World powers scramble to salvage Iran nuclear deal days before country breaches stockpile limits

Analysis: Financial mechanism put together by the European states is not, by itself, going to be an adequate counter to American sanctions

Kim Sengupta
Diplomatic Editor
Thursday 27 June 2019 14:59
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Forty-eight hours of great significance is under way in the crisis over Iran’s nuclear programme.

Tehran is due to announce it will exceed the uranium enrichment agreed under the landmark 2015 agreement: and a mechanism to counter American sanctions is due to be unveiled when international powers meet in Vienna.

The Iranian move on uranium follows the campaign by the Trump administration to dismantle the nuclear deal with the imposition of sweeping new penalties and sustained pressure on European states to abandon it as well.

The move by the government of Hassan Rouhani also comes against a backdrop of escalating violent confrontation, with Washington blaming Tehran for attacks on oil tankers in the Gulf, and Iran shooting down an American drone.

It was revealed that the US had an operation under way to carry out military strikes on Iran after the drone shooting before it was stopped by Donald Trump.

Since then the US president has threatened to “obliterate” Iran’s security forces, words reminiscent of his “fire and fury” tweet on North Korea, if Tehran took military action against American assets.

Iran continues to insist that, despite the threats, it has no intention of acquiring a nuclear arsenal and that it’s pursuing the civil nuclear programme which it is permitted to do under the Joint Comprehensive Plan of Action (JCPOA).

Tehran also maintains that it is entitled to pull back on some of its commitment after the US unilaterally reneged on the agreement and the Trump administration has effectively launched an economic war. It points out that senior White House officials, such as John Bolton, the president’s national security adviser, have called for regime change in Iran.

Under the JCPOA, Iran is allowed to keep up to 300 kilograms of uranium enriched to 3.67 per cent purity, an amount which can be used for civilian nuclear energy, but nothing like enough to start to manufacture nuclear weapons. To do so it will need to triple the level for just one bomb.

Whether and when Tehran has breached the JCPOA uranium limit will be ascertained by the International Atomic Energy Agency (IAEA) in a few days’ time.

Its assessment, according to senior diplomatic sources, on Wednesday, was that Iran had around 202kg of low-enriched uranium, below the limit of 202.8kg. It is, however, producing at a rate of 1kg a day which means it will be on course to breach the limit by the weekend and not Thursday 27 June, as it had claimed.

This in itself is not a matter of surprise. Tehran had initially stated that it would go over the uranium limit by 7 July, changing it to 27 June, back to 7 July and then again to 27 June.

The changes in the dates can be viewed as negotiating brinkmanship, or more signs of divisions in the country between the various factions in its hierarchy – the government of Hassan Rouhani and the clergy and the Iranian Revolutionary Guards Corps (IRGC) and the reformists and reactionaries – attempting to control policy.

Delaying the enrichment extension means that it will not take place before Friday when the other signatories to the JCPOA – Britain, Germany, France, Russia and China – meet the Iranians in Vienna.

All five countries, as well as the IAEA, have repeatedly stressed that the agreement is working and Iran is standing by its commitment, which is also the view of the western intelligence services.

The meetings in Vienna have been taking place at regular intervals. But this one is of particular importance, coming as it does before draconian new American sanctions start in August designed to stop foreign companies from trading with Iran and crippling its main source of income, oil exports.

Russia and China have established bilateral deals with Tehran since the US sanctions began and France, Germany and Britain have set up a financial mechanism, Instex, to provide lines of credit to businesses that want to continue working with Iran.

Details of the system, which will be based in Paris with management provided by Germany and Britain heading the supervisory board, is due to be made public at the Vienna meeting.

The initial injection of money is expected to be in low millions. A number of companies from Europe, but as yet none from Britain, have expressed interest in using Instex with the focus mainly on providing humanitarian supplies to Iran.

The Iranian government has repeatedly complained about the delay in Instex, which was due to be set up in January, becoming operational and there have been warnings from Iranian officials, including President Rouhani, that Tehran may suspend other commitments to the nuclear deal if this continued. Failure to ensure that trade continues is, in itself, say the Iranians, a breach of the JCPOA.

Ali Shamkhani, the secretary of the Supreme National Security Council in Iran, accused the European states of “deceitful political attempts aimed at restricting the Iranian people’s obvious rights”.

There have, however, been extensive talks about Instex between the European states and Iran, including a meeting lasting three days in Tehran last month with the Iranian Foreign Ministry which is said to have ended amicably.

The Trump administration had reacted to the setting up of Instex by threatening retaliation.

Sigal Mandelkar, the Treasury Department’s undersecretary for terrorism and financial intelligence, said in a letter to Instex president Per Fischer: “I urge you to carefully consider the potential sanctions exposure of Instex.

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“Engaging in activities that run afoul of US sanctions can result in severe consequences, including a loss of access to the US financial system.”

Mike Pompeo, the US secretary of state, has claimed there was no need for Instex because the US allows for humanitarian and medical products to get into Iran without sanction.

“When transactions move beyond that, it doesn’t matter what vehicle’s out there, if the transaction is sanctionable, we will evaluate it, review it, and if appropriate, levy sanctions against those that were involved in that transaction. It’s very straightforward.”

Talks continue to be held between European and American officials about the mechanism and the US administration is expected to set out its position after Instex is unveiled.

There are also expectations that further sanctions may be imposed after details of Iran’s uranium enrichment becomes clearer. Steven Mnuchin, the US Treasury secretary, has said that Mr Trump wants Mohammad Javad Zarif, the foreign minister – a reformist, and one of the architects of the JCPOA – to be targeted by the end of the week.

The increase of uranium enrichment does not mean that Tehran is setting off to get the bomb. The financial mechanism put together by the European states is not, by itself, going to be an adequate counter to American sanctions.

But the next few days will reveal just what may be needed to salvage a historic agreement which significantly reduced the threat of nuclear proliferation and made the region and the world beyond a safer place.

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