The United States and other world powers welcomed Iran back in to the global economy on January 16, 2016, lifting burdensome economic sanctions as the historic Joint Comprehensive Plan of Action (JCPOA) took effect. The IAEA, the United Nations nuclear watchdog organization, released a report on January 16 confirming that Iran had complied with all aspects of the nuclear agreement. IAEA Director General Yukiya Amano penned a statement that read, “Iran has completed the necessary preparatory steps to start the implementation of the Joint Comprehensive Plan of Action... Relations between Iran and the IAEA now enter a new phase. It is an important day for the international community. In line with its commitments, Iran will start to provisionally implement the Additional Protocol to its Safeguards Agreement with the IAEA. Together with other nuclear-related measures under the JCPOA, this increases the Agency’s ability to monitor nuclear activities in Iran and to verify that they are peaceful” (IAEA, January 16, 2016).
The United Nations Security Council received the IAEA report detailing Iran's compliance with the JCPOA on January 16, 2016, triggering an automatic end to most United Nations Sanctions on Iran under UNSCR 2231 adopted on July 20, 2015. UNSCR 2231 states that when Iran completes all of the necessary steps to implement the agreement and the IAEA approves, seven Security Council resolutions against Iran will be lifted. The resolution includes an automatic snap-back provision to re-impose sanctions, should Iran be found in violation of the JCPOA. The Iranians are encouraged not to engage in research and development of ballistic missiles capable of delivering a nuclear warhead for eight years under UNSCR 2231, but the language is vague. This resolution also includes an arms embargo preventing Iran from selling or purchasing any weapons for five years.
In order to reach this historic date, Iran had to comply with all aspects of the nuclear agreement including dismantling approximately 13,000 centrifuges, removing the core of the Arak nuclear reactor and filling it with cement, and shipping the vast majority of it's enriched uranium stockpile to Russia. Speaking at a press conference in Vienna, Austria, U.S. Secretary of State John Kerry pointed out that Iran's stockpile of enriched uranium was just two percent of what it was prior to the JCPOA.
Although U.S. and International economic sanctions were lifted, the U.S. embargo on Iran remained in place, preventing U.S. companies from engaging in direct business with their Iranian counterparts with a few minor exceptions. These exceptions include passenger aircraft, rugs, and pistachio nuts. In addition to the embargo, sanctions relating to Iran's human rights abuses and support for terrorism remained in place. New sanctions pertaining to Iran's recent ballistic missile tests were simultaneously put in place by the Obama administration along with the lifting of economic sanctions. These sanctions targetted eleven individuals and small companies suspected of shipping critical technologies to Iran, such as carbon-fiber and parts to various missiles. Most Iranians will not be affected by these new sanctions. Iranian officials referred to these new sanctions in the subsequent days as “illegitimate,” and “propagandastic.” Iranian Foreign Ministry Spokesman Hossein Jaberi Ansari claimed that the sanctions “have no legal or moral legitimacy” (Yahoo, January 18, 2016). Other Iranian officials asserted that they would continue to test their ballistic missiles, regardless of these new sanctions.
With the lifting of these sanctions, Iran will be able to export as much crude oil as it can find demand for.
Following the implementation of the nuclear agreement and just hours before the lifting of economic sanctions was to be announced, Iran released four Americans that had been held hostage for various periods of time, in a prisoner-swap. Included in the group was Washington Post reported Jason Rezaian, who was arrested on July 22, 2014, and found guilty of espionage in a closed trial in October 2015. Rezaian's wife was arrested with him, but was released in October 2014. The American prisoners released in the prisoner-swap with Iran were Rezaian, Marine veteran Amir Hekmati, Christian pastor Saeed Abedini, and Nosratollah Khosravi-Roodsari. Khosravi-Roodsari opted to stay in Iran after his release, and the other three were brought to Germany where they underwent medical evaluations. All four of these individuals held dual Iranian-U.S. citizenship. The United States released seven prisoners who had been involved in exporting products to Iran in violation of trade sanctions, in exchange for the four Iranian prisoners. Iranian officials and their American peers had engaged in secret negotiations planning this prisoner exchange for more than a year beforehand. Jewish former FBI Agent and suspected Iranian prisoner Robert Levinson was not released with the group. Separately, Iran released recently detained student Matthew Trevithick. It was revealed in the following months that the United States paid Iran a sum of $400 million that night to secure the safe release of the prisoners. Although the payment was part of a $1.7 billion I.O.U. to Iran for equipment purchased from the United States but never delivered, State Department officials confirmed in mid-August 2016 that the payment was used as leverage, and the timing was no coincidence. The remaining $1.3 billion was delivered to Iran following the release of the prisoners.
Iran's Ayatollah Khamenei published a letter to President Hassan Rouhani on January 19, 2016, which was later posted on Khamenei's website. In the letter he calls American actions during the previous weeks deeply suspicious, refers to America as arrogant, and states that Iran has been bullied by sanctions levied by the international community. He instructs Rouhani to watch for American “deceptions and breaches of promises” (Khamenei.ir, January 20, 2016).
Valiollah Seif, the head of Iran's Central bank, said that Tehran successfully transfered funds from banks in Japan and South Korea to banks in Germany and the United Arab Emirates on January 19, 2016. It was not revealed how much money was transfered during this transaction, but Seif revealed that the lifting of sanctions with the implementation of the JCPOA would free up $32 billion in frozen overseas assets. U.S. based credit card companies like Mastercard and Visa, and payment processing applications such as Paypal are still forbidden from doing business in Iran. Most Iranians choose to use cash, because their credit and banking is not tied to the global system.
Americans Baquer Namazi, Siamak Namazi, Xiyue Wang, and Bob Levinson remain hostages in Iran.
In case diplomatic measures to curb Iran's nuclear program failed and led to a military conflict, according to Obama administration and intelligence officials the United States had a secret plan to carry out a cyber-attack against Iran code-named Nitro Zeus. The plan, developed as an alternative option to the P5+1 negotiations, would have largely disabled Iranian air defenses and communications systems, as well as crucial parts of the Iranian power grid. According to security and intelligence officials, at one point the preparations for Nitro Zeus included investments of millions of dollars and thousands of employees implanting code and programs within Iranian computer networks. A separate plan was developed by U.S. intelligence agencies to disable the Fordow nuclear facility by planting a destructive “worm” in the computer system, in a covert operation that would have needed the sole authorization of the President to carry out. This operation would have been a follow-up to Operation Olympic Games, in which the United States and Israel mounted a cyber-attack on the Iranian Natanz facility that destroyed 1,000 centrifuges.
The existence of the Nitro Zeus plan was revealed while director Alex Gibney was researching for his documentary “Zero Days,” which explores the conflict between Iran and West in the years leading up to the nuclear agreement. Gibney's findings were confirmed by separate New York Times interviews. The Nitro Zeus contingency plan was shelved after Iranian and P5+1 negotiators reached an agreement in July 2015.
New security arrangements to monitor the arms embargo against Iran as well as restrictions on Iran's ballistic missile program and all other programs still active after the implementation of the JCPOA were established by the United Nations Security Council on January 21, 2016. These arrangements and procedures replaced the Security Council committee charged with monitoring Iranian violations of sanctions that were removed with the implementation of the deal. The resolution including these arrangements also provides for an automatic reimposition of sanctions on Iran should the Security Council find it to be in violation of the JCPOA.
A bipartisan group of lawmakers, diplomats, policymakers, and experts published a statement on U.S. policy toward Iran in the weeks following the implementation of the deal. This statement explains that although the deal has been implemented there is still much work to be done, and encourages the Obama administration to reject Iran as an ally in the fight against ISIS as well as continue to closely monitor Iran to be sure it is not cheating the deal. The group statement recommends being completely willing to snap back sanctions, and bolstering ties to regional allies as ways to keep Iran contained. To read the full statement released by the group, please click here.
French diplomats asked the European Union on January 27, 2016, to consider new sanctions on Iran over their recent ballistic missile tests. It is unlikely that new sanctions will be imposed by the EU, as other member states view the move as counterproductive to efforts to revive political and economic ties with the Islamic Republic.
Iranian Army commander Major General Ataollah Salehi told reporters in Tehran on February 4, 2015, that their missile tests were not a breach of the JCPOA, and the Iranian missile program will continue to develop. Speaking about the new sanctions placed against the Islamic Republic in response to their ballistic missile tests, Salehi stated, “We are neither paying any attention to the resolutions against Iran, nor implementing them. We are doing our job and our missile program for the future will be stronger and more precise” (PressTV, February 4, 2016).
Iran test-fired two Qadr H missiles with the phrase “Israel must be wiped out,” emblazoned on the sides on March 8, 2016. The missile test coincided with U.S. Vice President Joe Biden's visit to Israel to discuss upcoming aid packages. The head of Iran’s Revolutionary Guard’s aerospace division, Amir Ali Hajizadeh, made it clear that the missile test was intended to intimidate Israel, stating “The 2,000-kilometer (1,240-mile) range of our missiles is to confront the Zionist regime. Israel is surrounded by Islamic countries and it will not last long in a war. It will collapse even before being hit by these missiles” (Time Magazine, March 8, 2016). The United States has Iran under “close watch,” after the missile tests, according to Vice President Joe Biden. The United States pressured the United Nations to condemn the missile tests as a violation of resolution 2231 during the subsequent week. Russian officials sided with Iran, claiming that 2231 only “suggests” Iran stop test-firing missiles. Therefore, Russian Ambassador to the United Nations Vitaly Churkin asserted the Iranian missile test did not violate 2231, stating to reporters that, “A call is different from a ban so legally you cannot violate a call, you can comply with a call or you can ignore the call, but you cannot violate a call” (Free Beacon, March 15, 2016).
In response to these ballistic missile tests, the United States imposed new sanctions on Iranian defense firms, units of the Iranian Revolutionary Gaurds, Iran's Mahan Air, and two firms in the United Arab Emirates. These sanctions targetted entities that aided Mahan Air in smuggling various supplies into Syria, and played a supportive role in the country's latest missile tests.
