Belfer Iran Brief – US “fully prepared” to walk away from talks as “significant gaps” remain, and other news

Highlights

• “Significant gaps” remain between Iran and the West, and President Barack Obama is “fully prepared to stop these talks” if more progress is not made, Kerry announced.

• Parliament voted to reduce by 25% the 2015-16 budget’s reliance on oil revenues, following the continued drop in oil prices.

• Iran continued to stonewall IAEA inspectors on Possible Military Dimensions of its nuclear program.

Diplomacy and nuclear issue

• “Significant gaps” remain between Iran and the West, and President Barack Obama is “fully prepared to stop these talks” if more progress is not made, US Secretary of State John Kerry announced, following negotiations. Ali Akbar Velayati, senior adviser to Supreme Leader Ayatollah Ali Khamenei, responded that the future of the talks “depends on the Americans.” (New York Times, 2/23;AP, 2/21)
  • Negotiations in Geneva included Kerry, Iranian Foreign Minister Mohammed Javad Zarif, Atomic Energy Organization of Iran chief Ali Akbar Salehi and US Energy Secretary Ernest Moniz, who was invited following Iran’s decision to bring Salehi. Iranian President Hassan Rouhani also dispatched his brother, Hossein Fereydoon, to participate. (Reuters, 2/21)
  • Iranian officials expressed frustration at two separate deadlines (March 24 for political framework and June 30 for technical annexes), an arrangement that was decided in November. Iranian nuclear negotiator Abbas Araqchi said that “we won’t have a two stage deal,” comments that echoed Khamenei. (AFP, 2/23)

• Negotiators are reportedly considering a 15 year deal in which Iran would submit to strict controls during the first 10 years, while constraints would be relaxed in the remaining 5 years. Iran would keep 6,500 IR-1 centrifuges and be limited to stockpiling 300 kg of low-enriched uranium. (AP, 2/23)

• Iran continued to stonewall IAEA inspectors on questions related to Possible Military Dimensions of its nuclear program. (IAEA via ISIS, 2/19; ISIS, 2/19; Reuters, 2/20)
  • IAEA: Iran “has not provided any explanations” nor “has it proposed any new practical measures” toward resolving PMD issues.
  • Iran informed the IAEA of “its intention to establish process lines for the recovery of uranium from solid and liquid scrap,” potentially enabling it to recover uranium from its converted 20% enriched stockpile.
  • Iran’s fleet of IR-1 centrifuges achieved only 0.66 SWU/centrifuge-year, a significant reduction from their usual performance. ISIS assesses that Iran may be “artificially lowering” capability of its centrifuges during negotiations.
  • Iran ceased testing its IR-5 centrifuge, following international concern.

• Governments of Saudi Arabia, Egypt, UAE and Qatar expressed concerns to American diplomats that Iran would retain much of its nuclear infrastructure in a final deal. “At this stage, we prefer a collapse of the diplomatic process to a bad deal,” one Arab official said. (Wall Street Journal, 2/20)

• Khamenei said Iran “can withstand the sanctions and neutralize and foil the enemy's goals,” and he said Iran may cut back energy exports in retaliation for new sanctions. (Reuters, 2/18)
  • He added: “A big collection of the world's oil and gas is in Iran so Iran if necessary can hold back on the gas that Europe and the world is so dependent on.”
  • Khamenei continued to criticize the dual deadlines in nuclear talks, even as Iran acknowledged it accepted “understanding” of two stage agreement. (Al-Monitor, 2/19)

• Khamenei secretly responded to one of Obama’s letters in recent weeks with “respectful” but “noncommittal” letter. Iran denied report. (Wall Street Journal, 2/13; AP, 2/16)

• Iran has accelerated its nuclear activities in recent months, Rouhani announced, without providing any detail. “We have made highly important progress in the nuclear field, but the negotiations receive so much attraction and hue and cry that they overshadow these activities, otherwise, we are running at a higher speed.” (Fars News, 2/17)

• China opposes an additional extension of the nuclear talks, Foreign Minister Wang Yi said. (AFP, 2/15; Reuters, 2/16)

• Marking the 36^th anniversary of the Iranian revolution, Rouhani said: “If there is going to be peace and stability in the region, and terrorism is to be uprooted, there is no other way than with the presence of the Islamic Republic of Iran.” (Reuters, 2/11; AFP, 2/11;AP, 2/11; Tehran Times, 2/11)
  • On nuclear negotiations, he said: “What we are after in the negotiations is to reach a win-win mutual understanding… The same way that we defended our independence on the battlefield, we have and will continue to defend our independence at the [negotiations].”
  • In a reference to Iran’s influence across Middle East, he added: “You've seen in Iraq, Syria, Lebanon and Yemen that the power that could help those nations against terrorist groups was the Islamic Republic of Iran.”
     
• Satellite imagery shows that Iran continues to modify the site in the Parchin military base where Iran allegedly conducted nuclear weapons-related testing. The Institute for Science and International Security reported that “Iran may be engaging in new asphalting at the site, efforts likely aimed at concealing past banned activities.” (ISIS, 2/11)

• Click here for the Belfer Center’s backgrounder on controversies surrounding Iranian nuclear facilities.

