Thursday, April 16, 2015

The 2015 Iranian Nuclear Deal: Concerns and Expectations

Alvite Singh Ningthoujam, 
Research Associate, VIF

The much-awaited nuclear breakthrough has happened again when Iran and the P5+1 countries comprising of the United States (US), Russia, China, France, Germany and the United Kingdom (UK) signed the “parameters” for a Joint Comprehensive Plan of Action (JCPOA) on 2 April 2015. As it was with the 2013 Geneva interim accord, this deal is considered as a “good deal” or a “historic understanding” by the US President Barack Obama. Simultaneously, Israeli Prime Minister Benjamin Netanyahu continues to consider the deal as a threat to Israel’s survival and to the region. A few of the Arab countries welcomed the deal but with “caution”. India, which is the second largest importer of Iranian crude oil, is watching the developments anxiously.

The Deal:

After a prolonged gridlock, Iran and P5+1 countries have finally agreed on some conditions, which would halt the former’s ambitions to acquire nuclear military capabilities. This particular deal has fructified only after Iran has consented to limit its nuclear capabilities in return for lifting of financial sanctions which were crippling its economy. That said easing of sanctions would come only if Iran remains committed to the framework agreed upon.

According to the parameters of the JCPOA, Iran agreed to scale down nearly two-thirds of its installed centrifuges. Out of 19,000 centrifuges installed, Iran would restrict to 6,104 under the deal, and only 5,060 would be enriching Uranium for 10 years. It should also be noted that these 6,104 centrifuges will be IR-1s, or Iran’s first-generation centrifuges. On the enrichment, Iran would lower its stockpile of approximately 10,000 kilogram (kg) of low-enriched Uranium (LEU) to only 300 kg, or not to exceed enrichment beyond 3.67 percent. Another important parameter is the agreement of Iran to stop enriching Uranium at its Fordow facility for 15 years, and this facility would be converted into research centres for nuclear, physics and technology, etc. However, research and development related with Uranium enrichment in Fordow will no longer be conducted by Iran. The level of Uranium enrichment has always been a major point of contention between Iran and the Western countries involved in the negotiation process. Moreover, owing to the geographical location of the Fordow facility, which is deep beneath the ground and heavily fortified this particular parameter is a crucial one.

Another pivotal parameter is that Iran will remove the 1,000 IR-2M centrifuges which are currently being installed at Natanz facility, and these would be monitored by International Atomic Energy Agency (IAEA) for ten years. Along with this, the Islamic Republic will not use its IR-2, IR-4, IR-5, IR-6 and IR-8 models. Under the agreement, the IAEA will have constant monitoring on the nuclear activities undertaken by Iran. On reactors and reprocessing front, Iran and the P5+1 have agreed to redesign and rebuild the heavy water research reactor situated in Arak. This reactor, however, will assist in peaceful nuclear research and in the production of radioisotope but it will not produce any weapons grade plutonium. Further, all the spent fuel from this reactor will be shipped out of the country, and no additional heavy water reactors will be built for 15 years.

The above mentioned are a few of the parameters agreed by both the negotiating partners. That Iran entered into negotiations on issues such as reduction of stockpiles; reduction of levels of Uranium enrichment; constant monitoring of its nuclear facilities; is significant as its officials had vehemently opposed to any of these earlier. If Iran fulfils or abides by its commitments, it will receive the much-needed relief, that is, the lifting of US and European Union (EU) nuclear-related sanctions. This requires a thorough verification by the IAEA. These sanctions, however, will be restored if Tehran does not adhere to the 2-April parameters agreed in Lausanne. Nevertheless, those US sanctions on Iran on issues related to terrorism, abuses of human rights, and ballistic missiles will continue to remain in place.

The unveiling of the nuclear agreement framework ushered in a significant ray of hope for the Iranians, who have been surviving under a deteriorating economy for the last several years. It was certainly a big relief for the common Iranians; not only they took to the streets in different cities and they expressed their joy through social media tools such as Twitter, right after the announcement of the deal. The Iranian society, for all these years, has gradually learned to survive under tight economic sanctions, high-level inflation, and rising unemployment rate. As a result, rejoicing by the people from different quarters is justified. The efforts of the Foreign Minister Javad Zarif and his negotiating team were acknowledged by many in the country. Meanwhile, Iranian hardliners or conservatives criticised the deal as they considered it to be “a bargain for the West and a disaster for Iran.” It should also be recalled that Iranian President Hassan Rouhani, who came to power in 2013, was severely criticised for his efforts to normalise relations with the outside world, and the negotiation with the US-led Western countries on nuclear issues was particularly targeted. But the indirect backing from Iran’s Supreme Leader Ayatollah Ali Khamenei helped reach the deal. The leader was believed to have lent his crucial support with a motive to end Iranian isolation in the international community, and to revive its economy.

