How Sanctions Decision Could Jeopardize the Iran Agreement

President Trump speaks about the Iran nuclear agreement at the White House in October 2017. Kevin Lamarque/Reuters

Iran could restart aspects of its nuclear program if President Trump declines to renew sanctions waivers this month, leaving major powers with few options for monitoring or restricting it.

May 4, 2018

President Trump speaks about the Iran nuclear agreement at the White House in October 2017. Kevin Lamarque/Reuters
Interview
To help readers better understand the nuances of foreign policy, CFR staff writers and Consulting Editor Bernard Gwertzman conduct in-depth interviews with a wide range of international experts, as well as newsmakers.

The agreement imposing restrictions and allowing international scrutiny of Iran’s nuclear program faces a critical test on May 12, when waivers that keep U.S. sanctions lifted are due for renewal. If President Donald J. Trump does decline to issue the waivers, the deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), will collapse, “possibly within weeks or months,” says CFR’s Philip H. Gordon, who helped negotiate the agreement in the Obama White House. Iran could then resume aspects of its nuclear program, as it was doing prior to 2013, he says in a written interview, presenting the United States with a dilemma: “allow the program to continue to expand in the absence of international monitoring or use military force to stop it.”

If President Trump declines to renew the sanctions waivers, or withdraws from the nuclear deal altogether, will that end the JCPOA?

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Almost certainly yes, though the timing will depend on what Iran and other countries do afterward. If U.S. sanctions come back into effect, Iran could accuse Washington of nonperformance and refer the matter to the JCPOA’s Joint Commission, setting off a potentially protracted period during which the deal would remain in effect. Since the lifting of U.S. sanctions is such a core part of the deal, however, at the end of that process Iran would likely insist that the United States is in noncompliance and that Iran is therefore no longer obliged to abide by its provisions. Iran and other countries could continue to implement the deal even if the United States is out, but it’s hard to imagine that scenario lasting for long, as it would effectively deny Iran the main benefits it was promised in exchange for freezing its nuclear program.

What are the other countries that are party to the deal likely to do?

This could lead to major tensions with U.S. trading partners like China, Japan, India, and the European Union.

If President Trump does not issue the sanctions waivers by May 12, then the provisions of the 2012 National Defense Authorization Act (NDAA) will come back into play, meaning that any firm or financial institution doing business with Iran’s Central Bank—and therefore anyone buying Iranian oil—would immediately be subject to U.S. secondary sanctions and therefore cut off from the U.S. banking system. This would raise numerous questions, like whether Washington would implement sanctions right away or allow for a wind-down period, and whether it would waive sanctions on countries that had “significantly reduced” their purchases of Iranian oil, as authorized in the NDAA. Since all the other parties to the JCPOA believe the deal is working, this could lead to major tensions with U.S. trading partners like China, Japan, India, and the European Union if the United States hits them with sanctions.

Trump has talked about fixing what he calls the deal’s “disastrous flaws.” What outcome would you expect from such efforts?

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The Trump administration has identified at least four aspects it would like to see included or improved—ballistic missiles, Iran’s regional behavior, the inspections regime, and the sunset clauses, which allow certain provisions to expire in ten to twenty years—and has discussed doing so with European allies. There has been some progress on the first three, but addressing sunsets is much harder, as permitting Iran to eventually expand its enrichment program, albeit under permanent monitoring, is a core component of the deal. The best the U.S. can hope for is an agreement to pursue some sort of follow-on arrangement that might prohibit Iran from expanding its enrichment program even years down the road. There is no chance that Russia and China, let alone Iran, will agree to new provisions the United States and Europe may come up with, so the deal in that sense will not be fixed. The risk is that Trump will effectively tear up the deal on May 12 without any realistic prospects for putting a new or better deal in place.

Do Israeli Prime Minister Benjamin Netanyahu’s allegations concerning Iran’s past nuclear program offer new insights into Iran’s intent or compliance?

