Last week President Hassan Rouhani announced that his country would lower its commitments under the nuclear deal, or the Joint Comprehensive Plan of Action (JCPOA), signed with world powers in July 2015.
After President Donald J. Trump decided that the United States would withdraw from the nuclear deal last May, Iran has been placed under tight sanctions.
Sanctions have made doing business with Iran harder. Iran says that the EU has not abided by its JCPOA commitments. The EU has delayed operationalizing INSTEX, a banking mechanism set up by a German banker that will allow trade and financial transactions with Iran to take place despite the US-led sanctions. INSTEX has a local office in Tehran which remains unused.
Iran says it will halt its obligations under the JCPOA within a two-month period. It has given the EU the same time to resume trading with Iran.
According to Rouhani, Iran would end the export of extra enriched uranium and heavy water produced locally if the EU does not take action. The JCPOA imposes a ceiling on Iran that allows it to enrich 300kg of low-grade uranium and to produce 130 tons of heavy water. If Iran produces more enriched uranium and heavy water, and its excess production is not exported, it would constitute a violation of the JCPOA. But Iran can avoid this prospect by quickly halting or slowing down its production levels.
Under articles 26 and 36 of the JCPOA, Iran can also consider the nuclear deal violated in whole or in part if other parties to the deal do not abide by its terms, or if they reinstate nuclear-related sanctions against Iran though it meets the production restrictions laid out in the JCPOA. According to the IAEA’s 14 reports issued in the past 1,208 days outlining Iran’s nuclear activities, Tehran has observed all restrictions, and when it has occasionally produced a modest excess of just 100kg of heavy water, it has immediately restored lower production levels.
The United States has withdrawn sanctions exemptions to restrict Russian-Iranian nuclear cooperation, though it has extended exemptions that would let Moscow and Beijing work with Iran on its heavy water production, and to allow the transfer of excess Iranian heavy water to Oman, as well as the exchange of excess enriched uranium for yellow cake, a uranium concentrate powder to process ores.
But Iran says that if its international partners refuse to resume buying Iranian oil in the next two months, as a result of the US decision to withdraw sanctions exemptions that allowed the export of its oil, Tehran will take additional steps to lower its commitments under the JCPOA. Iran could decide to increase uranium enrichment from the current permissible grade level of 3.67 percent to 20 percent required to run the Tehran nuclear reactor that produces nuclear medicines. Tehran has also threatened to halt the Chinese-led effort to redesign its Arak heavy water nuclear reactor, unless within the 60-day window a solution to resolve the sanctions crisis is found with the remaining signatories to the JCPOA.
The EU is still assessing its response to Iranian expectations that its trade partners should fix the crisis in the oil markets and the financial issues with Iran caused by the US sanctions regime. Recent attacks on two Saudi oil tankers in the Gulf waters and on Saudi Arabia’s major oil pipeline near Riyadh, blamed on Iran’s proxies, have not only raised oil prices, but have also served as a strong signal of Iran’s desire to push forward with its demands.
The EU foreign policy Chief Federica Mogherini says that Europe is prepared to commit to INSTEX, and hopes that India and China can save the nuclear deal. Russia has already said that it has the mechanisms in place to cope with US pressures, as it has long had to deal with the consequences of US sanctions in one way or another since 2012. China continues to buy Iranian oil.
The details of the content of Rouhani’s letter to the JCPOA member parties will remain confidential under the terms of the agreement but Iran’s President has outlined the political framework under which his country would move forward with the nuclear deal. Rouhani clarified that his ultimatum will be enforced only if the remaining signatories don’t make good on their promises to shield Iran’s oil and banking sectors from US sanctions.
Iran will not abandon the nuclear deal, but according to Rouhani, it has shown enough restraint despite the slow progress made by the other parties to the agreement to implement their commitments towards Iran. The Iranian Foreign Minister Javad Zarif has stressed that even so, Iran will continue to work within and not outside the nuclear agreement framework.
Iran could also be looking towards the East to keep the nuclear deal alive. On his recent Asian tour, Zarif traveled to Russia, India, Turkmenistan and Japan, stressing that he was anxious to exchange views with Iran’s key partners as the United States escalates tensions in the region.
The US withdrawal from the nuclear deal and the ending of exemptions to the US-led sanctions regime against Iran may have disturbed Iran’s political calculations as President Trump had predicted. But it appears that the Iranian decision to lower its commitments to the nuclear deal in response to US pressures, along with the recent possible Iranian-led attacks on oil tankers in the Gulf and pipelines in Saudi Arabia, are intended to shift US calculations. What the US response will be and how Iran will react, is now an open can of worms.
