On May 8, 2018, U.S. President Donald Trump announced his decision to end the extension of waivers on nuclear sanctions against Iran, in effect, withdrawing from the Joint Comprehensive Plan of Action (JCPOA), almost a week before the deadline. Under the Iran Nuclear Agreement Review Act, passed by the U.S. Congress in 2015, the sitting president must suspend various sanctions every 120 to 180 days to allow the nuclear deal to continue. By not extending one of the waivers which was due to expire on May 12, Trump unilaterally withdraws from the deal since other parties, the five permanent members of the UN Security Council plus Germany (P5+1), will not follow the U.S. suit unless the Iranian side commits a clear violation of the agreement provisions. Nevertheless, this step increases the risk of the whole agreement being derailed since the re-imposition of U.S. sanctions eliminates key incentives for Iran to stay in. The agreement that was reached almost three years ago has significantly reduced a number of concerns of the international community about Tehran’s nuclear intentions while its breakdown has instead created many uncertainties.
The JCPOA, signed in Vienna in July 2015, effectively curbed Iran’s capability to go nuclear, at least until 2025, but has been under the constant threat since Donald Trump came to office in 2017. During his election campaign, Trump heavily criticized the nuclear accord and promised to renegotiate a “better deal” by putting more pressure on and demanding more concessions from Tehran. When the sanction relief was extended last time on January 12, 2018, President Trump warned that he would not renew any subsequent waivers unless “the terrible flaws of the Iran nuclear deal” were fixed while also seeking support from the U.S. European allies to extract a better deal from Iran [Whitehouse, 2018]. In general, he expressed grievances over the following: the presence of the so called “sunset provisions” in the deal that will expire in 10 to 15 years; its failure to address the development of ballistic missiles by Tehran and Iran’s growing influence in the region, as well as the limitations on inspections of its military bases. Months following the January 12 announcement were marked by the diplomatic efforts of the European and other signatory nations to urge the United States to keep the JCPOA alive, with the German and French leaders, Angela Merkel and Emmanuel Macron, as well as British Foreign Secretary Boris Johnson, each separately visiting Washington days before a final decision by Trump was made. During these talks, the Europeans acknowledged their concerns shared with Washington related to Iran’s ballistic missile program and its regional ambitions, but called the White House to consider these issues as separate from the nuclear deal. Perhaps, they were trying to convey the idea that the nuclear agreement despite its imperfections was working and using again the same leverage of economic sanctions and international isolation that previously brought Iran to the negotiating table is unlikely to bear any fruit and, on the contrary, might be destructive. China and Russia have similarly expressed their support for the JCPOA with the reports suggesting that their representatives together with diplomats from Britain, Germany, Britain are planning to meet in Vienna in the nearest future to combine efforts in salvaging the deal.
Following Trump’s final announcement on May 8, Iranian Foreign Minister Javad Zarif declared that Iran would keep the agreement in place as long as the non-U.S. signatories could ensure full benefits of the deal for Iran. However, under the current circumstances saving the nuclear deal would be difficult. The re-imposition of nuclear sanctions against Tehran by the United States that will come into force by August 8, 2018, will target any country purchasing oil from Iran and financial institutions that have transactions with its banks. On May 16, the European Union (EU) leaders at their summit in Sofia discussed practical ways to keep Teheran’s oil and investment flowing. At present, the EU considers applying the 1996 Blocking Statute, the piece of legislation that bans its companies from complying with Washington-imposed sanctions and envisages compensations for affected firms doing business with Iran. Nevertheless, it is unlikely that this countermeasure is going to be effective in convincing the large European companies with major interests in the United States to continue doing business with Iran under the risk of being cut off from access to the U.S. market. Moreover, the U.S. sanctions are expected to reduce the production of the Iranian oil to 500,000 barrels per day as they would restrain purchases from Japan, South Korea and European nations [Nephew, 2018]. As a result, Tehran may start experiencing a recurrence of the pre-deal sanctions regime when its economy went from 6.6% of economic growth in 2010 to a 1.5% decrease in 2015 when the sanctions were in their full force. These possible implications may significantly reduce Iran’s incentives to remain committed to the JCPOA as one of the main motivations behind its accession to the agreement was breaking the international isolation and reviving its economy. Therefore, there is a fear that the renewed U.S. sanctions might induce the Iranian leadership to withdraw from the agreement. At present, moderate Iranian President Hassan Rouhani is under increased pressure from his domestic political rivals, including the Revolutionary Guard, who have been opposed to the deal since the beginning of the negotiation process with the world’s major powers.
A potential collapse of the accord that has helped to constrain Iran’s capability to go nuclear for at least next 15 years and greatly reduced the chances of a direct military confrontation between the United States and Iran might have grave consequences for an already delicate balance of power in the Middle East. On May 10, shortly after Trump’s abandonment of the deal, a direct military exchange between Israel and Iran took place in Syria that if escalated further may inflame the entire region. Moreover, it is expected that, if the nuclear accord breaks down, Teheran could relatively quickly resume the production of highly enriched uranium, the material used for building nuclear weapons [Cordesman, 2018]. On May 21, newly appointed Secretary of State Mike Pompeo presented the U.S. administration’s Iran strategy that envisages putting maximum pressure on Tehran unless it meets Washington’s 12 demands ranging from halting its missile and nuclear program to ending interventions in the Middle East affairs [U.S. Department of State, 2018]. Nevertheless, with the JCPOA derailed and Iranian hardliners gaining an upper hand in Tehran, there is no evidence that Washington’s new strategy of trying to get more with offering less is going to work. As a result, experts warn, the United States may be left with the choice of either letting Iran advance toward the capacity to build a nuclear bomb or going to war in an attempt to stop it [Z. Beauchamp, 2018].
White House. (2018). Statement by the President on the Iran Nuclear Deal. Retrieved from https://www.whitehouse.gov/briefings-statements/statement-president-iran-nuclear-deal/. Accessed on 14.05.2018.
Nephew, Richard. (2018). Trump and the End of the Iran Deal: Oil Market Implications. Center on Global Energy Policy. Retrieved from http://energypolicy.columbia.edu/sites/default/files/pictures/CGEPTrumpEndIranDealOilImplications218.pdf. Accessed on 16.05.2018.
U.S. Department of State. (2018). After the Deal: A New Iran Strategy. Retrieved from https://www.state.gov/secretary/remarks/2018/05/282301.htm . Accessed on 22.05.2018.
Cordesman, Anthony. (2018). Iran and the May 12th Deadline: Finding Winning Compromises. CSIS. Retrieved from https://www.csis.org/analysis/iran-and-may-12th-deadline-finding-winning-compromises . Accessed on 14.05.2018.
Beauchamp, Zack. (2018). Trump’s withdrawal from the Iran nuclear deal, explained. Vox.com. Retrieved from https://www.vox.com/world/2018/5/8/17328520/iran-nuclear-deal-trump-withdraw . Accessed on 21.05.2018.
Note: The views expressed in this blog are the author’s own and do not necessarily reflect the Institute’s editorial policy.
Abulkhairkhan Zhunisbek is a research fellow at the Eurasian Institute of the International H.A Yassawi Kazakh-Turkish University. He graduated from Abylai Khan Kazakh University of International Relations and World Languages with a Bachelor in International Relations. He obtained his master’s degree in Diplomatic Studies at the University of Oxford through the Bolashak scholarship. His thesis “ Political Economy of Oil: the case of Kazakhstan” received distinction mark. Prior to joining the ERI, he worked for governmental and international organizations.