Is the US-Iran Nuclear Deal Worth the Hassle?
The deal with Iran has been on the precipice since US President Joe Biden assumed his office last year. It has been a tortuous ride from partisan resistance in Washington to a change of regime in Tehran. On multiple occasions, the European mediators have intervened to prevent deviation in the talks. A ‘final draft’ is now the object of current negotiations that could pave a path to economic appeasement for Iran and a semblance of security for the broader Middle East.
The time has come to ask the following questions: Can this deal play a successful role in curbing regional insecurities? Could it prove to be an economic panacea for Europe? And would it reinvent the animus between Iran and the United States?
The Iran Nuclear Deal 2015
The nuclear accord between Iran and the European Union (EU) alongside the P5+1 – a strategic coalition of five permanent members of the UN Security Council and Germany – was a pragmatic arrangement. It crafted a nexus of economic pressure and diplomatic coercion that weaved a balance of power aiming at ensuring a binding commitment. Also known as the Joint Comprehensive Plan of Action (JCPOA), the plan was signed in 2015 after years of deliberations. It waived sanctions on Iran in exchange for a framework that placed curbs on its nuclear program and gave tentative access to Iran’s declared nuclear sites for international inspections. The deal symbolized a landmark victory for the Democrats and Barack Obama’s administration, despite critical opposition within and without.
Things went awry when Donald Trump, a rightist Republican, became president and nixed the nuclear deal in 2018. While his legacy is still heavily debated, marked by domestic political and social turmoil and his attempt to isolate American interests in an increasingly globalized world, the unilateral exit from the Iran deal stands as one of his least rational foreign policies. Nicholas Burns, an American Diplomat and US Ambassador to China, termed the decision of withdrawal “reckless and one of the most serious mistakes of his presidency.” According to the Pew Research Center, a centrist American think tank, 94% of US international relations scholars opposed the US departure from the deal. Their prescient fears materialized the very next year.
By 2019, Iran had enriched its Uranium stockpile to 60% concentration, up from around 3% before the US withdrawal. This meant it was mere weeks away from developing a nuclear weapon. While the economic sanctions further deteriorated the social fabric of Iranian society, the nation’s impressive adaptability in the face of financial hardship continues to this day. In fact, it is a case study often employed as a testament to the failure of sanctions without appropriate complementary diplomatic policies.
The absence of economic relief, despite adhering to the nuclear deal, shifted power from moderates under former Iranian President Hassan Rouhani to hardline theocrats under the current leadership of President Ebrahim Raisi. Now after a dismal exit from Afghanistan and rapidly alienating allies in the Persian Gulf, Biden is determined to reshape the deal amidst fierce criticism from the Republicans. From the suspension of talks to heated exchanges between American forces and Iranian proxies in Syria, the indirect negotiations have continued, inching closer to a resolution. But the questions asked in 2018 are still unanswered!
A Middle Eastern Resolve?
When Donald Trump reneged on the agreement, the Gulf states voiced overwhelming support for the decision. The UAE Foreign Ministry urged the international community “to respond positively to President Trump’s position.” Saudi Arabia backed the move that severed economic gains and prevented Iran from “developing ballistic missiles and supporting terrorist groups in the region.”
Four years later, the UAE recently revived diplomatic relations with Tehran, reinstating its ambassador to Iran after a six year hiatus. Saudi Arabia has visibly distanced itself from American influence and appears to be gradually moving towards a diplomatic connection with Iran. The reasons are manifold. From Biden’s aversion to supporting the Saudi offensive in Yemen to Iran’s continued support to Houthi rebels despite harsh sanctions, the Arab states have become disenchanted. The attacks on Saudi oil facilities against a backdrop of receding American military support have disillusioned the monarchy from the supposed effectiveness of a strategy that consists of cornering Iran and trusting US policies amid a patent polity divide in America.
