to Iraq. There has to be cooperation between Iran and Iraq…The Iranians are talking to the Iraqi security forces and we're talking to Iraqi security forces...we're relying on them to do the deconfliction." (AP, 12/5)
  • Kerry: “I think it's self-evident that if Iran is taking on ISIL in some particular place and it's confined to taking on ISIL and it has an impact, it’s going to be – the net effect is positive.” (Reuters, 12/4)
  • Pentagon spokesman John Kirby: “It’s the Iraqi air space and Iraqi’s to deconflict. We are not coordinating with nor are we deconflicting with Iranian military.” (Reuters, 12/3)

Israel

• Israeli fighter jets bombed targets in Syria likely connected with Iranian or Hezbollah arms smuggling. (AP, 12/7; Daily Star, 12/9; The Jerusalem Post, 12/8)

“Red lines,” “points of no return,” and military strikes

• No significant developments.

Uncertain or dubious claims

• No significant claims.