A Peril to the Iran Nuclear Deal
There exists, right now, a problem with one side's obligations not being fulfilled as provided for under the preliminary agreement, known as the Joint Plan of Action, that Iran reached with the United States and its negotiating partners (the P5+1) last November. This lack of fulfillment endangers the process of negotiating a final agreement. It is an understandable source of consternation to the other side, which will increasingly doubt the first side's ability and willingness to make good on its commitments, including in any final deal. Hardliners on the second side will pounce on any non-fulfillment of the terms of the JPA as a reason to scuttle the whole process.
So is Iran not living up to its commitments under the JPA? Well, we do have hardliners on our own side eager to pounce. In fact, they are so eager that they are trying to pounce even though there isn't anything to pounce on. Senators Robert Menendez (D-NJ) and Mark Kirk (R-IL), who led the recent unsuccessful effort in Congress to impose additional deal-busting sanctions after conclusion of the JPA, have sent a letter to President Obama that bemoans indications of some increased Iranian oil sales and says “If Iran moves forward with this effort to evade U.S. sanctions and violate the terms of oil sanctions relief provided for in the JPA” the United States should in effect renounce its obligation under the JPA to—this is the wording of the JPA—“pause efforts to further reduce Iran's crude oil sales.”
The senators make it sound as if Iran has some obligation under the agreement to knuckle under to sanctions, don't they? Otherwise how could Iran “violate” what they are talking about? But Iran has no such obligation. All the obligations in the preliminary agreement concerning sanctions are obligations of the P5+1 (including that very mild “pause efforts” clause, which does not entail rolling back the existing oil sanctions). All of Iran's obligations involve restrictions on its nuclear program. According to the International Atomic Energy Agency, Iran so far is in compliance with those obligations.
No, the current problem in implementing the agreement involves another part of the P5+1's side of the deal, not Iran's side. Specifically, it involves the unfreezing in installments of a small portion ($4.2 billion out of an estimated $100 billion) of the Iranian money that already was earned from prior oil sales and is sitting in non-Iranian banks. Iran has been unable to withdraw much of the money that it was supposed to have gained access to by now. It appears the problem is not direct violation of the agreement by the U.S. Treasury or any of the other governments involved. Instead, the banks that are to handle the funds are so deathly afraid of running afoul, however inadvertently, of any continuing sanctions that Treasury is enforcing that they have not made the money move. The fear is understandable, given how huge and complex the sanctions regime has become and also how huge have been fines that Treasury has levied on transgressors. The marvelous sanctions machine is so powerful that it continues to exude power and have effects even after a switch has been turned off. Treasury needs to do more than just saying “go,” and more than it has done so far to put banks into their comfort zone, for the JPA to be implemented the way it was supposed to be.
Iranian President Rouhani had a big enough challenge domestically as it was to sell a preliminary agreement that gave the P5+1 most of what it wanted in restricting the nuclear program while getting only modest sanctions relief in return. His selling task is made all the harder when even that modest relief is not properly implemented. And there certainly are hardliners on his side ready to pounce on any such developments.
This issue is a reminder of how an Iranian belief that the West and especially the United States will come through with positive action if Iran makes desired concessions is just as important as (and given how the issue has evolved, has become even more important than) an Iranian belief that it will be hit with still more negative consequences if it does not concede.
The current problem also underscores how much work—political, not just administrative—on the U.S. side remains to be done to prepare for the undoing of sanctions that will be part of any final agreement, and that necessarily will be substantially greater than the minor sanctions relief in the JPA. Members of Congress are still talking about piling on more sanctions when they ought to be discussing how to take sanctions off the pile. We have already seen how hard it is to redirect the sanctions machine. Aircraft carriers do not turn around on a dime, and neither do sanctions, especially ones as complicated and extensive as the ones on the Iranian pile. Even if the more optimistic projections of when a deal will be struck in Vienna do not prove true, it is not too soon for Congress and the administration to be working diligently on this and for it to be a subject of public discussion.