Israeli Government Insists On Internal Unity Over Iran Nuclear Issue

Some media outlets in Iran, not directly under government management, have published interviews with local pundits about the prospects of more nuclear talks with the United States, after the visit Saturday of the European Union’s foreign policy chief Josep Borrell to Tehran.

The visit ended in a positive tone that Tehran and Washington might resume indirect talks after a hiatus since March, in a Persian Gulf country, apparently without the participation of Russia and China, two other signatories of the 2015 nuclear agreement known as the JCPOA.

Diako Hosseini, a well-known political analyst in Tehran told the Islamic Labour News Agency (ILNA), expressed confidence that Iran was already tilting toward renewed talks, even before the recent visit of Russian Foreign Minister Sergey Lavrov to Tehran. He did not say how if Lavrov’s meetings with Iranian officials helped convince them to respond positively to Borrell, or as some other Iranian experts believe, Moscow has never been helpful in Iran’s nuclear talks.

Hosseini argued that both Iran and the United States see the JCPOA as serving their interests and if talks resume, this would be the last round and agreement will be at hand.

Asked how the two sides would resolve their outstanding differences, the analyst said that it is possible they would push points of contention to future talks and focus on reviving the 2015 deal, which President Doanld Trump abandoned in 2018.

Tehran has been demanding the removal of its Revolutionary Guard (IRGC) from the US list of Foreign Terrorist Organizations (FTO). Washington has rejected the demand so far, saying that the IRGC sanctions are not related to the nuclear issue and are “extraneous” to the talks.

Hosseini seemed to be suggesting that Iran could decide not to insist on this or other demands, with an agreement to discuss them after an deal to return to the JCPOA.

“If there is a will to reach an agreement, it is possible to find formulas so that the remaining differences do not to prevent a restoration of the JCPOA,” he said.

Borrell during his visit also spoke about shared interests with Iran over energy resources. Asked if this means Europe is ready to make separate deals with Iran, Hosseini responded that there would be no guarantees from Europe but perhaps “incentives” would be offered.

Reza Nasri, another Tehran-based analyst speaking to Rouydad24 website, dismissed demands often voiced by Iranian officials for iron-clad guarantees that the US would not pull out of an agreement in the future and Europe would be forthcoming in full economic cooperation.

“In all countries, including Iran, there is concept of national interest or ‘Raison d'état’ which allows states based on sovereignty – with their unilateral decision – to abrogate any guarantee or legal obligation toward another country,” he said. Indirectly referring to Iranian officials, he quipped that “Those who beat the drums of receiving guarantees, should say what kind of guarantee they want from America that only addresses one issue.”

He also expressed the view that fast changing global conditions in recent months might have also changed calculations in Washington and Tehran.

Nasri went on to say the best guarantee is creating conditions in which the other side calculates that “breaking an agreement is more harmful than staying committed.”

Iran's indirect talks with the United States on reviving the 2015 nuclear pact will resume soon, the Iranian foreign minister said on Saturday amid a push by Josep Borrell to break a months-long impasse.

The official said discussions would take place on Sunday at a dinner between the leaders of the Group of Seven rich nations with more detailed talks taking place on Tuesday morning between France, Britain, Germany and the United States.

The three European powers are parties to the nuclear deal, which then-US President Donald Trump pulled out of in 2018.

The pact appeared close to being revived in March after 11 months of talks, when the process came to a halt. Tehran insisted that Washington remove the Islamic Revolutionary Guard Corps (IRGC), its elite security force, from the U.S. Foreign Terrorist Organization list.

"Talks have intensified between our teams," said the French official, adding that it was crucial to revive the pact for the nuclear non-proliferation benefits, regional security and also to see how it all fits into the question of high oil prices.

Israel has reportedly critized Borrell's trrip to Tehran and the revivial of the JCPOA, which it regards as inadequate in preventing Tehran from acquiring nuclear weapons.

With reporting by Reuters

Nour News, usually reflecting the views of the Supreme National Security Council Secretary, Ali Shamkhani, said, “Considering the continuing efforts by Qatar to help re-start talks for the lifting of US sanctions, Doha’s chances for hosting the upcoming negotiations are higher than other Persian Gulf countries.”

A two-day visit by the European Union’s foreign policy chief Josep Borrell to Tehran appeared to have succeeded on Saturday in convincing Iran to have talks with the United States to resolve remaining differences that have blocked an agreement to revive the JCPOA.

The key factor that prevented an agreement in Vienna in March, when year-long talks came to a standstill, is Iran’s demand for the removal of its Revolutionary Guard from a US terrorist list.

There is no official word from Washington yet, if the Biden Administration agrees with a formula to hold talks with Iran apparently outside the JCPOA framework. What Borrell seems to have agreed with Iran would probably exclude Russia and China, two of the original JCPOA signatories from this round of talks.