Sanctions and Iran’s economy

• Iran’s oil ministry’s financial situation is “catastrophic” and it does not have enough money to pay salaries of its employees, let alone invest in future oil projects, Minister of Petroleum Bijan Namdar Zangeneh told the Parliament (Majles). He is requesting an additional $4.8 billion for the ministry in next year’s budget. (Press TV, 2/16)

• The European Union agreed to continue sanctioning the National Iranian Tanker Company, after an EU court ruled that the company should be removed from sanctions blacklist. Zarif said the EU’s decision is “against logic.” (Reuters, 2/12; Tehran Times, 2/20)

• Iranian chambers of commerce in France, Germany and the UK formed the “European-Iranian Business Alliance” to help European companies compete in Iran if sanctions are lifted. (Wall Street Journal, 2/11)

• State media boasted that Iran is “applying innovative methods to sidestep US-led sanctions,” as sales of fuel oil rose 30% in 2014. (Press TV, 2/12)

Iranian domestic politics

• After reviewing Rouhani’s 2015-16 budget proposal, the Majles voted to reduce by 25% the budget’s reliance on oil revenues. Rouhani’s proposal was based on $24 billion in oil revenues and oil remaining at $72/barrel. Following oil price drop to around $40/barrel, the Majles projected only $18.5 billion in oil revenue. (AFP, 2/16) Note: Budget must be ratified before end of fiscal year on March 20.      
  • Lawmakers also approved an increase in the domestic price of gasoline. (Tehran Times, 2/17)

• The Majles approved taxation on religious foundations and companies controlled by the Army, a move that lawmakers believe could generate additional $350 million in tax revenue. (AFP, 2/23)

• Rouhani touted economic achievements of his government including reduction of inflation, which he termed a “miracle.” (Tehran Times, 2/22)
  • Rouhani: “It has been a year and a half since the start of [the tenure] of the government, and ever since, what people have done has been great and grand.”

• The Interior Minister lamented prevalence of “dirty money” in politics, including money from drug trafficking. (AFP, 2/21)

• Iran’s judiciary reminded journalists that publishing comments, photographs or even the name of former President Mohammad Khatami is forbidden. (Radio Free Europe, 2/17; Guardian, 2/17)

• Click here for the Belfer Center’s backgrounder on the key players in Iranian politics.

US-Iran relations

• Sen. Bob Corker (R, Tenn.) aims to have the Senate Foreign Relations Committee vote within several weeks on a bill that would require Congressional up-or-down vote on any nuclear deal with Iran. (Al-Monitor, 2/11)

• An Iranian lawmaker said there is an “espionage” case against Washington Post reporter Jason Rezaian and accused him of “penetrating into the most sensitive sections at the president’s office.” (Washington Post, 2/14)

Geopolitics and Iran

• Russia has offered to sell Iran its Antey-2500 surface-to-air missile system (S-300VM), after the West blocked Russia’s attempted sale of the less-advanced S-300 system. (Reuters, 2/23)

• Militants affiliated with ISIL claimed credit for a double bombing outside the home of the Iranian ambassador in Tripoli, Libya. No injuries were reported, and the ambassador was out of country, the Iranian foreign ministry said. (AP, 2/22; AFP, 2/22)

• Backed by Iran and Hizballah, Bashar Al-Assad’s military initiated a major operation to retake territory in Syria’s south and west from the Al-Nusra Front, bringing Shia forces closer to Israeli-controlled Golan Heights. (Ha’aretz, 2/11; AP, 2/11)
  • Israeli Prime Minister Benjamin Netanyahu said Israel believes “thousands of Hizballah fighters” are nearing Israel’s border. (Jerusalem Post, 2/13)
  • Israeli reports were confirmed by the Syrian Observatory for Human Rights, most prominent Syrian monitoring group. (AFP, 2/11)
  • Analysis by Israeli Institute for National Security Studies: “For the first time, the Iranians are not concealing their presence in the Golan Heights, which until now was an improbable scenario. Hizbollah is permitting itself freedom of action and a high profile on the Golan Heights and is working to establish an infrastructure in the region for attacks on Israel – not to protect Damascus, but out of a sense of power and freedom from the need to take into account the considerations of the Assad regime, whether it backs this activity or not.” (INSS, 1/27)

• In a rare speech, Quds Force commander Qassem Suleimani predicted the imminent demise of ISIL forces in Iraq and Syria: “Given the heavy failures that the ISIL and other terrorist groups in Iraq and Syria have sustained, we are sure that these groups are nearing the end of their life.” (Fars News, 2/11)