U.S., German, British, and French officials expressed their opinions that the missile test was “in defiance” of resolution 2231 in a letter to UN Secretary General Ban Ki-moon on March 29, 2016. The letter stated that the missiles launched were “inherently capable” of delivering nuclear weapons, and encouraged the Security Council to respond appropriately to the Iranian aggression. Following the launch, Iranian Supreme Leader Ayatollah Khamenei offered support to the IRGC, bluntly stating, “Those who say the future is in negotiations, not in missiles, are either ignorant or traitors” (Reuters, March 30, 2016).
Iranian officials announced that they had tested a significantly more accurate ballistic missile with a 2,000-kilometer range on May 9, 2016. The missile tested in early May can be remote-guided to an accuracy of within 8 meters of it's target, according to Deputy Chief of Staff of the Iranian Armed Forces Brigadier General Ali Abdollahi.
Iran test-fired a North Korean BM-25 Musudan ballistic missile on July 11, 2016, which exploded shortly after launch.
Addressing the annual Iranian military parade in September 2016, Chief of Staff of the Armed Forces Major General Mohammad Hossein Baqeri contested that, “all military tests and war games will continue to be held according to the schedule and will not be suspended or delayed under any circumstances” (Tasnim, September 22, 2016).
The Iranian Revolutionary Guard displayed it's sophisticated Russian-made S-300 missile system in public for the first time during a military parade in September 2017.
In May 2018, a press report disclosed the discovery of a secret site where researchers said it was likely Iran is developing the technology for long-range missiles. Such a project would not violate current restrictions on Iranian military activities, but could ultimately threaten Europe, Israel and the United States (New York Times, May 23, 2018).
In July 2018, it was revealed that in 1999, North Korea offered to stop selling missile technology to Iran and other enemy states if Israel paid Pyongyang $1 billion in cash. Israel offered food aid instead, but no agreement was reached (Wall Street Journal, July 8, 2018).
Meanwhile, the Congressional Research Service (CRS) reported in August 2018 that “Iran continues to invest in developing ballistic missiles and in building an extensive network of facilities.” The report also said “Iran’s short- and medium-range ballistic missile tests indicate that Iran is focused on increasing the accuracy of its missiles” (Congressional Research Service, August 1, 2018).
Shortly after the CRS report was released, Iran test-fired a ballistic missile for the first time in more than a year. The test coincided with a large-scale naval exercise by Iran’s Revolutionary Guard forces in the Strait of Hormuz (Fox News, August 10, 2018).
In December 2018, Secretary of State Mike Pompeo revealed that Iran had test-fired a medium-range ballistic missile capable of carrying multiple warheads that could reach parts of Europe. He warned of the “accumulating risk of escalation in the region if we fail to restore deterrence” and called on European allies to impose tough new sanctions on Iran (AP, December 3, 2018).
In 2018, Iran test-fired at least seven medium-range missiles and five additional short-range and cruise missiles. The tests appear to have violated the nuclear agreement, which included Resolution 2231 and its ban on “ballistic missile-related activities designed to use nuclear weapons and “launches using such ballistic missile technology” (WELT, December 9, 2018).
Although global terror attacks experienced a 13% decline from 2014 to 2015, and global deaths from terror attacks experienced a 14% decline over the same period, a U.S. State Department report released in June 2016 asserted that Iran was still the top global sponsor of terrorism. During 2015, Iran sowed instability in the Middle East by arming and funding Hezbollah and the Assad regime, and using the Quds Force of its Islamic Revolutionary Guard Corps to influence and drive foreign policy.
Iran also provided financial and material support to many other groups, most notably the Hamas terror organization, various militant groups in Bahrain, and Houthi rebels in Yemen. While speaking at the Aspen Ideas Festival in mid-June 2016, U.S. Secretary of State John Kerry stated that in his opinion Iranian involvement in Iraq was helping the United States in the fight against ISIS. Kerry stated, using a different name for the terrorist group, that “I can tell you that Iran in Iraq has been in certain ways helpful, and they clearly are focused on ISIL-Daesh.” The Secretary of State went on to say that Iran and the United States seem to have common goals in Iraq of defeating the Islamic State (CNN, June 28, 2016).
The Times of London reported that “hundreds of Taliban fighters are receiving advanced training from special forces at military academies in Iran as part of a significant escalation of support for the insurgents.” The report added, “The scale, quality and length of the training is unprecedented and marks not only a shift in the proxy conflict between the US and Iran inside Afghanistan, but also a potential change in Iran’s ability and will to affect the outcome of the Afghan war (The Times, July 2, 2018).
Iran has also been actively supporting Houthi rebels in Yemen fighting a civil war there and threatening Saudi Arabia. On August 7, 2018, Nasser Shabani, a senior Iranian Revolutionary Guards Corps commander, admitted that Iran ordered the rebels to attack two Saudi oil tankers in the Red Sea on July 25, 2018 (Meir Amit Intelligence and Terrorism Information Center, August 21, 2018).
On October 30, 2018, the Danish government accused Iran’s intelligence agents of plotting the assassination of an Iranian opposition leader there in September. Earlier this year, French officials concluded Tehran was behind a plot to attack an Iranian opposition group meeting in Paris in late June (Wall Street Journal, November 2, 2018).
The implementation of the nuclear deal and subsequent lifting of harsh economic sanctions opened the Iranian economy up for investment and trade with most of the world.
Chinese government and business leaders held meetings with Iranian officials in early 2016 following the implementation of the JCPOA. On January 23, 2016, both countries pledged to increase bilateral trade to $600 billion in the coming decade. China's President Xi Jinping was the first foreign leader to visit Iran after international sanctions were lifted.
Iranian President Hassan Rouhani visited Italy in the week following implementation day, for, as Italian Foreign Minister Paolo Gentiloni put it, “a comprehensive relaunch of a strategic alliance” (Washington Post, February 2, 2016). Deals signed between the Iranian and Italian government on January 25, 2015, amounted to approximately 17 billion Euros, according to the Italian Industry Minister. President Rouhani spent three days in Italy, before travelling to France for the second part of his January 2016 European trip. French automaker Peugeot signed a deal with Iranian automaker Iran Khodro, pledging to produce 200,000 cars per year at a plant neat Tehran which they will also upgrade. When the car manufacturer was forced to close business with Iran in 2012 it suffered major losses, as Iran was Peugot's second largest market. As an apology for leaving the Iranian market abruptly due to sanctions, Peugot waived $89 million in outstanding Iranian debts, pledged to provide $28 million in free car parts, and also confirmed they will be providing a free production line for the Peugot 207 model, worth $12 million. Peugot was the first Western auto manufacturer to jump back into business with Iran, and the first vehicles are expected to roll off the production line in 2017. Airbus announced a deal with Iran Airlines during Rouhani's trip, agreeing to sell 118 aircrafts to the state-run airline. The total value of the deals signed by French and Iranian entities amounted to an estimated $16 billion.
Iranian Vice President Mohammad Bagher Nobakht said on state-run television that $100 billion in global Iranian frozen assets had been released, on February 2, 2016. The majority of these funds were released from banks operating in China, India, and Turkey. Nobakht also claimed that Iran was taking steps to rejoin the Belgium-based SWIFT international banking network. Later that week, on February 9, 2016, Nobakht stated that the money will not come to Iran and instead will still be kept in the foreign bank accounts, to avoid domestic inflation. This money will be handled the same as Iranian oil revenues in foreign institutions, according to the Vice President. Less than 10% of this money, $7 billion, belongs to the Iranian government, which they will receive and invest in infrastructure and development projects. The remaining money is owned by the National Development Fund of Iran ($50 billion), state-controlled oil companies and banks ($6 billion), and the Iranian Central Bank ($38 billion). The Iranian government's goal is to achieve a GDP growth rate of 8% annually by 2020, according to Nobakht.
Although specifics such as the timing and quantity of the purchase were not immediately announced, Iranian Defense Minister Hossein Dehghan published comments on the Defense Ministry website on February 10, 2016, confirming that Iran will sign contracts with Russia to purchase Sukhoi-30 fighter jets. Iran would also be involved in the production of the aircraft, according to Dehghan. The Sukhoi-30 fighter jet is equivalent to the American made F-15E fighter bomber jet. Dehghan also claimed that Iran would begin taking delivery of the Russian S-300 missile system within the coming months. During a visit to Russia on February 17, 2016, Dehghan claimed that the S-300 missile system would be delivered to Iran later that week. The U.S. State Department contended however, that the sale of this missile system without Security Council approval would be a direct violation of a UN arms embargo still in place for the next five years against Iran. While negotiating the JCPOA, agreed to in July 2015, the P5+1 kept in place a ban on conventional arms sales to Iran without prior UN Security Council approval. Iran originally announced that Russia had delivered the first components of the S-300 missile system during the weekend of April 9, 2016, but Iranian officialls recalled their statements in the following days. The missile portion of the system was delivered in mid-July 2016, according to Russian news agencies. The Iranian military deployed this missile system to central Iran to protect it's Fordow nuclear facility in August 2016.
Iranian citizens marked the anniversary of the 1979 Islamic Revolution on February 11, 2016, with chants of “death to America,” and “death to Israel.” President Rouhani spoke at a massive rally drawing thousands of participants, and pledged that Iran would never bow to the influence of the West.
On February 29, 2016, the Financial Action Task Force (FATF) released their first public statement on Iran since sanctions relief went into effect. The FATF sets international standards for countering money laundering and terror finance activities, and has issued statements pertaining to Iran in February, June, and October of each year since 2008. Despite the lifting of sanctions by the international community and the implementation of the JCPOA, the FATF did not revise their February 2016 statement. The statement by the task force, which includes 37 member states, called on Iran to address it's discrepancies with the organization, and urged it's members to warn their banks about the risks of doing business with Iran. Iran is still considered a high-risk jurisdiction to do business in by the FATF.
U.S.-based jet manufacturer Boeing inked a $17.6 billion deal to sell airliners to Iran in mid-June 2016, but the deal was scrapped in early July after U.S. House members rejected it in a vote of 239-185.
Iran announced in August 2016 that it was moving forward with plans to build two new nuclear power plants under the parameters of the JCPOA, which will cost approximately $10 million. State Department officials clarified that this type of construction does not violate the agreement, stating, “the [nuclear deal] does not prevent Iran from pursuing new light-water reactors... Any new nuclear reactors in Iran will be subject to its safeguards obligations” (Washington Free Beacon, August 12, 2016).
