On July 14, 2016 the EU3+3 and Iran signed the Joint Comprehensive Plan of Action (JCPOA), which imposed restrictions on Iran’s nuclear program in return for removal of nuclear-related economic sanctions against Iran. While enthusiastically received by many around the globe, the agreement was less well received by conservative hardliners, particularly in Iran and the United States. Congressional Republicans in a letter crafted by Senator Tom Cotton (R-Arkansas) warned Iran’s Supreme Leader that the U.S. was an unreliable negotiating partner stating “What…(the) constitutional provisions mean is that we will consider any agreement regarding your nuclear-weapons program that is not approved by the Congress as nothing more than an executive agreement between President Obama and Ayatollah Khamenei. The next president could revoke such an executive agreement with the stroke of a pen and future Congresses could modify the terms of the agreement at any time.” This played right into Ayatollah Khamenei’s view that the U.S. cannot be trusted, will always be hostile, and would never stop its efforts to overthrow the Iranian government.
The JCPOA is very specific concerning what is allowed and not allowed with respect to Iran’s nuclear program and the accompanying sanctions regimes. Under the agreement Iran is obligated to limit its enrichment capacity, reduce its stockpiles of enriched uranium and heavy water, redesign the Arak heavy water reactor and much more. In return, economic sanctions are to be lifted. The agreement states, “This JCPOA will produce the comprehensive lifting of all UN Security Council sanctions as well as multilateral and national sanctions related to Iran’s nuclear programme, including steps on access in areas of trade, technology, finance and energy.” Further, it states, “The E3/EU+3 will refrain from imposing discriminatory regulatory and procedural requirements in lieu of the sanctions and restrictive measures covered by this JCPOA.” While the UN has certified that Iran has meticulously lived up to its obligations, the U.S. has dragged its feet on removing sanctions, particularly the secondary sanctions that restrict Iran’s access to the international financial system.
Contrary to his approach to the opening of Cuba, in which he moved aggressively through executive action to change the political dynamic and get U.S. businesses involved, President Obama has been much more politically cautious with respect to changing the relationship with Iran. Specifically, his failure to begin to unwind the labyrinth of secondary financial sanctions has made international financial institutions leery of participating in or financing business transactions with Iran. The fact that many international transactions are denominated in USD and require so-called U-turn transactions in the U.S. to convert USD into local currency further hinders Iran’s access to its foreign funds and has reduced the economic benefits that Iran expected from the JCPOA. This has played into the hands of Iran’s hardline conservatives.
The situation is unlikely to change for the better after the U.S. presidential election. Of the remaining candidates, all except Bernie Sanders are much more hardline with respect to Iran. Hillary Clinton has said, “Iran is still violating UN Security Council resolutions with its ballistic missile program, which should be met with new sanctions designations and firm resolve.” Unsurprisingly, Ted Cruz has stated, “On my first day in office, I will rip to shreds this catastrophic deal.” While he makes many contradictory statements and one must take everything that Donald Trump says with a grain of salt, he has expressed that he understands that the JCPOA is a signed agreement, but “I’m really good at looking at a contract and finding things within a contract that, even if they’re bad, I would police that contract so tough that they don’t have a chance.” (Sic) Only Bernie Sanders has expressed complete support for JCPOA and has said, “I think what we’ve got to do is move as aggressively as we can to normalize relations with Iran.”
All this said, we need to remember that this is an international agreement and the EU, Russia and China are moving aggressively to live up to their obligations under the JCPOA and consummate business deals with Iran. Iran has signed a $25 billion aircraft purchase deal with Airbus, and Peugeot has signed a $430 million deal to produce automobiles in Iran. If the U.S. stands in the way of effective implementation of the JCPOA or takes steps that ensure its demise, its influence on the global stage will be further weakened. Supreme Leader Ali Khamenei has made his position clear, saying on his website, “Any comments suggesting the sanctions structure will remain in place or (new) sanctions will be imposed, at any level and under any pretext, would be (considered by Iran) a violation of the deal.”