April 11

The Potential Implications of Iran’s Nuclear Compliance



The P5+1 (Britain, China, France, Germany, Russia and the United States) talks over Iran’s nuclear program have continued since 2003, and despite significant disagreements over certain issues, it appears that both sides are beginning to come to an agreement. While many remain skeptical of Iran complying with any accord which may be reached, Iran’s actions as of late have indicated that a deal may be reached by the July 20 target date.

On November 24, 2013, Iran reached a six month interim agreement with the P5+1 in which, according to a Congressional Research Service report, Interim Agreement on Iran’s Nuclear Program (2013), Iran agrees to:

• freeze, in effect, its production of enriched uranium containing up to 5%
uranium-235 during this period by converting the material to a uranium
compound unsuitable for further enrichment;

• refrain from producing enriched uranium hexafluoride containing 20% uranium-
235—the form of enriched uranium in Iran’s stockpile that has caused the most
concern. Iran has also agreed to dilute this stockpile to low enriched uranium
hexafluoride containing no more than 5% uranium-235 or convert it to a uranium
compound unsuitable for further enrichment;

• halt key elements of its heavy-water reactor and uranium enrichment facilities;

• provide the International Atomic Energy Agency (IAEA) with additional
information about its nuclear program, as well as access to some nuclear-related
facilities which are not covered by Iran’s IAEA safeguards agreement.

Iran’s acceptance of these conditions signaled a monumental change in Iran’s nuclear policy. During Mahmoud Ahmadinejad’s presidency, Iran showed little desire to compromise with the west on its uranium enrichment activities. In an April, 9, 2013 speech, in which Ahmadinejad informed the world that Iran was expanding its uranium enrichment activities he defiantly stated “Iran has already become a nuclear country and no one is capable of stealing this title”. However, under the stewardship of Hassan Rouhanni , Iran appears to have moderated its stance on this issue. Sine coming into office, Rouhani has made it very clear that he wishes to reach an agreement with the west over Iran’s nuclear program. In a February 2014 speech, Rouhanni stated “Iran is ready to enter negotiations with the P5+1 to reach a comprehensive and final agreement,” and that “We are serious in this regard, as we were serious in the first step,” in regards to the current negotiations.

Iran’s newfound willingness to work with the P5+1 serves as a very good indicator that Iran may wish to shed its nefarious image of rogue state; a status which has prevented the country from living up to its full potential due to a host of economic sanctions. Should Iran comply with the P5+1 conditions, the group, according to the Interim Agreement on Iran’s Nuclear Program (2013), has agreed to refrain from imposing new sanctions and to:

• repatriate to Iran about $4.2 billion in oil sales proceeds that are locked up in
foreign accounts. Iran’s oil exports are to remain at their current level of about 1
million barrels per day—a 60% drop from 2011 levels of about 2.5 million
barrels per day;

• resume sales of petrochemicals and trading in gold and other precious metals,
and to resume transactions with foreign firms involved in Iran’s auto sector. The
estimated value of the revenue that will accrue to Iran from these sources during
the six months of the interim arrangement is $1.5 billion; and

• access about $400 million of its hard currency for tuition for Iranian students to
be paid directly to third country institutions, to buy spare parts for U.S.-made
civilian aircraft, and to facilitate humanitarian purchases of food and medicine.

Should Iran come to a full agreement with the P5+1 by July 20, these provisions will take effect and the negotiations will move on to a second phase. This phase will see the creation and implementation of a comprehensive agreement between Iran and the P5+1 (overseen by the International Atomic Energy Agency (IAEA), in which both sides define agreeable parameters for Iran’s nuclear program. Once this has been established, Iran will be subject to the same treatment and oversight as other Non-Proliferation Treaty (NPT) member states which do not possess nuclear weapons; meaning Iran may see all sanctions against it lifted should it comply. This would require a resolution which would modify the provisions of UNSC Resolution 1929 which target Iran with sanctions. This is not something the UNSC would take lightly and they would most likely need to see that Iran intends on complying with the comprehensive agreement before any such resolutions, which would result in the lifting of the majority of sanctions targeting Iran, would be considered.

The implementation of a comprehensive agreement between Iran and the P5+1 will have major geopolitical implications for the Middle East and the Levant. As sanctions targeting Iran are lifted, the ensuing boost to Iran’s economy will allow Iran to expand its influence throughout the region; something which will most likely make the Gulf states and Israel quite nervous. After all, the Gulf Cooperation Council (GCC) has, for quite some time, sought to counter Iran’s influence (evidenced most recently by the Gulf state’s support for the Syrian opposition). A more powerful Iran will be able to provide more support to Iraq, Syria, Lebanon and its proxy, Hezbollah; providing it with a strategic advantage in the region. This expansion of the Shia Crescent could also result in an alliance between Iran, Iraq, Lebanon and Syria in which the four countries will, as a unified group, seek to undermine the stability of the GCC states.

For Israel, this will be especially concerning as the instability of its Arab neighbors could result in a reduction of its own stability due to potential spillover. Should Arab spring like conditions continue to spread throughout the region, Islamist extremist elements (which appear to dominate these movements) could potentially take charge. For Israel, it is better the devil they know, as new Islamist regimes could herald in an age of increased hostility towards Israel. Also, should Iran develop a closer relationship with Syria (depending on if Bashar al-Assad remains in power), it will literally bring Israel’s longtime nemesis Iran, along with its proxy Hezbollah right to its front doorstep.

The GCC states, besides seeing the potential for Iran and its regional allies to undermine their stability, could lose out on oil revenue as well. As sanctions against Iran are lifted, the U.S., Europe and Asia could begin importing more oil from Iran and will certainly begin investing in Iran’s petrol sector. FDI in Iran’s refinement capabilities (currently 1,618,000 b/d), will increase its barrels per day (b/d) production, refinement and export potential and could result in Iran lowering global oil prices and exercising more control within OPEC. In a December 4 2013 OPEC meeting, Iran made its ambitions very clear when Iranian oil minister Bijan Namdar Zanganeh stated that “We will produce four million barrels a day even if the price drops to $20”. This statement was an indirect challenge to other OPEC members (especially Saudi Arabia) as it will certainly lead to production wars within the organization. This fact alone will ensure that the GCC continues trying to counter Iran’s growing influence. Should the bulk of sanctions targeting Iran be lifted, we may see increased hostility between Iran and the GCC; manifesting in the form of proxy wars in the Palestinian territories, or through political maneuvering within and/or the potential dissolution/transformation of OPEC.

For these reasons, should an agreement be reached between the P5+1 and Iran, the geopolitical consequences may have a profound influence on the future of both the Middle East and Levant due to the expansion of the Shia Crescent. While states within the region may fear this outcome, it is a likely possibility given Iran’s current behavior. Should Iran continue pursuing international recognition as a legitimate actor, and shed its pariah status, it will benefit tremendously. While Iran’s past behavior has proven unpredictable, Rouhanni, so far, appears quite rational. If this is the case, his decisions may serve as the catalyst which brings Iran into the modern world through integration with the global community.

Katzman, K., & Kerr, P. K. (2013). Interim Agreement on Iran’s Nuclear Program. Washington D.C: Congressional Research Service.