A dual British-Iranian citizen who was involved in the banking-related aspects of the nuclear negotiations was arrested in Iran under charges of espionage in late August 2016. The charges against the alleged “spy,” identified as Abdolrasoul Dorri Esfahani, contend that he bypassed official channels and divulged sensitive information directly to the U.S. negotiators.
The National Iranian Oil Company reported in September 2016 that their exports of crude oil to India in August more than tripled from the previous year's numbers, to 576,000 bpd. Iranian crude oil exports to China grew 48%, to 749,000 bpd during the same month, and crude oil exports to China for the year were up 7%. Japanese imports of Iranian crude oil in 2016 rose 45% compared to 2015, and South Korean imports more than doubled.
The United States Treasury Department published a new set of guidelines for doing business with Iran on October 7, 2016, that eased financial sanctions and loosened monetary restrictions on the nation. Sanctions on the Iranian military's IRGC remained in place, as did restrictions pertaining to Iranian access to the U.S. financial system and banking institutions.
Total, an enegry company based in France, became the first Western energy company to sign a deal with the Iranian government following the implementation of the JCPOA. The agreement, signed on November 8, 2016, provides for “Phase 11,” development of the South Pars gas condensate field, the largest gas field in the world. France's Total already had a hand in developing the South Pars, spearheading phases 1 and 2 of the field's development in the early 2000's. The field, whichcovers 3,700 square miles, is shared between Iran and Qatar.
Chinese state oil company CPNC and French energy company Total announced a 20-year, $2 billion deal with the Iranian Petropars group in June 2017, with the goal of further developing the South Pars gas field. This agreement marked the first major Western investment in Iran following the ease of sanctions in February 2016. The Iranian Petropars group will own a 19.9% stake in the project, while CPNC will hold 30% and Total will retain a majority of 50.1%.
On July 4, 2017, German automaker Volkswagen announced that they would begin to export and sell their Tiguan and Passat vehicles to Iran in August 2017. Volkswagen will work with local auto firm Mammut Khodro to sell their cars in the country.
The International Atomic Energy Agency (IAEA) concluded in their periodic report published in September 2016 that Iran had exceeded the soft 130-tonne limit on it's stock of heavy water for the second time since the JCPOA was put in place in January. The other six signatories to the JCPOA, including the United States, issued statements encouraging the IAEA to make the limit more firm. To read the IAEA Board of Governors Report released in September 2016, please click here. It was confirmed by the IAEA in early December 2016 that Iran had shipped 11 tonnes of heavy water abroad, bringing their stockpile back under the limit set forth in the JCPOA.
Lawmakers in the United States House of Representatives passed a 10-year reauthorization of the Iran Sanctions Act (ISA) on November 15, 2016, first passed in 1996. The members also voted to impose sanctions on the Syrian government and it's supporters, including Russia and Iran, for war crimes and crimes against humanity committed against it's citizens. The legislation passed the Senate unanimously in a 99-0 vote, and passed the House with a vote of 419-1.
In response to the reauthorization of the ISA, Iranian President Hassan Rouhani ordered the development of a nuclear-propulsion system for Iranian ships on December 14, 2016. Iran had expressed interest in building nuclear-powered vessels before, most notably in 2012.
President Trump’s administration issued their first sanctions against Iran on February 3, 2017, in response to a recent ballistic missile test during the previous week. The U.S. Treasury Department announced sanctions against 25 individuals and companies connected to and providing support for Iran's missile program. Administration officials announced that these new sanctions were not placed on any entities or individuals that had their sanctions lifted as part of the JCPOA.
Iranian Foreign Minister Mohammad Javad Zarif told reports during a press conference on March 21, 2016, that Iran is fully prepared to return to the pre-JCPOA situation or even [to conditions] more robust than that if the US reneges on its promises. Zarif added that Iranian scientists had been continuing work with advanced centrifuges (PressTV, March 21, 2017).
U.S. Secretary of State Rex Tillerson confirmed that Iran was remaining compliant with the JCPOA in a report to Congress on April 28, 2017. Although it was confirmed by Tillerson that Iran was indeed complying with the stipulations set forth in the JCPOA, later that day President Trump added that they’re not living up to the spirit of the agreement, I can tell you that. The President's comments were made during a joint press conference with the Italian Prime Minister.
The president of the Institute for Science and International Security, David Albright, testified before the U.S. House Subcommittee of Oversight and Government Reform that the JCPOA needs to be implemented more effectively and its nuclear conditions strengthened and better verified on April 5, 2017. Albright stated that the implementation of the JCPOA under the Obama administration was too permissive and tolerant of Iran’s violations of the deal, its exploitation of loopholes, and its avoidance of critical verification requirements. The Trump administration needs to strengthen and fix the deal, according to the professionals at the Institute for Science and International Security.
Director of US National Intelligence Daniel Coats testified during a U.S. Senate briefing on May 15, 2017, that despite the nuclear agreement Iran has been hard at work developing Inter-Continental Ballistic Missile (ICBM) technology. Coats stressed that the range and accuracy of Iranian missiles has steadily improved over time, and stated that the ICBMs would be Iran's “preferred method of delivering nuclear weapons, if it builds them.” The National Intelligence Director also suggested that “progress on Iran's space program could shorten a pathway to an ICBM because space launch vehicles use similar technologies” (Daily Mail, May 12, 2017).
Despite tough talk on the campaign trail about ripping up the JCPOA, on May 17, 2017, the Trump Administration's State Department announced an extension of general sanctions relief for Iran as part of the JCPOA. The State Department issued a statement, saying that the United States is
continuing to waive sanctions as required to continue implementing the JCPOA. Additionally, the Treasury Department revealed new sanctions to be imposed on Chinese and Iranian individuals for supporting Iran's ballistic missile program. These sanctions were levied by the U.S. Treasury Department against two senior Iranian defense officials, an Iranian company, a Chinese man, and three Chinese companies (Reuters, May 17, 2017).
The IAEA report released in June 2017 demonstrated that Iran was still complying with all aspects of it's commitments under the JCPOA. Iran's stock of low-enriched uranium remained below the limit set forth in the agreement, and further construction of the Arak reactor has not been pursued, according to the report issued by the nuclear watchdog organization.
Chinese-American Xiyue Wang, a 37-year old graduate student researcher from Princeton University was sentenced to 10 years in Iranian prison on spying charges on July 16, 2017. Wang had been arrested in August 2016 upon trying to leave Iran and return to the U.S.A.
On July 17, 2017, Trump reluctantly certified that Iran was complying with the JCPOA agreement. The certification came with announcements that the U.S. would work to toughen enforcement of the deal, increase sanctions on Iran for it's support of terrorists and other destabilizing activities, and cooperate with European powers to increase pressure on the Iranian government. While the administration certified that Iran was following the stipulations set forth in the agreement, one Trump administration official stated that the Iranians are “unquestionably in default of the spirit of the JCPOA” (Washington Post, July 17, 2017).
The day after agreeing that Iran was in compliance with the nuclear agreement, new sanctions against the country were announced jointly by the U.S. Departments of State, Treasury, and Justice. Eighteen individuals and entities involved in everything from missile development to software hacking and theft were designated in the new sanctions. Unlike previous rounds of sanctions levied against Iran, not all of the targets sanctioned were Iranian. A marine equipment supplier based in Turkey and a Chinese procurement agent who allegedly provided material support to an Iranian military electronics company were included in the sanctions as well.
The U.S. House of Representatives passed the Countering America's Adversaries Through Sanctions Act in a vote of 419-3 on July 25, 2017. In addition to primarily targetting Russian officials in retaliation for their involvement in hacking the 2016 U.S. elections, the act also imposes new sanctions against Iranian and North Korean entities for illegal measures surrounding their missile programs. These new sanctions affected 18 Iranian entities including two businessmen involved in software theft, and were designed to thwart Iranian military activities. An original version of the legislation, Countering Iran's Destabilizing Activities Act of 2017, was passed by the Senate on June 15, 2017.
Iranian Foreign Ministry spokesman Bahram Ghasemi spoke on Iranian television in the days following the passage of the act, promising to
continue with full power our missile program, and calling the new sanctions
hostile, reprehensible and unacceptable (Los Angeles Times, July 31, 2017). On August 13, 2017, the Iranian Parliament voted 240-4 to allocate $260 million to the country's missile development program, and an identical amount to the Quds Force.
In a speech to the Iranian Parliament on August 14, 2016, President Hassan Rouhani bragged that a “far more advanced” nuclear program could be jump-started within hours if the U.S. does not hold up it's end of the JCPOA deal (New York Times, August 15, 2017). Echoing Rouhani's remarks, during an interview with Iranian state television the following week Iranian atomic chief Ali Akbar Salehi stated that Iranian scientists would need only 5 days to resume enriching uranium to over 20%. Clarifying his remarks, Salehi went on to assure the audience
we are not interested in such a thing happening. We have not achieved the deal easily to let it go easily. We are committed to the deal, and we are loyal to it (Defense News, August 22, 2017).
On August 31, 2017, the IAEA once again certified that Iran was indeed complying with the parameters set forth in the JCPOA agreement.
More than 80 of the world's top nuclear non-proliferation experts issued a joint statement on September 13, 2017, encouraging the Trump administration to not abandon the JCPOA nuclear deal. The experts, including past IAEA Director-General Hans Blix, stated in the letter that the Iran nuclear deal advances the secutity interests of the United States, and has been proven to be
flexible and responsive to implementation problems that emerge (Armscontrol.org, September 13, 2017).
In October 2017, IAEA chief Yukiya Amano once again certified that Iran was in compliance with all aspects of the JCPOA. The head of the international watchdog organization stated that
the nuclear related commitments undertaken by Iran are being implemented, and added that the Iranians
have not pursued construction of the Arak reactor (Al-Monitor, October 10, 2017).