Washington might be waiting for a briefing by Borrell to see the details of his discussions with the Iranians, but some coordination must have taken place before the EU foreign policy chief flew to Tehran on Friday.

US Special envoy for Iran and chief nuclear negotiator, Rob Malley, was in Brussels before Borrell’s trip and a tweet on Thursday [June23] showed him having dinner with Borrell and his deputy Enrique Mora.

Al Jazeera also reported on Sunday that according to an Iranian official Qatar has the best chance for hosting the new talks.

Israel’s Channel 12 television quoted a security official as saying that Israel has objected to the prospect of the JCPOA being revived in the near future. The source said that restoring the 2015 agreement in its current form would be “very bad” for Israel.

Israel says that the JCPOA’s sunset clauses would mature in a few years and Iran would be free to expand its nuclear program and build atomic weapons. The deal was weak from the beginning when the Obama administration negotiated it, Israel has always argued and supported for President Donald Trump’s decision to withdraw from the agreement in 2018.

Saudi Arabia and its Arab allies, although less vocal publicly, are equally alarmed not only at Iran’s nuclear program but also for its aggressive regional behavior, arming and supporting militant groups.

Washington is said to be working to lead a regional alliance of Israel, Saudi Arabia and other Arab countries to contain Iran. Israeli officials said this week that work is in progress to set up a joint air defense system between these countries, led by the US.

Iran’s Shamkhani told Borrell that Iran will further develop its nuclear programme until the West changes its "illegal behavior".

"Iran's retaliatory actions in the nuclear sector are merely legal and rational responses to US unilateralism and European inaction and will continue as long as the West's illegal practices are not changed," Shamkhani said, without elaborating.

And despite the imminent resumption of talks, Borrell appeared to play down the possibility of a quick deal.

"I cannot predict ... We are pushing for it. I appreciate the goodwill from the Iranian side. There is also goodwill from the American side," Borrell said in a news conference on an EU website.

In a joint news conference in Tehran with Iranian Foreign Minister Hossein Amir-Abdollahian, Borrell, the European Union High Representative for Foreign Affairs and Security Policy, spoke of resuming negotiations “speedily.”

There was no clarification from either Borrell or Amir-Abdollahian, whose news conference followed a three-and-a-half hour meeting, as to what changes would break the impasse that in March paused year-long talks in Vienna.

Borrell – according to IRNA, Iran’s official news agency – said the talks had lapsed with outstanding questions “that Iran and the United States were supposed to answer,” but neither he nor Amir-Abdollahian gave any indication Saturday that Tehran or Washington had answered these questions.

One outstanding matter is reportedly the US designation of Iran’s Revolutionary Guards (IRGC) as a ‘foreign terrorist organization,’ which highlights wider disagreement between Washington and Tehran over which US sanctions violate the JCPOA.

“This [delay in the Vienna talks] was not supposed to be three months,” Borrell said, according to IRNA. “But today the talks should resume, and this is a decision to be made by Tehran and Washington.”

Different words from Borrell were cited by Reuters. "We are expected to resume talks in the coming days and break the impasse,” was the agency’s account. “I am very happy about the decision that has been made in Tehran and Washington.” These words have fed wider media reports of agreement to resume talks, including with the US.

According to IRNA, Borrell said that after his Tehran trip Tehran talks “will resume, and my team will be there.” Borrell was quoted in some media that these talks would not be in Vienna but in the Persian Gulf.

‘Possibility'

But IRNA also reported from New York a “State Department source” expressing “appreciation for the efforts of Joseph Borrell,” as Washington awaited “consultation with him about his talks in Tehran.” IRNA’s source referred to the “possibility of resuming indirect talks with Iran.”

The US and Iran have since March have placed the onus for reaching agreement firmly on the other and have traded accusations that the other had raised demands unrelated to the JCPOA. Amir-Abdollahian appeared to restate this Saturday in expressing “hope” that “the American side will this time realistically and fairly engage in committed and responsible acts towards reaching the final point of an agreement.”

The Iranian foreign minister called his meeting with Borrell “long but positive.” Amir-Abdollahian stressed the importance of links between Iran and the “European continent…especially in trade relations,” a remark suggesting the EU was floating trade incentives for Iran should there be agreement on reviving the 2015 deal, the Joint Comprehensive Plan of Action (JCPOA).

New incentives?

The three European JCPOA signatories – France, Germany, and the United Kingdom – condemned President Donald Trump in 2018 for withdrawing from the agreement and imposing ‘maximum pressure’ sanctions that threatened punitive action against third parties trading with Iran. But the EU’s financial mechanism designed to protect European-Iran trade, Instex, proved ineffective as European companies ended commercial links.

There have been recent suggestions of Europe offering Tehran new economic incentives, including in the energy sector, should the JCPOA be restored, potentially soothing Iranian fears over the impact of the US again leaving the agreement.

