Trump Escalates Rhetoric on Iran
Rhetoric escalated between the United States and Iran when U.S. President Donald Trump irresponsibly tweeted July 22 that Iranian President Hassan Rouhani must “NEVER EVER THREATEN THE UNITED STATES AGAIN” or else suffer consequences the likes of which “FEW HAVE EVER SUFFERED BEFORE.”
In response to Trump’s threat, Iranian Foreign Minister Javad Zarif tweeted July 23 that Iran is “UNIMPRESSED” by the bluster and ended his message with the warning “BE CAUTIOUS.”
The Trump tweet was likely prompted by Rouhani warning July 22 that the United States should know that “war with Iran is the mother of all wars” and if Iran’s oil exports are blocked, “no other country in the region” will export oil.
The sanctions that Trump reimposed May 8 when he violated and withdrew from the multilateral nuclear deal with Iran, known as the Joint Comprehensive Plan of Action (JCPOA), include measures penalizing states if they fail to significantly reduce imports of Iranian oil every 180 days.
Secretary of State Mike Pompeo reiterated in a July 22 speech that the U.S. focus is to get states importing Iranian oil to “as close to zero as possible” by the Nov. 4 180-day deadline (see below for details).
Pompeo said little about the JCPOA in his speech, which criticized the Iranian regime and reiterated that the United States is engaged in a “diplomatic and financial pressure campaign” to cut off funds used by the government to “enrich itself and support death and destruction.”
While Trump’s tweet prompted pushback from some policymakers, U.S. National Security Advisor John Bolton July 23 reiterated and appeared to broaden the vague and reckless threat, saying “if Iran does anything at all to the negative, they will pay a price like few countries have ever paid before.”
Secretary of Defense James Mattis said July 24 that Trump is making “very clear” that Iran is “on the wrong track” and called for Tehran to “shape up and show responsibility.”
The exchange of threats between the United States and Iran is taking place as the P4+1 (China, France, Germany, Russia, and the United Kingdom) are looking for options to sustain sanctions relief and keep Iran in the JCPOA (see below for details).
The P4+1 face a ticking clock, as the first U.S. sanctions reimposed by Trump will be enforceable Aug. 6, when the 90-day wind-down closes. These measures target certain banking activities, trade involving certain metals, coal, and the automotive sector, and the purchase of U.S. dollars by the Iranian government. The Treasury Department will also revoke authorizations allowing carpets and Iranian foodstuffs to be exported to the United States and revoke licenses issued for the sale of commercial aircraft parts and services to Iran.
The remaining sanctions penalties, including those that target Iran’s oil sales, will be effective Nov. 4.—KELSEY DAVENPORT, director for nonproliferation policy
State Department Official’s Comments on Iran’s Nuclear Program at Odds with Compliance Report
U.S. Assistant Secretary of State for Arms Control, Verification, and Compliance, Yleem Poblete, gave a speech July 27 reiterating the Trump administration’s case against the JCPOA. But in addition to repeating Trump’s JCPOA “flaws,”—which are based on flawed assumptions and unrealistic demands— Poblete leveled several additional allegations against Iran that contradict conclusions drawn by the State Department earlier this year.
For instance, Poblete said “Iran has not yet demonstrated to the world that it has rectified its egregious record of noncompliance with Articles II and III” of the nuclear Nonproliferation Treaty.*
But the State Department’s 2018 Report on Adherence to and Compliance With Arms Control Nonproliferation, and Disarmament Agreements and Commitments concluded that “Previous issues leading to the finding of violation of both Article II and Article III of the NPT by the Islamic Republic of Iran (Iran) were resolved as of the 2015 report period, despite Iran’s continued refusal to acknowledge or provide certain information about the military dimensions of its past nuclear activities.”
Poblete’s case seemed to rest on past activities, not new actions by Iran. And there are no indications, either from the International Atomic Energy Agency (IAEA) or U.S. intelligence community, that Iran is currently violating its JCPOA or NPT commitments.
She claimed documents Israel recovered related to Iran’s past nuclear weapons activities “should leave no one in doubt that Iran has not yet clearly put its unlawful nuclear weapons ambitions forever behind it.” But Iran’s past nuclear weapons work is not in doubt and as the 2018 compliance report noted, the NPT violations were resolved despite Iran’s refusal to own up to its past nuclear weapons work and fully disclose it.
As the 2007 National Intelligence Estimate concluded, Iran had the capability to produce nuclear weapons if it chose to do so, but Tehran abandoned its organized nuclear weapons program in 2003. The 2015 IAEA report also concluded, “that a range of activities relevant to the development of a nuclear explosive device were conducted in Iran prior to the end of 2003 as a coordinated effort, and some activities took place after 2003,” but there was no credible evidence of nuclear weapons activities after 2009. While this report closed the IAEA’s file on Iran’s nuclear weapons activities, the agency could revisit these activities in the context of pursuing the broader conclusion on Iran’s nuclear program, which determines that a country’s nuclear declaration is both correct and complete.
The evidence of past nuclear weaponization activities underscores the importance of sustaining the JCPOA. Amongst the permanent monitoring and verification measures, the JCPOA includes a ban on certain nuclear weapons-related activities (Annex I, section T). This prevents Iran from pursuing certain activities under the pretext of conventional weaponry or civil purposes, as Tehran did in the past.
Poblete also called out the JCPOA for failing to cover Iran’s “chemical weapons program.” But the same 2018 State Department report concluded that while the United States cannot certify that Iran has met its obligations under the Chemical Weapons Convention, the United States “does not have sufficient information to ascertain whether or not Iranian facilities are involved in or intentionally retain the capability to produce CW agents.”
