Iran breaks nuclear deal

09.05.2019

Iran refused to fulfill part of its obligations under the “nuclear deal”. What will be the consequences of Tehran’s decision and how will the United States react to it?

Iran's patience has burst. Exactly one year after Donald Trump's decision to withdraw from the Joint Comprehensive Action Plan (JCPOA), Iranian President Hassan Rouhani announced his refusal to implement part of its provisions.

Recall that JCPOA was signed by the Islamic Republic of Iran (IRI) and the six mediators - the United States, Russia, France, Germany, the United Kingdom and China - on July 15, 2015. This agreement, known as the “nuclear deal,” implies the termination of the development of nuclear weapons by the IRI in exchange for the step-by-step abolition of international anti-Iran sanctions.

What conditions of a “nuclear deal” will violate Iran?

Today, the Iranian leadership sent a letter to the ambassadors of Germany, Britain, China and Russia, informing them about the "suspension of the fulfillment of certain obligations" within the framework of the JCPOA. Details of the decision Tehran handed over to EU High Representative for Foreign Affairs Federica Mogherini, who plays the role of the JCPOA coordinator.

In particular, Iran refuses to limit the reserves of enriched uranium and heavy water used in nuclear reactors. According to JCPOA, Tehran is obliged to reduce the reserves of enriched uranium by 97% and not enrich it above 3.67% - this level makes uranium unsuitable for creating nuclear weapons.

The second JCPOA commitment that Iran intends to violate is the modernization of a heavy-water reactor in Arak. Under the terms of the deal, Iranians should not use this reactor to produce weapons-grade plutonium.

JCPOA also limits the number of centrifuges and prohibits the construction of new uranium enrichment facilities for 15 years.

Why does Iran refuse JCPOA?

The Iranian leadership justifies its decision by saying that the participants in the transaction could not “compensate” for the damage caused by US sanctions.

The United States withdrew from the “nuclear deal” on May 8, 2018. In August and November 2019, the White House introduced two packages of sanctions. The constraints included the automotive industry, aviation, the banking sector, gold trading, transactions in dollars and the sale of oil.

In November, Trump gave a postponement to eight buyers of Iranian oil, in particular Turkey, South Korea, Greece, Italy, Japan, India, etc. But on April 30, the White House canceled the exemptions for these countries.

After the US sanctions, the European Union promised to create a mechanism for circumventing them, which would allow Iran to sell its oil to the world market, bypassing the dollar. In January, the EU launched the Instrument for Supporting Trade Exchanges (Instrument for Supporting Trade Exchanges, INSTEX SAS). But this system does not affect the oil industry, but extends to pharmaceuticals, medical equipment and agriculture.

The future is in the hands of the EU

Iran is ready to return to compliance with the deal, but only if the other participants fulfill their obligations. "Especially in the banking industry and in the field of oil fields," - said in a statement the Iranian authorities.

After the US withdrawal from JCPOA, European corporations began to hastily withdraw their assets from Iran. One of the biggest blows to the Iranian economy was the failure of the French company Total S.A. to invest a billion dollars in the development of the largest South Pars field. Example Total S.A. followed by Siemens, Deutsche Bahn, Peugeot, Deutsche Telekom, Daimler and other major players.

Translating into ordinary language, Iran’s demand is that the European Union should stop “scratching its tongue” that it will buy Iranian oil, despite the US sanctions, and actually began to do so, and also resume development of fields in the Persian Gulf.

Iran’s decision was made after a new wave of US restrictions on its nuclear industry, which in fact make it impossible to fully implement the agreement. Iran needs guarantees from Europeans that its nuclear program will not be terminated as a result of US measures. It also expects the Europeans to take real steps to provide Iran with the promised economic benefits from the deal, which could not be realized due to US sanctions.

US reaction

If Iran does not see any benefit from the nuclear deal, and the EU, under the penalty of punishment from the “elder brother”, does not dare to do business with Tehran, the latter has fewer incentives to remain within JCPOA.

At the same time, Rouhani’s decision pours water on the mill of the White House and the “hawks” from the US administration. Washington may interpret Tehran’s partial rejection of the deal’s provisions as a resumption of the development of a nuclear bomb. Moreover, Iranian Foreign Minister Mohammad Javad Zarif at the end of April allowed his country’s withdrawal from the Treaty on the Non-Proliferation of Nuclear Weapons (NPT).

These days, the United States sent a carrier group headed by the aircraft carrier Abraham Lincoln into the Persian Gulf. Consequently, the military solution of the Iranian problem is still on the agenda of the State Department and the Pentagon.

What should Russia do?

The withdrawal of Iran from the illegal sanctions pressure of America requires the joint efforts of the leading players: the EU, Russia, China and Turkey. However, each of these players has difficulties with the USA. China is afraid of new tariffs and therefore trades with Iran on black schemes. Turkey after the collapse of the lyre felt the power of Washington. And the EU does not want to be in the place of China and Turkey.

Moscow can play an important role in helping Iran bypass US sanctions. Since Russia itself has suffered from Western sanctions, both countries may develop mechanisms for independent trade, possibly with the participation of some other countries, such as Turkey. The system will benefit each participant.

From March to April 2019, Iranian oil exports fell from 1.7 million to less than 1 million barrels per day. The economic crisis in Iran can strengthen the conservatives led by Ayatollah Khomeini, which will bring closer the confrontation between Tehran and Washington. Iran will increasingly converge with Russia, and a reduction in Iranian supplies will temporarily stimulate price growth that is advantageous to us. However, swinging the IRI with the hands of the United States harms the regional strategy of Moscow, primarily in Syria.