Reactions from Israel and the GCC Countries

The harshest reactions, as expected, came from Iran’s arch-rival, Israel. Netanyahu, who considered the 2013 deal a “historic mistake”, reiterated his firm opposition to any sort of agreement between Iran and the West. Calling it a “bad deal” and a threat to Israel’s existence, he is now lobbying for support to “kill” this deal. Prior to the agreement, Netanytahu tweeted that, “Any deal must significantly roll back Iran’s nuclear capabilities and stop its terrorism and aggression.” Acknowledging Israel’s concerns, Obama called up Netanyahu and briefed the latter on the JCPOA, and he “emphasized that the United States remains steadfast in our commitment to the security of Israel.”But this did not budge the Israeli leader who still subscribes to the Iranian threat of “annihilating Israel”. Israel’s sense of insecurity has been heightened as the commander of the Basij militia of Iran’s Revolutionary Guards said that “erasing Israel off the map” is “non-negotiable”, just a couple of days before 2 April. Under such circumstances, the Jewish state would not take any agreement on Iranian nuclear programme lightly. The political spectrum in Israel, including Netanyahu’s opposition, raised their concerns about this agreement. As a result, Israel’s security cabinet unanimously opposed the deal. It was during this meeting the Israeli PM talked about “a clear and unambiguous recognition by Tehran of Israel's right to exist”, a demand which the US State Department and Obama bluntly rejected, considering it to be “fundamental misjudgement”.

The vehement opposition to the deal is described by Netanyahu: "This deal would legitimize Iran's nuclear program, bolster Iran's economy & increase Iran's aggression and terror. The alternative is standing firm and increasing the pressure on Iran until a better deal is achieved."

Obama’s repeated assurance of making Israel maintain a military advantage over Iran with its support is unlikely to alter the latter’s mood. As it is, the relationship between the two countries is undergoing a rough phase which got deepened with Netanyahu’s election campaign rhetoric. For the moment, it cannot be forecasted as to how the US would convince Israel about the ‘positive’ side of this deal, but from Israel’s side, it is very probable that it will lobby the US Congressmen and senators (mostly the Republicans) to pass legislation to thwart the comprehensive, or pressurise Washington D.C. to make “improvements” in the terms and conditions of the deal. Either of these two possibilities, however, seems to be a difficult task, if not impossible. Moreover, given the broad international support for this kind of agreement, it appears unlikely that Israel can prevent the final deal which will be signed on 30 June. And this will depend on how successfully Iran and the P5+1 nations will agree on the framework. This in itself is a humongous task before them.

With regard to the Gulf Cooperation Council (GCC) countries, ‘Cautious’ is the word that is best suited to describe their feelings. Although a few Arab countries welcomed the deal publicly, they seemed to have mixed feelings about the framework agreement. While the deal is expected to lead to more security and stability in the region as predicted by experts, many of the GCC countries have always viewed Iran as a rival that tried to expand its influence in war-torn Iraq, Yemen and Syria. A source indicated that the deal will ensure “more space to arm and finance proxies that Riyadh opposes in countries across the region”. As a result, Saudi Arabia, in particular, despite its public welcoming of the deal, remained extremely concerned about the wider implications of the framework. Riyadh viewed the Iranian nuclear programme with dismay, and it has already hinted at seeking its own atomic weapons, preferably from Pakistan, were Tehran to acquire nuclear weapons. There is a fear that a nuclear or an armament race in this region might be ignited as a result of the agreement, while renowned security expert Bruce Riedel said, “it [deal] will significantly reduce the risk of further proliferation in the Middle East.” Moreover, with its regional ambitions, this kingdom would view the American-Iranian rapprochement with fear as the deal, for them, will undermine their security and influence in the region. Similarly, the United Arab Emirates which has long-running dispute with Iran over three islands in the Persian Gulf has its own concerns even though its businessmen hope to benefit from the agreement as they could expand trade volumes with Iran. Likewise, Kuwait, Bahrain and Iraq continue to remain uneasy about the deal. The only country which has expressed warmest reception is Oman, which is believed to have contributed towards efforts leading to the breakthrough. In 2012, Oman brokered secret nuclear talks between Iran and the US.