The White House laid out their new Iran strategy in a policy paper and remarks by President Donald Trump on October 13, 2017. The new approach focuses on
neutralizing the Government of Iran’s destabilizing influence and constraining its aggression,
deny[ing] the Iranian regime funding for its malign activities,
counter[ing] threats to the United States and... allies from ballistic missiles and other asymmetric weapons, and attempting to ensure that Iran does not develop a nuclear weapon.
In a letter to Congress delivered on October 30, 2017, ninety of the top U.S. experts in atomic sciences urged the Trump administration to keep the Iran deal in place. The experts recommended that Congress act to keep the deal,
as scientists who understand the physics and technology of nuclear power, of nuclear explosives, and of long-range missiles; and who collectively bring their experience with nuclear nonproliferation. Earlier in the day, a statement signed by 20 government officials and Iran policy experts expressing their support for Trump’s position on the agreement was released by the Foundation for Defense of Democracies (New York Times, October 31, 2017).
Trump’s complaints about the deal, however, resonated with the public. According to a Harvard-Harris poll in October 2017, 60 percent of voters (including most Democrats), said the deal was a bad one for the United States, two-thirds said Iran had not complied with the terms of the agreement and 68 percent favored Congress imposing sanctions on Iran. By a 53-47 percent margin, Americans agreed the U.S. should pull out of the deal and an overwhelming majority, 81 percent, said any new deal should require Senate approval (The Hill, October 23, 2017).
The IAEA certified again in November 2017 that Iran was complying with all aspects of the nuclear agreement. The report said Iran’s stockpiles of enriched uranium have not exceeded the agreed limit of 300 kilograms, and that the IAEA is being granted access to all sites they have requested to visit.
On January 11, 2018, President Trump announced the continuation of sanctions relief for Iran as part of the nuclear agreement.
Critics warned that the Joint Comprehensive Plan of Action (JCPOA) was flawed; nevertheless, it was agreed to by the United States and its international partners. The most immediate sign of its failure, according to detractors, was the increased bellicosity of Iran, and the intensification of its efforts to destabilize its neighbors and establish a hegemonic Shiite sphere of influence that threatens Israel and Arab allies. “The list of Iranian transgressions has increased dramatically since the date that the [nuclear deal] was signed,” said CIA director Mike Pompeo (Jenna Lifhits, “Cotton on Iran Nuclear Deal: ‘I Simply Do Not See How We Can Certify,’” Weekly Standard, September 18, 2017). Pompeo elaborated on these points as Secretary of State after the Trump administration withdrew from the agreement (Remarks at the Heritage Foundation, May 21, 2018). After noting that John Kerry had said the Middle East “is going to be more manageable with this deal,” he listed some of the examples of how the situation had deteriorated since the JCPOA was signed:
- Lebanon is an even more comfortable home for Hezbollah today than it was when we embarked on the JCPOA. Hizballah is now armed to the teeth by Iran and has its sights set on Israel.
- Thanks to Iran, Hezbollah provides the ground forces for the military expedition in Syria. The IRGC, too, has continued to pump thousands of fighters into Syria to prop up the murderous Assad regime and help make that country 71,000 square miles of kill zone.
- Iran perpetuates a conflict that has displaced more than 6 million Syrians inside the – 6 million Syrians and caused over 5 million to seek refuge outside of its borders.
- These refugees include foreign fighters who have crossed into Europe and threatened terrorist attacks in those countries.
- In Iraq, Iran sponsored Shia militia groups and terrorists to infiltrate and undermine the Iraqi Security Forces and jeopardize Iraq’s sovereignty – all of this during the JCPOA.
- In Yemen, Iran’s support for the Houthi militia fuels a conflict that continues to starve the Yemeni people and hold them under the threat of terror.
- The IRGC has also given Houthi missiles to attack civilian targets in Saudi Arabia and the Emirates and to threaten international shipping in the Red Sea.
- And in Afghanistan, Iran’s support to the Taliban in the form of weapons and funding leads to further violence and hinders peace and stability for the Afghan people.
- Today, the Iranian Qods Force conducts covert assassination operations in the heart of Europe.
- We should remember, too, that during the JCPOA Iran continues to hold Americans hostage: Baquer Namazi, Siamak Namazi, Xiyue Wang, and Bob Levinson, who has been missing for over 11 years.
- The list continues. Iran continues to be, during the JCPOA, the world’s largest sponsor of terror. It continues to serve as sanctuary for al-Qaida, as it has done since 9/11, and remains unwilling to bring to justice senior al-Qaida members residing in Tehran.
David Albright, President of the Institute for Science and International Security, testified in Congress:
On September 14, 2017, Secretary of State Rex Tillerson said, “Iran is clearly in default of these expectations of the JCPOA,” adding that Iran’s actions are “threatening the security of those in the region as well as the United States itself” (Nick Wadhams, “Tillerson Says Iran ‘Clearly in Default’ of Nuclear Deal’s Terms,” Bloomberg, September 14, 2017).
Supporters of the deal say the IAEA has certified Iran’s compliance to prove that it is working. They neglect to mention, however, that the IAEA has found that Iran has committed several violations and only complied when caught. According to National Security Advisor H.R. McMaster, “the IAEA has identified, and we’ve identified some of these breaches that Iran has then corrected. But what does that tell you about Iranian behavior? They’re not just walking up to the line on the agreement. They’re crossing the line at times” (“General H.R. McMaster on global threats,” Fox News, September 17, 2017).
IAEA Director General Yukiya Amano revealed in September 2017 that Russia opposed the agency’s enforcement of one part of the JCPOA – Section T – which bans “activities which could contribute to the development of a nuclear explosive device,” such as using computer models that simulate a nuclear bomb, or designing multi-point, explosive detonation systems. The U.S. believes the IAEA is responsible for monitoring these activities and the failure to do so is a flaw in the agreement that inhibits the IAEA’s ability to verify Iran is not engaged in nuclear weapons research and development (Francois Murphy, “IAEA chief calls for clarity on disputed section of Iran nuclear deal,” Reuters, (September 26, 2017).
Albright notes that it is difficult to assess Iran’s compliance with the JCPOA because of “the excessive secrecy surrounding the implementation of the deal and its associated parallel arrangements” (David Albright, “House Subcommittee Testimony of David Albright on Assessing Iran Nuclear Deal,” Institute for Science and International Security, April 5, 2017). Nevertheless, his institute found several Iranian violations of the agreement, as well as cases where Tehran exploited loopholes in the deal to weaken its effectiveness. For example:
- Iran has twice had more than its heavy water limit of 130 metric tons inside Iran.
- Iran is likely operating advanced IR-6 centrifuges in excess of the limit allowed.
- The Atomic Energy Organization of Iran has sought sensitive nuclear-related materials and facilities beyond what it needs or should get.
- Iran is seeking to exploit a loophole in reactor restrictions, including work on naval propulsion reactors.
Regarding the last point, Iran’s announcement that it planned to build nuclear submarines was an indication of its intent to go beyond the peaceful use of nuclear energy as subs have no civilian use. Furthermore, the level of enriched uranium needed for nuclear propulsion of ships and submarines is far greater than what was permitted under the JCPOA and closer to the level needed to produce a bomb (MEMRI, April 10, 2018).
German intelligence has caught Iran seeking “products and scientific know-how for the field of developing weapons of mass destruction as well [as] missile technology” (Benjamin Weinthal, “Iran Still on the Hunt for Nuclear Weapons Technology Across Germany,” Weekly Standard, July 7, 2017). Additional intelligence reports from Germany indicated Iran attempted to buy nuclear technology illegally 32 times
that definitely or with high likelihood were undertaken for the benefit of proliferation programs (Benjamin Weinthal, “Iran attempted to buy nuclear technology illegally 32 times, German agency says,” Fox News, October 9, 2017).
Iran has also violated agreements related to the deal, notably, by its noncompliance with UNSC resolution 2231’s prohibition on conventional weapons sales and transfers and its prohibition on ballistic missile testing. Director of U.S. National Intelligence Daniel Coats testified during a U.S. Senate briefing on May 15, 2017, that Iran has been hard at work developing Inter-Continental Ballistic Missile (ICBM) technology. Coats stressed that the range and accuracy of Iranian missiles has steadily improved over time, and stated that the ICBMs would be Iran's “preferred method of delivering nuclear weapons, if it builds them.” The National Intelligence Director also suggested that “progress on Iran's space program could shorten a pathway to an ICBM because space launch vehicles use similar technologies” (Amanda Ulrich, “Iran ‘is still developing ballistic missiles that could carry nuclear warheads in violation of UN resolution,’” Daily Mail, May 12, 2017).
More important, negotiators accepted Iranian demands to cease investigation of its prior weapons research and, according to Iran, barred monitors from military sites despite the fact the JCPOA was described as giving the IAEA the right to visit any site in Iran, whether military or civilian (David Albright and Olli Heinonen, “Verifying Section T of the Iran Nuclear Deal: Iranian Military Site Access Essential to JCPOA Section T Verification,” Institute for Science and International Security, August 31, 2017). According to Israeli sources, within a few months of signing the JCPOA, the IAEA was given information regarding sites Iran had not reported as part of its nuclear program and where it was believed forbidden nuclear military research and development activity was being conducted. Few of the suspected sites were inspected because of Iran’s refusal to allow access and the IAEA’s unwillingness to confront Iran on the issue (Barak Ravid, “Israel: IAEA Received Info About Suspected Iranian Nuclear Sites but Didn't Inspect Many of Them,” Haaretz, September 17, 2017).
This is quite different from Obama’s promise of “unprecedented” inspections (Glenn Kessler, “President Obama’s claim of ‘unprecedented inspections’ in Iran,” Washington Post, February 6, 2014). Since the IAEA does not visit the sites where Iran is most likely engaged in prohibited activities, there is no way to know whether Iran is engaged in prohibited activities at those locations.Obama acknowledged that Iran would have no prohibition on getting a weapon after the deal’s expiration while simultaneously claiming the deal “cuts off all of Iran’s pathways to the bomb” (Roll Call, July 14, 2015). He admitted “in year 13, 14, 15 [of the proposed deal], they [Iran] have advanced centrifuges that enrich uranium fairly rapidly, and at that point the breakout times would have shrunk almost down to zero” (“Transcript: President Obama's Full NPR Interview On Iran Nuclear Deal,” NPR, April 7, 2015).