There was nothing really new in the Israeli presentation, and while it was apparently designed to strengthen the case for leaving the deal, you could argue it does the opposite. Both the International Atomic Energy Agency and the U.S. intelligence community have long publicly reported that Iran had a nuclear weapons program prior to 2003, and the IAEA has published detailed reports highly consistent with the Israeli allegations. I don’t know anyone involved with the nuclear deal who doubted the existence of this past program or that the Iranians were lying about it. The fact that they have previously sought nuclear weapons in secret and could do so again is the reason why the United States and others insisted on a verifiable nuclear deal in the first place.    

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Would Iran be likely to restart its nuclear program, as officials have threatened?

I don’t think Iran will rush to expand its program or do any weaponization work, which could unite the world against them at a time when most would be blaming the United States for killing the deal. But Iran would likely restart some of the aspects of the nuclear program that had been frozen—for example, accelerating research and development on advanced centrifuges, expanding its stockpile of low-enriched uranium, or even resuming enrichment to more dangerous 20 percent levels—and it could end the enhanced verification program provided for in the JCPOA. [The JCPOA limits Iran to enriching uranium to 3.67 percent, far from weapons grade.] Then the question would become what the United States and others would do in response, as Iran’s capacity to build a bomb gradually grows in the absence of international monitoring.

What do you make of Foreign Minister Mohammad Javad Zarif’s charge that the Trump administration is already noncompliant with the agreement by interfering with Iran’s economic development?

Zarif is not exactly an honest broker, but he has a point. The JCPOA requires the United States not only lift secondary sanctions but also avoid interfering with Iran’s ability to fully benefit from sanctions relief. You could argue that efforts by various Trump administration officials to persuade other countries not to do business with Iran and the constant threats to reimpose secondary sanctions are inconsistent with this commitment, as is the U.S. refusal to issue licenses for commercial-aircraft purchases and spare parts. These are all, however, minor issues compared to what a game-changing step not renewing sanctions waivers would be.

How do you expect the May 12 decision to play out among competing Iranian elites?

We sometimes forget there are critics of the JCPOA in Iran. These include Iranians who believe that Iran has not seen the promised economic benefits of the deal as well as institutional factions, like the Islamic Revolutionary Guards Corps and hard-liners in parliament, who have a vested interest in strategic tensions with the West. The collapse of the JCPOA would strengthen the case of those who benefit from Iran being closed off from the world, and it would undermine those who want to see it more integrated and know the only way to do that is through assurances about its nuclear program.

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Do you expect a broader U.S.-led pressure campaign against Iran, and would that be likely to sway its regional policies?

Economic sanctions alone are not likely to significantly change Iran’s regional behavior.

The Trump administration has talked a lot about containing Iran in the region, but so far this has consisted more of rhetoric than of action. President Trump, at least, seems to want to end the already small U.S. military presence in Syria, and it’s hard to see how the United States can realistically contain Iran if it is not willing to bear the costs and risks of doing so. Economic sanctions alone are not likely to significantly change Iran’s regional behavior, as interfering in neighboring states, like Syria and Yemen, which Iran was doing since well before the JCPOA was agreed, is not particularly expensive for Tehran.

Will Trump’s moves on the Iran deal have a bearing on North Korea’s approach to the pending summit over its nuclear program?

Proponents of tearing up the deal seem to think it could help, by showing Kim Jong-un that the United States under President Trump is not afraid to drive a hard bargain. I fear it could have a more negative effect, by sending the North Koreans a message that the United States does not necessarily abide by its international commitments or by suggesting that even the Iran deal is “not good enough.” It is far more restrictive than anything we could imagine getting from Pyongyang, which already has nuclear weapons. 

So what’s the bottom line?

There is a lot of uncertainty, but what seems clear is that if President Trump doesn’t issue the waivers by May 12 the JCPOA will erode, possibly within weeks or months. Iran will then be free to expand its nuclear program as it was doing until 2013, and it may prove more difficult to assemble an international sanctions coalition now than it was then, since the United States will be blamed for killing the agreement. Before long, the United States could face the dilemma the JCPOA was designed to avoid: allow the program to continue to expand in the absence of international monitoring or use military force to stop it.

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