The regional concerns regarding the deal that shaped Trump’s rhetoric to withdraw are still elusive. While Iran has backed away from its demand to remove the Islamic Revolutionary Guard Corps (IRGC) from US State Department’s list of Foreign Terrorist Organisation (FTO), its contentious ballistic missile program remains problematic in the final phase of negotiations.
Moreover, Tehran has further developed its intelligence wing since the assassination of its IRGC Divisional Commander Qasem Soleimani in 2020. Its proxy militia forces have exponentially grown in Iraq, Lebanon, and Yemen. And its grip on the Syrian heartland, thanks toRussian support, is nothing short of strategic leverage against its bordering arch-nemesis: the state of Israel. The core opposition from both the Republican fraction in the US Congress and the Israeli government has aligned on a singular premise. They claim that a loose nuclear deal that ignores Iran’s militaristic capabilities and its allegedly extremist presence in the region would be a strategic blunder. It would eventually allow Iran to cash in on oil revenue and streamline support to its proxies threatening regional stability.
In August, Israeli Prime Minister Yair Lapid underscored his opposition to any deal with Iran that leads to windfall profits for Iran’s hardline leadership. While planning closed-door discussions with the P5+1 nations to rethink the elements of negotiations, he bolstered Israel’s Mossad spy agency in order to “prepare for any scenario” if the deal is revived. Israeli leadership has maintained throughout the negotiations over the past year that promises made to Iran would not prevent Israel from launching its covert operations against the Islamic Republic.
Traditionally, Israel has focused its shadow policies on disrupting the military infrastructure of Iran, ranging from acts of sabotage against its nuclear facilities to assassinating its nuclear scientists. Hence, there is no reason to believe that a successful nuclear deal would lead to a prosperous Middle Eastern landscape. Even if Iran returns to compliance and normalizes relations with the Arab states, the eternal strife over Palestine would likely have a spillover effect sooner or later through indirect confrontation, whether with Hezbollah in Lebanon or with Hamas in Gaza. Thus, framing this deal as a prelude to regional harmony is unrealistically ambitious. And highly unlikely!
Economic Advantage to Europe?
In 2018, when Trump’s sanctions kicked in, Iran reduced its oil production to a third of its capacity. However, despite bearing a cost of over $200 billion in lost oil revenue, Iran managed to curb production while minimizing damage to its oil fields. Currently, Iran exports about 800,000 barrels per day with a capacity to rapidly scale up to around 2.5 million barrels per day, according to shipping estimates compiled by Bloomberg. Since 2018, Iranian output has predominantly poured into China. A nuclear deal, however, could allow Iran to supply twice what it exports now. And according to energy analysts, Iran could even reach its 2017 production level of 3.8 million barrels per day in just a few months.
Nevertheless, contrary to mainstream beliefs, waivers on Iranian crude exports would not ease the energy crisis in Europe. Admittedly, the flow of Iranian oil would mitigate pressure on global oil prices. It could even alleviate the pains of inflation for oil importing countries in Asia. Yet we need to understand the basis of the soaring energy costs in Europe. It is not oil; it is natural gas. Electricity in Britain, the chemical plants in Germany, and the industries in all of Europe thrive on natural gas piped in from Russia. Disruption of the gas supply that arrives via the Nord Stream 1 (NS 1) pipeline has debilitated the commercial and domestic equilibrium in European countries. While oil transit is seaborne, gas supply relies on a complex pipeline network. Europe is dependent on the Russian grid, which is impossible to replace in the short term. Even alternatives like coal would not be enough, as most systems run on natural gas while compatible substitutes like LNG are limited in supply. Thus, while normalizing oil prices may fetch some relief to transportation costs and consumer prices, it would not quell fears of a chilly winter ahead.