The head of Iran’s nuclear program has said Iran has the capability to build advanced centrifuges on short notice and Iranian Foreign Minister Mohammad Javad Zarif admitted Iranian scientists had been continuing work with advanced centrifuges (PressTV, March 21, 2017). According to the Institute for Science and International Security, “The mass production of these centrifuges (or their components) would greatly expand Iran’s ability to sneak-out or breakout to nuclear weapons capability, or surge the size of its centrifuge program if the deal fails, or after key nuclear limitations end. If Salehi’s statement is true, Iran could have already stockpiled many advanced centrifuge components, associated raw materials, and the equipment necessary to operate a large number of advanced centrifuges” (David Albright and Olli Heinonen, “Is Iran Mass Producing Advanced Gas Centrifuge Components? Can we even know with the way the Iran deal has been structured and implemented so far?” Institute for Science and International Security, May 30, 2017).
This concern was reinforced when Iran’s nuclear chief, Ali Akbar Salehi, said in July 2017 that Iran could reactivate the reactor capable of producing plutonium for a bomb and ramp up enrichment of uranium to the pre-agreement level of 20% within five days (“Iran: Five days needed to ramp up uranium enrichment,” Al Jazeera, August 22, 2017; “Iranian Statements Underscore Weaknesses of Nuclear Deal,” The Tower, September 12, 2017). On March 5, 2018, Behrouz Kamalvandi, spokesman for Iran’s Atomic Energy Organization, said this level of enrichment could be reached in within 48 hours (David Brennan, “Iran Nuclear Program Can Restart Within 48 Hours If Deal Collapses, Official Claims,” Newsweek, (March 5, 2018).
Critics have also noted that the failure of the agreement to include Iranian sponsorship of terror, ballistic missile research and development, and aggression against its neighbors, combined with the release of billions of dollars in previously frozen funds, has allowed Iran to accelerate each of these activities. In September 2017, for example, it was disclosed that Iran increased its support for the Hezbollah to $800 million a year and resumed payments of $60-70 million to Hamas (Anna Ahronheim, “Iran Pays $830 Million To Hezbollah,” Jerusalem Post, September 18, 2017).
General Yoav Galant, a member of Israel’s security cabinet compared the nuclear deal to the Munich agreement that Europe signed with Germany in 1938, “which only postponed the war by a year, and thy got that war under far worse conditions” (Ynet, May 8, 2018).
Based on these perceived flaws, Israel’s prime minister and others called on the Trump administration to fix the nuclear deal or tear it up.
On April 30, 2018, Israeli Prime Minister Benjamin Netanyahu displayed excerpts of some 100,000 files Israel obtained from a secret compound in Tehran detailing Iran’s nuclear weapons activities (Haaretz, April 30, 2018). Netanyahu said Iran moved records of the weapons program to a secret warehouse in Tehran. The Mossad discovered the location in February 2016, broke into the building in January 2017, and smuggled the original documents back to Israel (New York Times, April 30, 2018). It was notable that the trove was found by Israeli intelligence rather than the IAEA, which is responsible for inspections and monitoring Iran’s nuclear activities, raising again questions about the agency’s ability to verify the JCPOA or any other nuclear agreement.
Secretary of State Mike Pompeo said “these documents are real, they are authentic” and the White House issued a statement saying Netanyahu’s information is “new and compelling.” The Institute for Science and International Security (ISIS) noted that Netanyahu presented a “surprising amount of information that was not previously known by Israeli, Western intelligence, or the IAEA about Iran”s nuclear weapons program” (@TheGoodISIS, April 30, 2018).
“These files conclusively prove that Iran is brazenly lying when it says it never had a nuclear weapons program,” Netanyahu said. Pompeo agreed that the documents indicated “the Iranians have continued to lie to their own people.” He added, that they debunked the Iranian claim that they have “never had a program like this” (Department of State, April 30, 2018).
According to the documents, the nuclear weapons program, Project Amad, began in the early 1990s with the goal of designing, producing and testing five warheads, each with a 10 kiloton TNT yield, for integration on a missile. Following the signing of the JCPOA, Iran preserved and expanded its nuclear knowhow for future use, under a different name using the same personnel.
The agreement had also called for the IAEA to report on Iran’s past nuclear activities, but it never did so, in part due to Iran’s refusal to cooperate. The final IAEA report prior to implementation of the JCPOA said Iran failed “to cooperate on central points” to establish that it had never pursued a nuclear weapon. Nevertheless, the IAEA concluded Iran had been “exploring the technologies, testing, and components that would be needed to produce a weapon someday” (New York Times, December 2, 2015).
ISIS noted that “Iran had an opportunity to come clean about its past nuclear weapons effort” in 2015, but, “instead, Israel found, it accelerated its effort to organize, preserve, and hide this massive archive of nuclear weaponization data and documents” (@TheGoodISIS, April 30, 2018).
According to ISIS: “No document explicitly stated that Iran will use the archives to build nuclear weapons in the future. But, question has to be asked, why preserve and extend such extensive archives if Iran never plans to build nuclear weapons?” (@TheGoodISIS, April 30, 2018).
The Wall Street Journal noted that “regimes that have peaceful intentions don’t behave this way. When South Africa decided to denuclearize in the early 1990s, President F.W. de Klerk ordered the destruction of all sensitive technical and policy documents and gave U.N. inspectors ‘anytime, anywhere’ access to inspect nuclear facilities. In Moammar Gadhafi’s case, U.S. officials physically removed sensitive nuclear-weapons documents, uranium and equipment from Libya” (Wall Street Journal, May 9, 2018).
Supporters of the agreement argued that Netanyahu did not provide any evidence that the Iranians were violating the nuclear agreement; however David Albright of ISIS highlighted several important findings from the Archive which demonstrated Iran was not in compliance with the agreement (“Nuclear Experts: Iran Nuclear Documents are a ‘Jackpot,’ Show Continued Intent to Make Bomb,” The Tower, May 11, 2018):
- Unlike South Africa, Iran hid the documentation of its nuclear weapons program from inspectors. Consequently, Iran did not denuclearize as required by the JCPOA.
- The JCPOA limits Iran’s nuclear activities to peaceful use. “It’s hard,” Albright said, “to see how this [the archive] is consistent with this pledge.”
- Section T in the JCPOA states “that under no circumstances will Iran ever seek, develop or acquire any nuclear weapons.” Iran put the head of the AMAD nuclear weapons program, Dr. Mohsen Fakhrizade, in charge of the secret stewardship program. This made the stewardship program, effectively, a program “contributing to nuclear weapons,” that was forbidden by the JCPOA.
- The JCPOA required Iran to disclose its past nuclear weapons work, but the archive showed that Iran had equipment that was used for nuclear weapons work that it never disclosed to the IAEA.
Based on their analysis of the material obtained by Israel, David Albright, Sarah Burkhard, Olli Heinonen, and Frank Pabian concluded “there is no proof that Iran has abandoned its goal of building nuclear weapons, only that it has accepted that its projects and plans are put on the shelf.” The documents and photographs indicate “Iran conducted at Parchin more high explosive tests related to nuclear weapons development than previously thought.” They also noted that Iran had very sophisticated dual use equipment that they suspect was stored by Iran for “future us or assigned it to other projects,” which raises the question: “where is it now?”
The findings lead them to also question “whether Iran is simply preserving, curating, and improving its nuclear weapons capabilities, awaiting a decision to reconstitute a full-blown nuclear weapons program at a later date, if such a political decision is made.” They add that Iran’s “failure to destroy all these documents, and purportedly, the equipment used in these activities, does not align with its commitment under the JCPOA ‘that under no circumstances will Iran ever seek, develop or acquire nuclear weapons.’” The authors say this is in stark contrast to the case of South Africa, which, after agreeing to abandon its nuclear weapons program, “involved program officials searching for and burning all nuclear weapons sensitive documents and destroying the sensitive components, equipment, and non-nuclear materials.”
As a result of the new information, the authors believe there is “a renewed urgency” for the IAEA “to look again at the question of whether Iran is maintaining and advancing a nuclear weapons program.” They added, “It is also vital for the inspectors to have full, unrestricted access to relevant technical and scientific personnel, equipment, and sites” (David Albright, Sarah Burkhard, Olli Heinonen, and Frank Pabian, “New Information about the Parchin Site: What the Atomic Archive Reveals About Iran’s Past Nuclear Weapons Related High Explosive Work at the Parchin High Explosive Test Site,” Institute for Science and International Security, October 23, 2018).
Albright subsequently told Foreign Policy that the documents proved the Iranians “were further along than Western intelligence agencies realized.” He said “the U.S. was issuing statements that it would take a year at least, perhaps two years, to build a deliverable weapon. The information in the archive makes it clear they could have done it a lot quicker.” Albright added that the French government, which was then saying Iran could achieve a weapon in three months, was much closer in its estimates (Foreign Policy, November 13, 2018).
On September 27, 2018, Netanyahu revealed the existence of a secret warehouse in the Turquz Abad district in Tehran, which he said held equipment and materiel related to Iran’s past or possibly on-going nuclear weapons efforts. He also disclosed that the facility had held 15 kilograms of radioactive material that Iran subsequently dispersed around Tehran. Even after Israel provided information regarding the warehouse to the IAEA, the agency failed to investigate.
Meanwhile, the Iranians emptied the warehouse and “disposed of radioactively contaminated material stored at the site.” According to Olli Heinonen, Former Deputy Director General of the IAEA and head of its Department of Safeguards, “The IAEA’s lack of action or explanation of its inaction undermines its credibility and raises questions about its effectiveness in its Iran safeguards mission” (Institute for Science and International Security, November 29, 2018).
After Trump had warned he would cancel the deal with Iran, administration officials spent months trying to negotiate an agreement with European allies on how to strengthen the JCPOA to satisfy the president’s concerns. As columnist Bret Stephens noted, “the same people who previously claimed the deal was the best we could possibly hope for suddenly became inventive in proposing means to fix it” (New York Times, May 8, 2018).