Given the deep-rooted suspicion about Iran, many Arab leaders doubt the ability of the Iranians to stick to the agreements. An analyst on the region mentioned that, “Saudi Arabia and the United Arab Emirates, the Gulf’s hawks, fear Iran’s international rehabilitation through the nuclear agreement will ease its political and economic isolation and embolden its designs in the Arab world”. These uncertainties reflect the cautious approach of the mentioned GCC countries towards the deal. It is yet to be seen how Obama’s upcoming conference with the GCC leaders at Camp David can actually assuage their concerns. The main agenda is to discuss “their security and the Iran diplomacy”. The US President, however, expressed that “The biggest threats that they face may not be coming from Iran invading. It’s going to be from dissatisfaction inside their own countries”. And, the general perception that this deal would bring calm or usher in a major shift in West Asia, which is engulfed by conflict, appears to be a tall claim, considering the entrenched sectarianism and political discord that exist between different sects in the region.

India’s Expectations:

India, too, “hailed the agreement” as a “significant step” towards a comprehensive settlement of the Iranian nuclear dispute. According to a Ministry of External Affairs (MEA) statement, “The announcement yesterday underlines the success of diplomacy and dialogue, which India has always supported and which we hope would lead to a comprehensive agreement by June 30”. If the deal is finalised without further obstacles, there are certain benefits which India can enjoy. These are mainly in areas pertaining to economic transactions and energy-trade, which at the moment, have remained hampered due to the sanctions. For instance, after the 2013 interim agreement, India imported from Iran 276,800 barrels per day (bpd) of oil and condensate in 2014, as compared to that of 195,600 bpd in 2013. But the unresolved payment imbroglio for the import of Iranian crude oil; inability to streamline trade between the two countries and various other issues have downgraded the bilateral ties visibly. As a result, the Lausanne-deal is being looked at with lots of expectations in India.

Since the last few years, India has been facing the adverse impact of the economic sanctions on Iran. Severity of the US pressure was such that it had to halt importing Iranian oil in March 2015, the first time in at least a decade. Moreover, New Delhi has been unable to pay Iran approximately US$8.8 billion for imports of oil. Due to this, the Indo-Iranian bilateral trade, which is currently estimated at US$15 billion, has been adversely affected. These issues are expected to be streamlined if the negotiating partners reach a final agreement two months later. As an immediate impact, it has been reported that Essar Oil and Mangalore Refinery and Petrochemicals Ltd have planned to import oil from Iran sometime from this month (April). Despite this, it would be unrealistic to expect a quantum rise in Iranian oil imports as the earlier dues need to be cleared, that too, by having a proper payment mechanism in place.

An added optimism out of this deal is that it will provide an incentive for India and Iran to play a proactive role in the reconstruction process of Afghanistan. Therefore, the agreement happens at a crucial juncture when the US is aiming to complete the withdrawal of its troops by the end of 2016. The newly-elected Bharatiya Janata Party (BJP) government, in late 2014, approved India’s participation in the development of Chabahar port in Iran by sanctioning approximately US$85 million. This amount will be utilised for the construction of two berths that would include container terminal and a multi-purpose cargo terminal. The importance of this port lies in the fact that it would offer an alternative route to the landlocked Afghanistan and resource rich countries in Central Asia without actually depending on Pakistan.

Along with the above expectations, also comes a little bit of concern. Indians, who are heralding the nuclear deal, should also be mindful of the fact that there are high chances of Indian companies facing a stiff competition inside the Iranian markets, should the final agreement be reached. The European and American companies will make unrelenting efforts to tap the Iranian economy. It is now in the hands of the Indian policy planners to reap the benefits of this thawing Iran-West relation. Tellingly, these projections will be actualised only if the final deal is clinched; as a result, India needs to have clear visions about its course of actions with Iran, should there be any negative fallout on nuclear talks. It is quite evident that the opening of Iran to the West and removal of sanctions presents India with an opportunity to strengthen its relationship with Iran in many ways.

As the Lausanne breakthrough provides only a framework, a major task is still left for the negotiators to convert it into the final nuclear deal. This in itself is going to be an important challenge. The potential for sabotaging deal is ever present as the Republicans in the US Congress and Israeli leaderships are dead against the deal with Iran. As a result, there is no room for complacency. It remains to be seen whether Obama’s foreign policy skills and leadership acumen can achieve the goals of the deal.

Published Date: 16th April 2015, Image Source: http://www.financialexpress.com

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