Backgrounder

What Is the Iran Nuclear Deal?

The United States’ withdrawal from the arms control agreement has heightened tensions and left the remaining signatories scrambling to keep the deal alive.
U.S. Secretary of State John Kerry and Iranian Foreign Minister Mohammad Javad Zarif meet in 2016.
U.S. Secretary of State John Kerry and Iranian Foreign Minister Mohammad Javad Zarif meet in 2016. Kevin Lamarque/Reuters
Summary
  • Signed in 2015 by Iran and several world powers, including the United States, the JCPOA placed significant restrictions on Iran’s nuclear program in exchange for sanctions relief.
  • President Trump withdrew the United States from the deal in 2018, claiming it failed to curtail Iran’s missile program and regional influence. Iran began ignoring limitations on its nuclear program a year later.
  • President-Elect Biden has pledged to return the United States to the JCPOA if Iran resumes compliance, but it is unclear whether Iran will agree to new negotiations.

Introduction

The Iran nuclear agreement, formally known as the Joint Comprehensive Plan of Action (JCPOA), is a landmark accord reached between Iran and several world powers, including the United States, in July 2015. Under its terms, Iran agreed to dismantle much of its nuclear program and open its facilities to more extensive international inspections in exchange for billions of dollars’ worth of sanctions relief.

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However, the deal has been in jeopardy since President Donald J. Trump withdrew the United States from it in 2018. In response to the U.S. departure, as well as to deadly attacks on prominent Iranians in 2020, including one by the United States, Iran has resumed some of its nuclear activities.

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The election of Joe Biden, who supports a U.S. return to the agreement, has spurred some expectations of renewed diplomacy.

Who are the participants?

The JCPOA, which went into effect in January 2016, imposes restrictions on Iran’s civilian nuclear enrichment program. At the heart of negotiations with Iran were the five permanent members of the UN Security Council (China, France, Russia, the United Kingdom, and the United States) and Germany—collectively known as the P5+1. The European Union also took part.

What were their goals?

The P5+1 wanted to unwind Iran’s nuclear program to the point that if Tehran decided to pursue a nuclear weapon, it would take at least one year, giving world powers time to respond. Heading into the JCPOA negotiations, U.S. intelligence officials estimated that, in the absence of an agreement, Iran could produce enough nuclear material for a weapon in a few months.

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Iran had previously agreed to forgo the development of nuclear weapons as a signatory to the Nuclear Nonproliferation Treaty, which has been in force since 1970. However, after the overthrow of the Pahlavi dynasty in 1979, Iranian leaders secretly pursued this technology. (In 2007, U.S. intelligence analysts concluded that Iran halted its work on nuclear weapons in 2003 but continued to acquire nuclear technology and expertise.) 

Prior to the JCPOA, the P5+1 had been negotiating with Iran for years, offering its government various incentives to halt uranium enrichment. After the 2013 election of President Hassan Rouhani, who was viewed as a reformer, the parties came to a preliminary agreement to guide negotiations for a comprehensive deal.   

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For its part, Iran sought the JCPOA for relief from international sanctions, which starved its economy [PDF] of more than $100 billion in revenues in 2012–2014 alone.

Does it prevent Iran from getting nuclear weapons?

Many experts say that if all parties adhered to their pledges, the deal almost certainly could have achieved that goal for longer than a decade. Many of the JCPOA’s restrictions on Iran’s nuclear program have expiration dates. For example, after ten years (from January 2016), centrifuge restrictions will be lifted, and after fifteen years, so too will limits on the amount of low-enriched uranium Iran can possess. The International Atomic Energy Agency (IAEA), the United Nations’ nuclear watchdog, is also set to lose access to Iran’s undeclared nuclear sites in 2030.

What did Iran agree to?

Nuclear restrictions. Iran agreed not to produce either the highly enriched uranium or the plutonium that could be used in a nuclear weapon. It also took steps to ensure that its Fordow, Natanz, and Arak facilities pursued only civilian work, including medical and industrial research.

The accord limits the numbers and types of centrifuges Iran can operate, the level of its enrichment, as well as the size of its stockpile of enriched uranium. (Mined uranium has less than 1 percent of the uranium-235 isotope used in fission reactions, and centrifuges increase that isotope’s concentration. Uranium enriched to 5 percent is used in nuclear power plants, and at 20 percent it can be used in research reactors or for medical purposes. High-enriched uranium, at some 90 percent, is used in nuclear weapons.)

Monitoring and verification. Iran agreed to eventually implement a protocol that would allow IAEA inspectors unfettered access to its nuclear facilities and potentially to undeclared sites. However, it has yet to fulfill this pledge. Inspections are intended to guard against the possibility that Iran could develop nuclear arms in secret, as it has allegedly attempted before. The IAEA issues quarterly reports to its board of governors and the UN Security Council on Iran’s implementation of its nuclear commitments.

A body known as the Joint Commission, which includes representatives of all the negotiating parties, monitors implementation of the agreement and resolves disputes that may arise. A majority vote by its members can gain IAEA inspectors access to suspicious, undeclared sites. The body also oversees the transfer of nuclear-related or dual-use materials.

What did the other signatories agree to?

Sanctions relief. The EU, United Nations, and United States all committed to lifting their nuclear-related sanctions on Iran. However, many other U.S. sanctions on Iran, some dating back to the 1979 hostage crisis, remained in effect. They cover matters such as Iran’s ballistic missile program, support for terrorist groups, and human rights abuses. Though the United States committed to lifting its sanctions on oil exports, it kept restrictions on financial transactions, which have deterred international trade with Iran.

Weapons embargo. The parties agreed to lift an existing UN ban [PDF] on Iran’s transfer of conventional weapons and ballistic missiles after five years if the IAEA certifies that Iran is only engaged in civilian nuclear activity.