The Europeans were unwilling, however, to make significant changes in the agreement, and were particularly opposed to reimposing sanctions that would threaten their business opportunities in Iran. Consequently, on May 8, 2018, Trump announced the United States would be exiting the nuclear deal, making good on a campaign pledge to undo an agreement he repeatedly criticized as the
worst deal ever. “The Iran deal is defective at its core,” he said. "If we do nothing, we know exactly what will happen. In just a short period of time, the world’s leading state sponsor of terror will be on the cusp of acquiring the world’s most dangerous weapons.”
Trump also announced the U.S. would reimpose sanctions lifted as part of the JCPOA and that “no new contracts” with Iran will be permitted. The U.S. Treasury Department said it would halt transactions in Iranian government debt or currency, and purchases involving the country’s automobile sector within 90 days. Deals involving Iran’s oil and energy sector, shipping and ports, would be banned within 180 days. Individuals and entities that were delisted from sanctions will be re-designated. Treasury Secretary Steven Mnuchin specifically said the administration was revoking licenses for Boeing and Airbus to sell aircraft to Iran. Mnuchin also declared, “Our objective is to, again, eliminate transactions and eliminate access to their oil industry” (Washington Post, May 9, 2018).
One objective of the sanctions is to bring Iran back to the negotiating table and allow the international community to forge a deal that will prevent Iran from building a nuclear weapon and stop its other destabilizing activities. The day after withdrawing from the agreement, Trump warned if Iran resumed its nuclear program, there would be “very severe consequences” (Politico, May 9, 2018).
After Trump’s announcement, French President Emanuel Macron, German Chancellor Angela Merkel, and UK Prime Minister Teresa May issued a joint statement expressing “regret and concern” and stating their intention to honor the terms of the agreement. French Foreign Minister Jean-Yves Le Drian said that the deal remains in place despite the American withdrawal (Yara Bayoumy and Brian Love, “Europeans scramble to save Iran deal after Trump reneges, Reuters, May 9, 2018). An official statement from the Chinese Foreign Ministry urged the international community to defend the deal.
European Union leaders also met with their Iranian counterparts to reassure them they would do what they could to protect the JCPOA from the effects of the sanctions. Trade between the European Union and Iran skyrocketed following the signing of the JCPOA, from $9.2 billion in 2015 to $25 billion in 2017. Trump, however, warned that “any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States.” Secretary of State Mike Pompeo added later: “We understand that our reimposition of sanctions and the coming pressure campaign on the Iranian regime will pose financial and economic difficulties for a number of our friends. Indeed, it imposes economic challenges to America as well. These are markets our businesses would love to sell into as well. And we want to hear their concerns. But we will hold those doing prohibited business in Iran to account” (Remarks at the Heritage Foundation, May 21, 2018).
The decision to withdraw from the deal was met with widespread criticism from many foreign policy experts, former Obama administration officials and some nuclear proliferation analysts. A poll published by Politico also indicated the American public was split on the decision (40-37 percent opposed pulling out in response to one question but, when worded differently, respondents approved by a 42-40 percent margin) and most felt it made both the United States and Israel less safe (Politico, May 2018).
Meanwhile, America’s Middle Eastern allies expressed enthusiastic support for the U.S. announcement. Israel, Saudi Arabia, Egypt, the UAE, and Bahrain all pointed out the flaws in the agreement and hailed Trump’s decision (MEMRI, May 9, 2018).
Iranian President Hassan Rouhani expressed his desire to stay in the deal and continue negotiations with the European Union, China and Russia. Foreign Minister Mohammad Javad Zarif tweeted that he would “spearhead a diplomatic effort to examine whether remaining JCPOA participants can ensure its full benefits for Iran.” He said the outcome of those talks would “determine our response” (Washington Post, May 9, 2018). Khamenei subsequently said Iran would resume its nuclear activities unless the Europeans agreed to “safeguard trade” and protect Iranian oil sales from U.S. sanctions by purchasing Iranian crude. He also demanded that the Europeans promise not to seek negotiations on Iran’s ballistic missile research or its regional activities (Washington Post, May 24, 2018).
Despite the U.S. withdrawal from the agreement, the IAEA still has “both the right and the obligation to ensure the peaceful nature of Iran’s nuclear program” based on United Nations Security Council Resolution 2231 and the Nuclear Non-Proliferation Treaty. Iran also “has a binding legal obligation to grant the IAEA access to all relevant sites, materials, equipment, documents, and personnel to resolve outstanding questions about the military dimensions of Iran’s past nuclear activities” (FDD Memorandum, May 21, 2018).
On May 21, 2018, Secretary of State Mike Pompeo said “any new agreement will make sure Iran never acquires a nuclear weapon, and will deter the regime’s malign behavior in a way that the JCPOA never could.” He laid out 12 demands that Iran must meet before the U.S. will lift sanctions and consider the reestablishment of full diplomatic and commercial relationships with Iran:
- First, Iran must declare to the IAEA a full account of the prior military dimensions of its nuclear program, and permanently and verifiably abandon such work in perpetuity.
- Second, Iran must stop enrichment and never pursue plutonium reprocessing. This includes closing its heavy water reactor.
- Third, Iran must also provide the IAEA with unqualified access to all sites throughout the entire country.
- Iran must end its proliferation of ballistic missiles and halt further launching or development of nuclear-capable missile systems.
- Iran must release all U.S. citizens, as well as citizens of our partners and allies, each of them detained on spurious charges.
- Iran must end support to Middle East terrorist groups, including Lebanese Hizballah, Hamas, and the Palestinian Islamic Jihad.
- Iran must respect the sovereignty of the Iraqi Government and permit the disarming, demobilization, and reintegration of Shia militias.
- Iran must also end its military support for the Houthi militia and work towards a peaceful political settlement in Yemen.
- Iran must withdraw all forces under Iranian command throughout the entirety of Syria.
- Iran must end support for the Taliban and other terrorists in Afghanistan and the region, and cease harboring senior al-Qaida leaders.
- Iran must end the IRG Qods Force’s support for terrorists and militant partners around the world.
- Iran must end its threatening behavior against its neighbors – many of whom are U.S. allies. This certainly includes its threats to destroy Israel, and its firing of missiles into Saudi Arabia and the United Arab Emirates. It also includes threats to international shipping and destructive – and destructive cyberattacks.
Pompeo acknowledged these terms were tough, but said they were no different than what was expected of Iran prior to signing the JCPOA:
“So we’re not asking anything other than that Iranian behavior be consistent with global norms, global norms widely recognized before the JCPOA. And we want to eliminate their capacity to threaten our world with those nuclear activities” (Remarks at the Heritage Foundation, May 21, 2018).
The United States imposed sanctions on multiple Iranian companies and individuals accused of running an illegal currency-exchange network on May 10, 2018. On May 15, the United States named Valiollah Seif, the governor of the Iranian central bank, along with Ali Tarzali, who works in the central bank’s international division, “specially designated global terrorists.” The Treasury Department accused the men of secretly funneling millions of dollars through an Iraqi bank to help Hezbollah. The sanctions apply to non-Americans and non-U.S. companies, which means that anyone in any country who does business with Seif or Tarzali could be punished, creating a strong disincentive for governments or businesses considering deals involving Iran’s central bank (AP, May 15, 2018). On May 24, 2018, the Treasury Department announced sanctions on nine individuals and firms accused of procuring jet engines and airplane parts for Iranian airlines previously blacklisted for their support of U.S.-designated terror groups (Wall Street Journal, May 24, 2018).
Critics of the Trump Administration insisted Iran could not be pressured by the United States alone and that it was only the multilateral sanctions that brought Iran to the negotiating table. The U.S. prohibitions on doing business with Iran, however, are having a major impact as American companies cancel deals with Iran and European companies do the same despite their governments’ continuing support of the deal. The following is just a sample of the impact of the U.S. policy:
- The top two shipping container carriers, 2M partners MSC and Maersk Line, announced they are reviewing their plans in Iran due to the changing situation (The Maritime Executive, May 14, 2018). French shipping group CMA CGM later announced it was pulling out of Iran (Reuters, July 7, 2018).
- Hyundai and Mazda cancel their contracts with Iranian automaker (BBC Persian, June 11, 2018).
- Airbus reportedly cancelled its deal to provide aircraft to Iran (AFP, June 16, 2018).
- Korean contractor Daelim has cancelled a $2 billion contract to modernize a refinery in the Iranian city of Esfahan (Global Construction Review, June 4, 2018).
- Hyundai Heavy Industries, the world’s largest shipyard was supposed to deliver container ships to an Iranian shipping company starting in April 2018, but has yet to deliver a single vessel (Korea Times, June 13, 2018).
- PSA, owner of the French carmaker Peugeot, said it had begun to suspend its joint ventures in Iran (Financial Times-UK, June 4, 2018).
- South Korea, one of Iran’s main customers in Asia, will not load any Iranian crude and condensate in July, halting all shipments for the first time in six years (Reuters, July 5, 2018).
- British renewable energy investor Quercus said it will halt the construction of a nearly $600 million solar power plant in Iran due to recently imposed U.S. sanctions on Tehran (Reuters, August 14, 2018).
- Deutsche Telekom and Deutsche Bahn, two state-owned German companies, along with car manufacturer Daimler and mechanical engineering company Herrenknecht, announced their withdrawal from Iran because of U.S. sanctions (PressTV, August 16, 2018).
- The Dutch airline KLM said it was cancelling flights to Iran after September 22, 2018. The decision was likely a product of the U.S. sanctions, but also coincided with an unexplained decision to deport two Iranian diplomats (Jerusalem Post, July 8, 2018). Subsequently, British Airways and Air France said they would suspend service to Iran (New York Times, August 23, 2018).
- Volkswagen AG agreed to comply with sanctions on Iran and end almost all of its business in the country. The company was given an exemption to do some business under a humanitarian exception. Other German companies, Adidas AG, and Daimler AG, have also said they will scale back or abandon their activities in Iran (Bloomberg, September 19, 2018).
- Despite Berlin's pledge to keep the Iranian nuclear deal alive, German banks are so scared of breaching U.S. sanctions they are refusing to process payments from Iran. Only 40 to 50 of Germany’s 900 cooperative banks and scores of Austrian banks are still processing payments linked to Iranian deals (Handelsblatt, October 2, 2018).