Borrell later met Ali Shamkhani, Secretary of Iran’s Supreme National Security Council (SNSC), who said the "Iran's retaliatory actions in the nuclear sector” were “merely legal and ratinal responses to US unilateralism and European inaction” and would “continue as long as the West's illegal practices are not changed." The EU announced Borrell’s visit Friday as a two-day trip.

This relatively strong economic growth can partially explain Tehran’s current stonewalling of nuclear negotiations with the Biden administration, as Supreme Leader Ali Khamenei likely does not feel massive pressure to secure sanctions relief by striking a deal. If Washington were to reinvigorate its sanctions enforcement, however, it could reverse the Islamic Republic’s economic fortunes, stoke political instability within Iran, and pressure Khamenei to surrender.

According to Iran’s Statistics Center, the country’s GDP grew by 4.3 percent during the Persian calendar year 1400 (April 2021 to March 2022). The growth rate in the previous year was one percent. Almost all major sectors of the economy grew. Oil and gas saw the fastest growth rate, at 9.7 percent. The service sector, the largest sector of Iran’s economy, grew by 4.5 percent after having shrunk by 1.3 percent the previous year. This growth, however, does not mean that the economy is doing well. The real GDP is still below its March 2018 level, the point-to-point inflation was 52.5 percent in June, and the country faces daily protests and strikes over low wages and high inflation.

Several factors explain this higher growth. First, since taking office in January 2021, President Joe Biden has abandoned his predecessor’s policy of “maximum pressure” against Iran, leading to loose enforcement of U.S. sanctions against the Islamic Republic. Iran exported $48 billion worth of non-oil goods during the Persian year of 1400, the most in the country’s history. This trend has continued throughout the first two months of 1401 (April and May 2022), during which time Tehran exported 40 percent more oil year-over-year.

Meanwhile, Iran’s economy has benefited from higher prices of commodities, particularly oil and oil-based goods such as petrochemicals. The Islamic Republic also managed to replace some imported goods by expanding domestic production, in turn boosting Iran’s manufacturing and mining sectors. Finally, the removal of pandemic-related restrictions, combined with public optimism about reaching a deal with the United States to end sanctions, contributed to the growth in the service sector.

Iran’s renewed economic growth likely helps explain why Khamenei is in no rush to reach a nuclear deal with Biden. Loose U.S. sanctions enforcement has allowed Khamenei to reap economic benefits while expanding his nuclear program and eroding Washington’s leverage over Tehran.

Fortunately for the United States, however, Iran’s economy — and thus Khamenei’s negotiating position — remains fragile. If oil prices remain high and U.S. sanctions enforcement remains lackluster, the Islamic Republic could probably achieve 3to 5 percent growth this year. But a U.S. return to “maximum pressure” would likely see Iran’s economy return to meager or negative growth rates.

One sign of this fragility is that Iranian economic growth decelerated toward the end of the year, with GDP growing by just 2.3 percent during the last quarter (spring of 2022) compared to 6.9 percent during the first quarter (winter of 2021). That trend held true across most economic sectors. For example, whereas the oil and gas sector grew by 27.4 percent in the first quarter, its growth rate dropped to 0.5 percent in the fourth quarter. Likewise, the real estate sector grew 15.3 percent in the first quarter but shrank by 3.4 percent in the last quarter.

Moreover, the Islamic Republic has suffered from high inflation since late 2018, reducing purchasing power. This means that domestic consumption and demand are fragile. If the Biden administration tightens sanctions enforcement, consumer and investor pessimism will push down investment and consumption. The result will be a slowdown in economic activity and lower or negative GDP growth.

That economic downturn could exacerbate Iran’s ongoing socio-political instability, toppling his regime or increasing Khamenei’s incentive to reach a deal with Washington. Since 2017, the country has faced two waves of massive protests. In November 2019, the regime killed at least 1,500 protesters in less than a week to survive the most widespread protests of its history. Government restrictions and self-imposed isolation during COVID-19 slowed down the protests, but as those impediments faded, protests and worker strikes began again in 2021 and gained momentum in 2022. The protests and strikes now occurring daily across Iran reflect deep societal discontent, which can both signal and create economic troubles.

If the Biden administration continues with the status quo, it can expect Tehran to continue stonewalling, eliminating any chance of reaching an acceptable nuclear deal. Conversely, reviving maximum pressure could force Khamenei to play ball. With the Islamic Republic edging closer and closer toward a nuclear weapon, Biden doesn’t have any time

Saeed Ghasseminejad, who contributed this opinion article is a senior advisor on Iran and financial economics at the Foundation for Defense of Democracies (FDD), where he contributes to FDD’s Iran Program and Center on Economic and Financial Power (CEFP). Follow Saeed on Twitter @SGhasseminejad. FDD is a Washington, DC-based, non-partisan research institute focusing on national security and foreign policy.

The opinions expressed by the author are not necessarily the views of Iran International.