How is the Iran deal enforced?

If any signatory suspects Iran is violating the deal, the UN Security Council may vote on whether to continue sanctions relief. This “snapback” mechanism remains in effect for ten years, after which the UN sanctions are set to be permanently removed.

In April 2020, the United States announced its intention to snap back sanctions. The other P5 members objected to the move, saying the United States could not unilaterally implement the mechanism because it left the nuclear deal in 2018.

What is the status of the deal?

The agreement got off to a fairly smooth start. The IAEA certified in early 2016 that Iran had met its preliminary pledges; and the United States, EU, and United Nations responded by repealing or suspending their sanctions. Most significantly, U.S. President Barack Obama’s administration dropped secondary sanctions on the oil sector, which allowed Iran to ramp up its oil exports to nearly the level it was prior to sanctions. The United States and many European nations also unfroze about $100 billion worth of frozen Iranian assets.

However, the deal has been near collapse since President Trump withdrew the United States from it in 2018 and reinstated devastating banking and oil sanctions. Trump said the agreement failed to address Iran’s ballistic missile program and its proxy warfare in the region, and he claimed that the sunset provisions would enable Iran to pursue nuclear weapons in the future.

Iran accused the United States of reneging on its commitments, and faulted Europe for submitting to U.S. unilateralism. In a bid to keep the agreement alive, France, Germany, and the United Kingdom launched a barter system, known as INSTEX, to facilitate transactions with Iran outside of the U.S. banking system. However, the system is only meant for food and medicine, which are already exempt from U.S. sanctions.

Following the U.S. withdrawal, several countries—U.S. allies among them—continued to import Iranian oil under waivers granted by the Trump administration, and Iran continued to abide by its commitments. But a year later, the United States ended the waivers with the aim of halting Iran’s oil exports completely.

What is Iran’s current nuclear activity?

In response to the other parties’ actions, which Tehran claimed amounted to breaches of the deal, Iran started exceeding agreed-upon limits to its stockpile of low-enriched uranium in 2019, and began enriching uranium to higher concentrations (though still far short of the purity required for weapons). It also began developing new centrifuges to accelerate uranium enrichment; resuming heavy water production at its Arak facility; and enriching uranium [PDF] at Fordow, which rendered the isotopes produced there unusable for medical purposes.

In 2020, Iran took more steps away from its nuclear pledges, following a series of attacks on its interests. In January, after the U.S. targeted killing of a top Iranian general, Qasem Soleimani, Iran announced that it would no longer limit its uranium enrichment. In October, it began constructing a centrifuge production center at Natanz to replace one that was destroyed months earlier in an attack it blamed on Israel. And in November, in response to the assassination of a prominent nuclear scientist, which it also attributed to Israel, Iran’s parliament passed a law that led to a substantial boost in enrichment at Fordow and that could eventually limit IAEA inspections.

So far, though, Iran has allowed IAEA inspections to continue. In August 2020, it agreed to provide the IAEA access to two suspected former nuclear sites, ending a monthslong standoff over the agency’s investigation into possible undeclared nuclear materials.

How has the deal affected Iran’s economy?

Prior to the JCPOA, Iran’s economy suffered years of recession, currency depreciation, and inflation, largely because of sanctions on its energy sector. With the sanctions lifted, inflation slowed, exchange rates stabilized, and exports—especially of oil, agricultural goods, and luxury items­—skyrocketed as Iran regained trading partners, particularly in the EU. After the JCPOA took effect, Iran began exporting more than 2.1 million barrels per day (approaching pre-2012 levels, when the oil sanctions were originally put in place). However, these improvements did not translate to a significant increase in the average Iranian household’s budget.

The end of sanctions waivers on oil exports and the restoration of U.S. sanctions in 2018 has once again cut deeply into a vital source of national revenue: oil and petroleum products account for 80 percent [PDF] of Iran’s exports. By mid-2020, oil exports had plummeted [PDF] to below three hundred thousand barrels per day. Additionally, in October of that year, the United States imposed sanctions on eighteen major Iranian banks, causing the Iranian rial to fall further against the U.S. dollar.

Meanwhile, the wide range of U.S. sanctions unrelated to the nuclear program have added to the damage. Multinational firms fear being punished by the United States for transacting with sanctioned Iranian entities associated with, for example, the Islamic Revolutionary Guard Corps (IRGC) which holds sway over many industries. With sanctions deterring international trade, black markets have boomed, enriching the IRGC at the expense of the regular economy.

What is the outlook for the agreement?

The fate of the Iran nuclear deal remains uncertain, although some experts see Biden’s victory in the U.S. presidential election as an opportunity for renewed diplomacy. Biden has said the United States would rejoin the agreement if Iran returns to compliance, but that he also wants to negotiate a successor agreement to address Iran’s other activities, such as its missile program.

Iran has called for the United States to return to the deal but has said it is not willing to discuss expanding the accord further. Foreign Minister Mohammad Javad Zarif told CFR in September 2020 that Iran would “absolutely not” renegotiate and that the United States must compensate Iran for damages caused by sanctions.

However, the prospects for new negotiations could dim come June 2021, when Iran is set to elect a new president. Many analysts say a conservative, hard-line candidate will likely replace President Rouhani, whose popularity has plummeted with the unraveling of the nuclear deal.

Recommended Resources

The Congressional Research Service takes stock of Iran’s nuclear program [PDF].

The International Crisis Group visualizes Iran-related sanctions levied by the Trump administration.

The trade publication Bourse & Bazaar assesses INSTEX.

The European Council on Foreign Relations’ Ellie Geranmayeh lays out a roadmap for bringing the JCPOA parties back to compliance.

Will Merrow created the graphic for this article.

For media inquiries on this topic, please reach out to communications@cfr.org.
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