- Bank of Kunlun Co, the key Chinese conduit for transactions with Iran, is set to halt handling payments from the Islamic Republic (Reuters, October 23, 2018).
South Korea's Hyundai Engineering & Construction scrapped a $521 million deal to build a petrochemical complex in Iran (Reuters, October 29, 2018).
Germany’s largest telecom company, Deutsche Telekom, reportedly cut off phone and Internet service to Iran’s Bank Melli, which is accused of funneling money to terrorist groups (Jerusalem Post, November 26, 2018).
It was reported that at least 17 U.S. companies did business with Iran using foreign subsidiaries after the Iran nuclear deal went into effect in January 2016. Most appear to be terminating their activities in Iran to avoid crippling sanctions. For example:
- Boeing cancelled a deal to sell 80 aircraft valued at $16.6 billion to Iran (AFP, June 16, 2018).
- General Electric is planning to end sales of oil and natural-gas equipment to Iran (Wall Street Journal, May 31, 2018).
- Dover, a manufacturing conglomerate, said it would end its business in Iran (Wall Street Journal, June 5, 2018).
In another blow to the Iranian economy,
The Treasury Department announced on July 9, 2018, it was sanctioning Mahan Travel and Tourism Sdn Bhd, a Malaysia-based General Sales Agent, for acting for or on behalf of Mahan Air, an Iranian airline previously designated in connection with Iran’s support for international terrorism. Mahan Air was sanctioned in 2011 for “providing financial, material and technological support” to Iran’s Revolutionary Guards IRGC-QF). “Mahan Air is the airline of choice for the Islamic Revolutionary Guard Corps-Qods Force, facilitating its support to terrorism across the Middle East. Mahan’s regular flights to Syria are used to prop up the Assad regime and deliver weapons, foreign fighters, and Iranian operatives who sow violence and unrest across the region,” said Secretary of the Treasury Steven T. Mnuchin. “The United States government has been very clear about the deadly role played by Mahan Air. Our action against an independent company providing General Sales Agent services to Mahan makes clear to all in the aviation industry that they urgently need to sever all ties and distance themselves immediately from this airline” (U.S. Department of the Treasury, July 9, 2018).
On August 7, “snapback” sanctions came into force targeting Iranian purchases of U.S. dollars, metals trading, coal, industrial software and its auto sector. Trump tweeted, “Anyone doing business with Iran will NOT be doing business with the United States” (Haaretz, August 7, 2018).
On October 16, 2018, the Treasury Department designated Iran’s Basij Resistance Force – an arm of the Islamic Revolutionary Guard Corps – and 22 companies and financial institutions associated with the group as “specially designated global terrorists.” The designation freezes Basij assets and blocks U.S. citizens from doing business with the Basij and its conglomerate of banks, investment companies and engineering firms, among other interests (Department of the Treasury, October 16, 2018). The same day sanctions also were applied to Bank Mellat, Mehr Eqtesad Bank, the Iran Tractor Manufacturing Company, Esfehan’s Mobarakeh Steel Company, and other companies linked to investment, commodities and engineering (Reuters, October 16, 2018).
European governments remain committed to the JCPOA and continue to negotiate with Iran on how to strengthen the agreement after the United States pulled out of the deal. The Iranians, however, have been unwilling to make any changes to the agreement.
Even as they acknowledge the flaws in the deal, defenders of the nuclear agreement repeatedly cite IAEA reports to demonstrate it is working. The EU, for example, insists the “JCPOA is working and delivering on its goal, namely to ensure that the Iranian program remains exclusively peaceful as confirmed by the International Atomic Energy Agency (IAEA) in 11 consecutive reports.” Olli Heinonen, who served at the IAEA for 27 years, says the EU position is misleading. “The IAEA has only said in its reports that it has continued to verify non-diversion of declared nuclear material, but it has not confirmed that Iran’s nuclear program remains exclusively peaceful,” according to Heinonen. He added, that rather than dismantling its nuclear program, Iran “proceeds with the development of new centrifuges, piles up uranium (yellow cake), and is quietly building infrastructure” (Washington Times, August 14, 2018).
Meanwhile, the Europeans hoped they could circumvent U.S. sanctions. In a major setback, however, the European Investment Bank rejected an EU proposal to do business in Iran. “The resistance from the European Union’s lending arm underscores the limits of the bloc’s ability to shield trade with Iran from the reimposition of U.S. sanctions” (Reuters, June 5, 2018).
In early July, the Europeans invited Iran’s President Rouhani to attend a meeting to discuss how to get around U.S. sanctions. Netanyahu pointed out the same week “his regime dispatched a terrorist cell to carry out a major terrorist action in France. The commander of this terrorism cell was an Iranian diplomat in Austria.” The plot to bomb a rally in Paris staged by Iranian opposition groups was discovered and members of the cell were arrested in France, Belgium and Germany. The Iranian diplomat was expelled (Deutsche Welle, July 2, 2018). Netanyahu said, “Here’s my message to the European leaders: Stop funding the very regime that is sponsoring terrorism against you and against so many others. Stop appeasing Iran” (Prime Minister’s Office, July 3, 2018).
Ahead of the talks, Rouhani told the leaders of France and Germany that a European package of economic measures to counter the effects of U.S. sanctions did not meet Iran’s demands. Instead of the leaders meeting, foreign ministers and senior diplomats from Britain, China, France, Germany, and Russia held talks on July 6 with their Iranian counterpart, Mohammad Javad Zarif, but failed to reach an agreement to salvage the nuclear deal after Iran said the package of economic measures they were offered did not go far enough. Afterward, EU foreign policy chief Federica Mogherin said the parties agreed to continue negotiations (Radio Free Europe, July 6, 2018).
The German newspaper Bild reported the Iranian regime intends to fly 300 million euros in cash from Germany to Iran. The mullahs are worried that they will run out of cash because of U.S. sanctions (Bild, July 8, 2018). The United States and Israel are concerned the money will be used to finance terrorism and Iran’s foreign adventures and the U.S. ambassador to Germany called on Berlin to block the plan (Haaretz, July 10, 2018). In September, Iran reportedly gave up trying to obtain the money in the wake of U.S. opposition (theAlgemeiner, September 5, 2018).
Replying to a June 4, 2018, letter from Britain, France and Germany seeking broad exemptions for European firms doing business in Iran, Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin wrote that the Trump administration would grant only limited exceptions based on national security or humanitarian grounds (NBC News, July 14, 2018).
In August 2018, the EU announced plans to provide Iran with more than $20 million as part of its effort to keep the nuclear deal alive. The EU said the funds represented the first tranche of a wider package of $58 million intended to help Iran “address key economic and social challenges.” The decision was criticized by Prime Minister Netanyahu who said it would undermine “efforts to curb Iranian aggression in the region and beyond the region” (Radio Free Europe, August 24, 2018).
Britain, France, Germany, Russia and China announced on September 24, 2018, plans to establish a “Special Purpose Vehicle” (SPV) to facilitate payments for Iranian imports and exports. The SPV is seen as the lynchpin of European efforts to salvage the nuclear accord. According to European Union foreign policy chief Federica Mogherini, “this will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue to trade with Iran in accordance with European Union law and could be open to other partners in the world” (AP, September 24, 2018).
Secretary Pompeo expressed dismay at the effort to circumvent U.S. sanctions. This is one of the most counterproductive measures imaginable for regional global peace and security,” Pompeo said. “By sustaining revenues to the regime you are solidifying Iran’s ranking as (the) No. 1 state sponsor of terror” (Algemeiner, September 26, 2018).
Efforts by the EU to protect trade with Iran against U.S. sanctions faced possible collapse when no EU country expressed willingness to host the SPV for fear of provoking U.S. punishment (Reuters, November 14, 2018). France and Germany subsequently said they would share responsibility, prompting another warning from American officials that they would impose sanctions on entities that participated in the effort to undermine U.S. policy (Jerusalem Post, November 28, 2018).
In a major blow to EU efforts to defy U.S. sanctions, SWIFT, the international financial messaging system, said November 5, 2018, it will comply with U.S. sanctions.
In keeping with our mission of supporting the resilience and integrity of the global financial system as a global and neutral service provider, SWIFT is suspending certain Iranian banks' access to the messaging system. This step, while regrettable, has been taken in the interest of the stability and integrity of the wider global financial system (Financial Times, November 2, 2018).
In October 2018, former CIA Director David Petraeus responded to the EU effort to maintain the JCPOA. “The Europeans focused on the strengths of the agreement and would like to continue it,” he says. “I would have some understanding for that, were it not for the fact that I’ve been on battlefields where American, coalition and Iraqi soldiers have been killed by lethal weapons and ammunition provided by Iran, along with funding. He added, “Iran is a country … that pushes until there is firm pushback. I think that you are now seeing an American administration that is willing to push back very firmly” (Arab News, October 28, 2018).
The Europeans find themselves in an increasingly difficult bind because their defense of the Iran deal, which in large measure was based on the promise of Iran moderating its behavior, has been undermined by two cases where Iran was discovered to be behind planned terrorist attacks on their soil. In June 2018, an attack on an Iranian opposition group was thwarted in Paris and, in September, Danish officials discovered a plot to assassinate the leader of a separatist group. Even as it attempts to undermine U.S. sanctions, the EU is now considering imposing its own sanctions to punish Iran for its role in these schemes (Wall Street Journal, November 2, 2018).
Even before U.S. sanctions went into full effect, they were having an impact on Iran’s economy. Iran’s currency, the rial, has been in a freefall compared with the dollar, making imports more expensive and forcing Iran’s manufacturers and exporters to cut production and cancel contracts. In one sign of turmoil in Iran created by Trump’s policy, Valiollah Seif, governor of the central bank of Iran was fired. When Seif took over the bank in 2013, it cost 30,000 rials to buy $1; today a dollar costs 150,000 (New York Times, September 5, 2018). Iran’s annual inflation rate is now 203% (Forbes, July 29, 2018).
Iran’s economy was already suffering from high unemployment and inflation, but had been projected to have modest growth as a result of the business activity that resumed following the signing of the JCPOA. Now, however, the economy is expected to grow by less than half the previously projected rate and to contract in 2019 (Wall Street Journal, July 18, 2018).
