Challenges to the Iran nuclear deal

What are the likely consequences of the US decision to withdraw from the Iran nuclear deal, asks Mounir Zahran

The Iran nuclear deal, more properly the Joint Comprehensive Plan of Action (JCPOA), was signed in Lausanne on 14 July 2015 and came into force in January 2016.

I studied the agreement without having access to the records of the negotiations to comment on the various proposals that were put forward during them, whether from the Iranian delegation or from the P5 Group of the five permanent members of the UN Security Council plus Germany. As a scholar, I believe the JCPOA failed to cover the following dimensions:

– An engagement on the part of all the negotiators to include in the deal the establishment of a Weapons of Mass Destruction Free Zone in the Middle East, in accordance with the 1995 Nuclear Proliferation Treaty (NPT) Extension and Review Conference Resolution and the relevant Resolutions of the UN General Assembly;

– A commitment on the part of all the parties, which have not made one, to adhere (sign and/or ratify), the Comprehensive Test Ban Treaty (CTBT);

– A pledge to adhere to the International Atomic Energy Agency (IAEA) Additional Protocol to formally enable the agency’s inspectors to carry out intrusive inspections of all the nuclear facilities of the country concerned;

– The means of delivery of nuclear and other Weapons of Mass Destruction, particularly missiles.

After the conclusion of the JCPOA, many believed that the mistrust between Iran, the IAEA and the Western countries was over. However, US President Donald Trump declared the US’s withdrawal from the deal in May 2018. In spite of the above observations, I approve of the role played by the IAEA in the follow-up and inspection of the Iranian nuclear sites and the cooperation shown by the Iranian side with the agency.

IAEA reports have indicated that the JCPOA is being observed by the Iranian government. However, this did not affect Trump’s decision to withdraw from it, though the other parties to the JCPOA have resisted the US pressure on them and refused to follow suit in what will be a crucial test in US-transatlantic relations.

The US and other world powers curbed Iran’s nuclear programme in return for sanctions relief and the licensing of military and other spending by Iran. When Trump pulled America out of the deal, he launched a campaign of economic pressure on US allies to deny the Iranian regime “the funds it needs to advance its national development agenda”.

Iranian President Hassan Rouhani did not meet Trump in New York on the margins of the UN 73rd General Assembly meetings in September 2018, and he will have hoped to achieve a victory over America in the crisis since Iran’s hardliners opposed the nuclear deal and see no room for compromise with America.

Trump then ordered the reinstatement of sanctions on the purchase of Iran’s debt and launched a campaign to stop foreign companies from doing business with Iran. After almost two years of negotiating the nuclear deal, the Europeans have vowed to resist US pressure and to evade its penalties.

Several of Europe’s largest companies, including Danish shipping firm Maersk, French energy giant Total and German conglomerate Siemens, have stepped back from Iran to avoid losing access to lucrative US markets, however. The next wave of US sanctions, due on 5 November, will target Iran’s port operators, insurance and reinsurance businesses and foreign purchases of Iranian oil.

The impact of the sanctions on Iran has been negative. Current forecasts estimate its economy will grow by 1.8 per cent in 2018 and its currency has hit a series of record lows.

The US will impose new sanctions against Iran aimed at its oil industry, and as a result Japan, South Korea, Sri Lanka and some European countries will likely slash oil imports from Iran. The US might offer cheap oil from its own reserves to induce some oil-importing countries to follow suit. Though European governments continue to uphold the nuclear deal, a French state-owned bank has dropped plans to finance exports to Iran, while the French government has restricted diplomatic travel to Iran.

On the other hand, Iran has sought support from Russia and China. Yet, Russia has largely filled the gap left by Iran in the oil market, and China is focusing on its current trade war with the US.

It should be noted that Iran draws nearly 80 per cent of its tax revenues from oil exports, and that these have dropped by 35 per cent since April in anticipation of November’s sanctions. The enforcement of the November oil sanctions will add more losses to Iran.

European governments are keen to protect their economies and companies from the negative effects of the US sanctions. The British, French and German governments thus agreed with Russia and China on 25 September to set up a new payments system that would allow their oil companies and other businesses to continue trading with Iran. Europe is seeking to alter transatlantic relations in order to ensure that it is “a sovereign continent” that has totally independent financial instruments.

As a result, the damage to US-European relations is expected to get worse. And European countries now face greater pressure than ever before to loosen the economic and security ties that bind them to the US.

Finally, the withdrawal of the US from the JCPOA is not the first time the US administration has withdrawn from an international instrument. Other international agreements and/or commitments have suffered the same fate, such as the North American Free Trade Agreement (NAFTA), the Trans-Pacific Partnership Agreement (TPPA) and the Paris Agreement on Climate Change. This trend, if sustained, throws doubt on future US international commitments.

The writer is the former head of the Egyptian Delegation to the Conference on Disarmament and 1996 chair of the Working Group on Legal and Institutional matters of the CTBT negotiations.

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