• An ISIL sniper killed Quds Force General Seyyed Reza Hosseini Moghaddam in Samarra, Iraq. (Tasnim, 2/8 (Fa); Entekhab, 2/9 (Fa); Tehran Times, 2/9)
  • Separately, another Iranian fighter was killed in Samarra, Iraq. Iranian media did not disclose whether he was affiliated with Revolutionary Guard, Quds Force or other group. In addition, two IRGC members were killed in Syria, including one of its top snipers. (AP, 2/17; Trend, 2/16)

• Iraqi Security Forces and Shia militias (Kataib Hizballah, Asaib Ahl al-Haq and Badr Organization) are staging in the holy city of Samarra for an offensive against ISIL-controlled Tikrit. Suleimani is reportedly in Samarra directing operations. The fight for Tikrit is a prelude to the operation against Mosul, scheduled for April or May. (Washington Post, 2/21)

• The Expediency Council’s Centre for Strategic Research, which is led by Velayati, reported that the West has quietly accepted Iran’s arms exports to Iraqi forces, despite a UN embargo. (Guardian, 2/17; “Concerns about Iraq and Considerations for the Future” (Fa))
  • The report also concluded there is greater global acceptance of the Quds Force and its leader, Suleimani.
  • However, Iraq’s improving relations with Saudi Arabia and Turkey constitute “serious challenge” to Iranian interests.
  • With ISIL on defensive, Iran should be concerned that its role in Iraq will be questioned internationally, report cautioned.

• Report identified IRGC Quds Force Unit 190 as secret arm that coordinates arms smuggling across Middle East. Unit is led by Behnam Shahariyari, according to Western intelligence officials. (Fox News, 2/11; Jerusalem Post, 2/15)

Israel

• Netanyahu said it is “astonishing” that Western powers continue to advance negotiations with Iran even as it conceals Possible Military Dimensions of its nuclear program. He also accused Iran of attempting to open “third front” against Israel in the Golan Heights. (PMO, 2/22; AFP, 2/22; Jerusalem Post, 2/22)
  • Netanyahu: “A framework agreement is liable to be signed that will allow Iran to develop the nuclear capabilities that threaten our existence. The agreement that is being formulated between Iran and the major powers is dangerous for Israel and therefore I will go to the US next week in order to explain to the American Congress, which could influence the fate of the agreement, why this agreement is dangerous for Israel, the region and the entire world.”
  • Tamir Pardo, head of Mossad: “At this very moment, Iran is setting up terror infrastructure around the world. Iran's terror activities are global.” (Israel HaYom, 2/23)

• Concerned by Israeli leaks and Netanyahu’s upcoming speech in Congress, the Obama administration has reduced the amount of information about nuclear talks it shares with Jerusalem. (New York Times, 2/17; Jerusalem Post, 2/15; Washington Post, 2/16)
  • Earnest: “There’s no question that some of the things that the Israelis have said in characterizing our negotiating position have not been accurate.” (White House, 2/18)
  • The White House is considering other moves to undercut Netanyahu’s visit, such as a Sunday show offensive and sending low-level official to AIPAC conference. Both Vice President Joe Biden and Kerry arranged travel to be out of country during conference. (AP, 2/20)
  • Only twenty-three House Democrats announced they would skip Netanyahu speech, despite CNN poll that showed 81% of Democrats disagreed with invitation. (Washington Post, 2/19)

• Netanyahu:  “I think this is a bad agreement that is dangerous for the state of Israel, and not just for it. If anyone thinks otherwise what is there to hide here?” (AP, 2/19)
  • “We know that Tehran knows the details of the talks. Now I tell you that Israel also knows the details of the proposed agreement.”

• Israeli Intelligence Minister Yuval Steinitz to Washington Post’s David Ignatius: “From the very beginning, we made it clear we had reservations about the goal of the negotiations…We thought the goal should be to get rid of the Iranian nuclear threat, not verify or inspect it.” (Washington Post, 2/19)
  • “You’re saying, okay, in 10 or 12 years Iran might be a different country…. To believe that in the next decade there will be a democratic change in leadership and that Iran won’t threaten the U.S. or Israel anymore, I think this is too speculative.”
  • “The temptation [to break out] is not now but in two or three or four years, when the West is preoccupied with other crises.”
  • Steinitz in Munich: “There can be no deal immediately, but this doesn’t mean that there will be no deal after a few months or maybe a year or two because if the pressure is sufficient and if the Iranians are forced to choose either to save their economy or to save their uranium enrichment facilities, I’m confident . . . they will choose to save their economy.” (Financial Times, 2/19)

• US National Security Adviser Susan Rice and her Israeli counterpart Yossi Cohen met at the White House to discuss Iran negotiations. (Reuters, 2/19)
   
• Seventy-two percent of likely Israeli voters do not trust Obama to keep Iran from obtaining a nuclear weapon, up from 64% in January 2014. (Times of Israel, 2/11)

Cyber

• Cyber attacks against Iranian nuclear infrastructure initiated a low-level cyber war between Iran and the US, and US officials confirmed that Iran was responsible for the 2012 attacks on Saudi Aramco and American banks. (New York Times, 2/22)

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

• No significant developments. 

Uncertain or dubious claims

• No significant claims.