In addition to attempting to strangle the Iranian economy as a means of pressuring the government to change its policy, the Trump administration has launched a campaign to foment unrest by using social media, speeches and other communications critical of the government. Pompeo said the U.S. is creating a Farsi channel across television, radio, digital and social media formats to circumvent Internet censorship in Iran “so that ordinary Iranians inside Iran and around the globe will know that America stands with them” (Washington Post, July 23, 2018). Some of the messages are meant to convince the public their leaders are corrupt and neglecting their welfare; for example, by portraying the government as squandering money on foreign adventures rather than spending it domestically on the Iranian people (Reuters, July 22, 2018).
On July 21, 2018, Iranian President Hassan Rouhani warned the Trump administration against continuing to oppose Iran and threatened to shut down international oil shipments in the Strait of Hormuz. “Mr. Trump, don’t play with the lion’s tail, this would only lead to regret,” IRNA, the state-run news wire, quoted Rouhani as saying. “America should know that peace with Iran is the mother of all peace, and war with Iran is the mother of all wars” (Reuters, July 22, 2018).
A day later, Trump tweeted:
Iran again upped the ante with Iran’s Major General Qassem Soleimani warning that the Red Sea was no longer safe for US vessels. “You may begin the war, but it is us who will end it,” the Iranian commander said (Asharq Al-Awsat, (July 27, 2018).).
In the latest sign of turmoil in Iran created by Trump’s policy, Valiollah Seif, governor of the central bank of Iran was fired. An indication of the economic decline is the continuing devaluation of Iran’s currency. When Seif took over the bank in 2013, it cost 30,000 rials to buy $1; today a dollar costs 112,000 (New York Times, July 25, 2018) after plunging 12.5% in one day (June 28-29). Iran’s annual inflation rate is now 203%. (Forbes, July 29, 2018).
On August 16, 2018, Pompeo announced that Brian Hook, the State Department’s director of policy planning, will serve as the administration’s special representative for Iran and lead a new “Iran Action Group” to oversee “our new strategy [that] addresses all manifestations of the Iranian threat.” Hook said the group will be comprised of an “elite team” of foreign affairs professionals at the State Department and across the administration. At the heart of the strategy are the twelve demands made of Iran by Pompeo in his May 21 speech. Hook also warned the U.S. is “prepared to impose secondary sanctions on other governments that continue to trade with Iran” (Algemeiner, August 16, 2018).
Less than a week later, U.S. prosecutors announced charges against Ahmadreza Mohammadi Doostdar, a dual U.S.-Iranian citizen, and Majid Ghorbani, an Iranian citizen and resident of California. The two men are accused of acting as agents of the government of Iran, covertly monitoring the Rohr Chabad House, which serves students at the University of Illinois at Chicago, and surveilling American members of an Iranian opposition group in exile. “This alleged activity demonstrates a continued interest in targeting the United States, as well as potential opposition groups located in the United States,” namely the Mujahideen-e Khalq (MEK) or People’s Mujahedin of Iran, said Michael McGarrity, acting executive assistant director of the FBI’s national security branch (Washington Post, August 20, 2018).
Iran has also been engaging in a variety of malevolent cyber activities. This includes spear-phishing attacks (using fake emails to induce recipients to reveal confidential information), the spread of malware and efforts to infiltrate computer systems. Social media platforms also discovered fake accounts, and the spread of false information and propaganda by Iranians using websites designed to look independent, videos and social media posts. Google, YouTube, Facebook and Twitter subsequently deleted videos and accounts traced to Iran (Wall Street Journal, August 24, 2018).
Admitting that sanctions were damaging their already weak economy, Iranian lawyers asked the International Court of Justice on August 27, 2018, to order the United States to lift sanctions imposed by the Trump administration against Tehran on grounds they violate the 1955 Treaty of Amity between Iran and the U.S. Secretary of State Pompeo described Iran’s suit as “an attempt to interfere with the sovereign rights of the United States to take lawful actions, including re-imposition of sanctions, which are necessary to protect our national security.” He added the United States, “will vigorously defend against Iran’s meritless claims this week in The Hague” (Reuters, August 26, 2018).
Admitting that sanctions were damaging their already weak economy, Iranian lawyers asked the International Court of Justice on August 27, 2018, to order the United States to lift sanctions imposed by the Trump administration against Tehran on grounds they violate the 1955 Treaty of Amity between Iran and the U.S. Secretary of State Pompeo described Iran’s suit as “an attempt to interfere with the sovereign rights of the United States to take lawful actions, including re-imposition of sanctions, which are necessary to protect our national security.” He added the United States, “will vigorously defend against Iran’s meritless claims this week in The Hague” (Reuters, August 26, 2018).
In another sign that sanctions are having a devastating impact on the Iranian economy, the Islamic Republic News Agency admitted that 70% of factories, workshops and mines in the country have shut down or gone bankrupt (Middle East Monitor, October 25, 2018). Unemployment is running at 12.1%, with 3 million Iranians unable to find jobs. The International Monetary Fund has forecast that Iran’s economy will contract by 1.5% this year and by 3.6% in 2019 due to dwindling oil revenues and a September report from the Iranian parliament warned that rising unemployment could threaten the nation’s stability (Reuters, November 24, 2018).
One of the major concerns of critics of the Trump administration’s policies is that oil prices would skyrocket if Iranian oil was taken off the market due to sanctions. Instead, in the first week following the imposition of sanctions, the price declined. Brent crude prices fell more than 20 percent from their four-year peak of $86.74 in early October 2018 to a three-year low of $55.69 on November 13 (Wall Street Journal, November 13, and 14, 2018). One reason is that OPEC and Russian crude production has been increasing, more than offsetting losses from Iran.
Iran’s oil exports fell about 8% in the first two months following the U.S. withdrawal from the JCPOA, and that was before sanctions on oil kicked in. The situation is expected to get worse as more shipping and oil companies cancel contracts and refuse to trade with Iran. For example:
- One of the largest deals between a European company and Iran involved the French oil and energy company Total, which signed a multibillion dollar agreement to develop Iran’s South Pars gas field in 2017. The company announced it was abandoning the project unless it receives an exemption from U.S. authorities (Reuters, May 16, 2018).
- Japan’s major oil distributors are expected to suspend crude imports from Iran in October (Japan Times, September 2, 2018).
- Refiners in India, Iran’s number two oil client after China, dramatically cut their monthly crude loadings and India’s oil ministry told refiners to prepare for a “drastic reduction or zero” imports from Iran starting in November 2018 (Reuters, September 14, 2018).
- South Korea did not import any oil from Iran in September 2018 for the first time in six years (Reuters, October 14, 2018).
The administration agreed to let eight countries, including South Korea, Japan and India to keep buying Iranian oil after it reimposed sanctions. One analyst called the waivers “a lifeline to Iran.” Another analyst countered, “The U.S. may use waivers to slow-walk implementation, but these will not apply indefinitely” (Reuters, November 2, 2018). Pompeo said the waivers were granted to the eight countries “only because they have demonstrated significant reductions in their crude oil and cooperation on many other fronts.” He said two of the eight were expected to end their imports of Iranian oil “within weeks,” and all must reapply for extended exemptions at the end of six months (New York Times, November 2, 2018).
The White House did not announce the exemptions but did put out a press release saying that “on November 5, 2018, all United States sanctions that were lifted under the disastrous Iran nuclear deal will be fully reimposed” (White House, November 2, 2018).
Meanwhile, Russia reportedly agreed to a deal with Iran that would allow the country to circumvent U.S. sanctions to import oil (i24News, October 14, 2018).
Ali Akbar Salehi, head of Iran’s Atomic Energy Organization, said Iran is close to finishing a factory where it can build a new generation of centrifuge machines. He also said Iran has imported some 400 tons of yellowcake uranium since signing the JCPOA, bringing its stockpile to between 900 and 950 tons. This is permissible under the agreement; however, Iran is still required to limit enrichment of uranium to 3.67 percent, enough to use in a nuclear power plant but less than the 90 percent needed for an atomic weapon (AP, July 18, 2018).
Reports released in 2018 by the German intelligence agencies in Hamburg, Bavaria, Baden-Württemberg, North Rhine-Westphalia and Hesse obtained by the Jerusalem Post indicate Iran continues to seek weapons of mass destruction (Jerusalem Post, July 21, 2018).
The July report from Hamburg said that Iran is among the “crisis countries” that “are still making an effort to obtain products for the manufacture of atomic, biological and chemical weapons of mass destruction (proliferation) and the corresponding missile carrier technology (rocket technology).” The report added, “Iran continues to pursue unchanged an ambitious program to modernize its rocket technology with the goal of a continued increase of the reach of the missiles.”
Bavaria’s intelligence agency disclosed in April: “Iran, North Korea, Syria and Pakistan are making efforts to expand their conventional weapons arsenal through the production of weapons of mass destruction.”
The report compiled in Hesse specified that Iran was one of two countries seeking to obtain nuclear weapons. “States like Iran and North Korea attempt, in the context of proliferation, to acquire and spread such weapons by, for example, disguising the transportation ways through third countries.”
In June, Baden-Württemberg intelligence reported: “Iran continued to undertake, as did Pakistan and Syria, efforts to obtain goods and know-how to be used for the development of weapons of mass destruction and to optimize corresponding missile-delivery systems.”
The North Rhine-Westphalia intelligence agency wrote: “Because of the demand for relevant goods for its rocket program, Iran continues to represent proliferation defense in our work.”
After signing the JCPOA, Iran stopped production of 20% enriched uranium and deposited the excessive fuel in Russia in nearly 10 batches. Iran announced on August 11, 2018, it asked for the return of the first batch seven months earlier and now plans to bring back a second. In April, Ali Akbar Salehi, head of the Atomic Energy Organization of Iran, said it would take only four days to ramp up enrichment again to 20% at its Fordo nuclear facility, which begs the question how this is possible if the nuclear deal was supposed to cut off all avenues for Iran to build a bomb. Salehi also threatened countries that might consider following the United States’ lead in pulling out of the JCPOA by suggesting Iran could respond by advancing its nuclear program beyond the pre-agreement levels (Fars News Agency, August 11, 2018).