Even if we assume that the nuclear deal with Iran allows roughly two million barrels per day into the global oil market, we should also consider that sanctions would not disappear overnight. Instead, sanctions would be phased away gradually over a set time frame. Moreover, many countries would be reluctant to trade with Iran even after the sanctions are completely relieved. There are no US sanctions against Russian grains, fertilizers, and energy supplies. Still, many countries have scaled back imports from Russia to avoid retaliation from the United States.
Given the historical context of tensions between Iran and the US, investors and neighboring countries would likely be wary of the consequences of engagement with Iran. After all, the US administration has offered no guarantees of an ironclad deal beyond Biden’s presidential term, which ends in 2024. The deal clearly does not enjoy bipartisan support. Thus, while I can foresee ebbing pressure on the global oil market, I am also aware that the OPEC+ alliance would likely cut production to accommodate the Iranian oil supply and maintain elevated oil prices in the international market. Therefore, in the short run, oil supply from Iran could ease the burden on neighboring oil-importing countries like Pakistan and Afghanistan. But the bane of energy costs in Europe would still largely depend on the stage of the conflict with Russia.
A Thaw in US-Iran Relations?
Since the Iranian Revolution in 1979, with the exception of the George W. Bush administration, every US government has tried to engage with Iran and failed. Bush launched the Iraq war in 2003, which (ironically) proved to be a pivot to Iranian theocracy, spreading through militias in Iraq, Syria, Lebanon, and Yemen. Trump tried an unorthodox approach by pressuring Iran via sanctions, assassinations, and diplomatic isolation. Instead of a weakened Iran, however, those policies made Iran more hard-skinned with newfangled nuclear facilities and a sophisticated Combat Drone Program.
The American policies in the face of a resilient Iran offer insights that many commentators have overlooked. Iran is an Islamist theocracy that promotes hardline governance, draconian and conservative policies, and a political system embedded in a religious hierarchy. Its Supreme Leader, Ayatollah Ali Khamenei, is a vocal critic of American imperialism and has held tightly to the revolutionary ideology of his predecessor, Ayatollah Ruhollah Khomeini. Anti-Americanism is central to Iranian orthodox identity, which is continually apparent in its narrative concerningforeign policy issues ranging from the Russian invasion of Ukraine to the Chinese intimidation of Taiwan.
The recent visit of Russian President Vladimir Putin to Iran offered another example of Iran’s characteristic opposition to American incentives. Ayatollah Ali Khamenei blamed the “Mafia Regime” of the US for the war in Ukraine, alleging that NATO would have eventually started the war. Successive American administrations have consistently failed to reach a balance of diplomacy and coercion that is pivotal to engaging Iran.
William J. Burns – Director of the Central Intelligence Agency (CIA) – recently wrote that the 2015 Nuclear Deal was a product of “tough-minded diplomacy, economic and military leverage, and International consensus.” Today, US diplomacy has become a mockery of statesmanship, whether in Ukraine, the Asia-Pacific, or the Middle East. American economic sway is becoming subtly diluted with the emergence of global duality due to China’s ascendency. And the traditional international cohesion, that the US once knew how to rally, has now become a visible chasm that has compromised the effectiveness of the Western offensive against Russia and China. India’s deviantly neutral foreign policy is one of the myriad examples and a throwback to the era of non-alignment.
Ultimately, the US should acknowledge its blunders and recalibrate the scale of its diplomacy. Over the years, it should have learned that Iran is hawkishly lethal, resilient to sabotage, diplomatically adept, and thrives under isolation. It is now high time that the US establishes a base of mutual trust by either holding firmly onto the agreement or scrapping the deal entirely before it’s agreed upon. Because any sane mind would realize that a repeat of Trump’s escapade would be even more catastrophic this time around. My colleague Karim Sadjadpour aptly sums up my argument in his opinion piece for The New York Times: “The Iranian regime has shown it’s too influential to ignore, too dogmatic to reform, too brutal to overthrow, and too large to [fully] contain.” Hence, either make a deal for the right reasons or maintain the status quo. The third option is too inimical to even put into words.
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.