*Article II of the NPT commits states not to develop, pursue, or possess nuclear weapons and Article III requires a safeguards agreement with the IAEA to verify that a state’s nuclear program is entirely peaceful.
Iran Announces Construction of New Centrifuge Rotor Facility
Ali Akbar Salehi, head of the Atomic Energy Organization of Iran, announced July 18 that Iran built a new facility to produce centrifuge rotors for its advanced IR-6 centrifuges. Salehi said that the facility can produce up to 60 rotors per day.
Rotors are a critical centrifuge component. They spin inside the centrifuge causing separation of the uranium isotopes. It is this process that “enriches” uranium by concentrating the uranium-235.
Under the terms of the JCPOA, Iran is permitted to test limited numbers of IR-6 centrifuges and to manufacture IR-6 centrifuges only to meet the needs under its research and development plan. After eight years, Iran can begin producing IR-6 centrifuges (without the rotors) on an industrial scale for installation after the first decade of the agreement. Salehi said that construction of the facility is not a violation of the nuclear deal.
Salehi’s announcement, while unhelpful, is unsurprising and the latest in a string of Iranian announcements likely designed to remind the international community that Tehran can significantly ramp up its nuclear activities if the JCPOA collapses or Iran no longer sees the benefit of continued compliance.
Salehi also noted that the IR-6 centrifuge is capable of producing 10 SWU per year. SWU, or separative work unit, indicates the efficiency of the centrifuge. The 10 SWU per machine estimate would decrease if the centrifuge was part of a cascade but still is significantly more efficient than the centrifuges Iran currently operates.
Under the JCPOA, Iran is permitted to enrich uranium using 5,060 IR-1 centrifuges for the first decade of the deal. IR-1s have an annual SWU of less than one.
EU Foreign Affairs Council Endorses Blocking Regulation
The EU Foreign Affairs Council endorsed the European Commission’s update of an EU blocking regulation, which prohibits European entities from abiding by U.S. sanctions. EU Foreign Policy Chief Federica Mogherini said July 16 after the council’s meeting that the endorsement is “very welcome” and gives a “consistent step forward” for the EU to sustain the economic benefits to the deal.
The European Commission adopted the update in June and it is set to go into effect Aug. 5 — the day before the first U.S. sanctions penalties are enforceable. However, if enough states object, the update to the blocking regulation (which covers the reimposed U.S. sanctions on Iran) would not go into effect.
The blocking regulation is even more critical after Pompeo said the United States will not issue any exemptions for European entities conducting business with Iran and Washington will apply “unprecedented financial pressure” on Iran until Tehran shifts its policies. Pompeo detailed this response in a July letter to Mogherini, who said the U.S. decision was no surprise. Mogherini, along with ministers from the E3 (France, Germany, and the United Kingdom) wrote to Pompeo and U.S. Treasury Secretary Steven Mnuchin in June requesting exemptions.
The Pompeo letter is consistent with statements by the Trump administration that it will pursue the “strongest sanctions in history” to get a “better deal” with Iran. But given Iran’s continued compliance with the nuclear deal and the widespread rejection of the U.S. decision to reimpose sanctions, Trump’s approach is only isolating the United States, causing a rift with key European allies, and jeopardizing the future of the JCPOA.
In a July 26 letter to the British, French, and German ambassadors to Washington, a group of 10 Republican Senators further exacerbated the rift with key allies when they hinted at retaliation if Europe did not comply with U.S. sanctions. The letter said it would be “particularly troubling if you sought to evade or undermine American statutes” and steps to do so “could well prompt Congressional action” to ensure the integrity of the sanctions.
The letter blatantly disregarded European arguments that sustaining the JCPOA is in their security interests and that the UN Security Council endorsing the deal commits states to support the JCPOA.
Europeans Look for Banking Solutions
Finding banking channels to facilitate business with Iran after U.S. sanctions kick in remains a challenge that the Europeans are seeking to address. The European Investment Bank (EIB) again reiterated July 18 that despite the June update to its mandate allowing investment in Iran, the bank “cannot play an active role.”
EIB President Werner Hoyer said he supported EU efforts to sustain the JCPOA but dealing with Iran may jeopardize the bank’s ability to raise money in U.S. markets and “would risk the business model of the bank.”
As an alternative, France, Germany, and the United Kingdom are exploring using national banks to open financial channels with Iran. According to a July 16 piece in The Wall Street Journal, the three governments presented the idea to Iran and are starting discussions with their own banks.
Creating financial channels, particularly to facilitate oil transactions, is a key concern of Iranian officials negotiating with the P4+1 on options to sustain the JCPOA.
Oil Exemptions Unclear Ahead of U.S. Sanctions Deadline
The Trump administration appears to be backing down on its initial position that states zero out oil imports from Iran, or face sanctions penalties Nov. 4.
Under the Fiscal Year 2012 National Defense Authorization Act, states importing oil from Iran can seek an exemption from U.S. penalties if imports are significantly reduced every 180 days. The law, however, does not define “significant reduction” and the Trump administration initially said states had to get down to zero. The administration appears to be moving away from that absolute interpretation, but officials are not saying publicly how much states must reduce purchases to qualify for the sanctions waiver.
Pompeo said July 22 that the U.S. focus is to get states importing Iranian crude to “as close to zero as possible” by Nov. 4, while Mnuchin said that the United States will consider waivers for states that reduce oil imports from Iran in order to avoid disruptions in the oil market.
Japan will reportedly cease oil purchases from Iran by October, but other states, including South Korea, have publicly stated they will make a significant reduction and seek a waiver from the United States to continue buying oil from Iran.
India, second only to China in total purchases of Iranian oil, maintains it will continue to import Iranian crude, and does has a mechanism to pay for oil imports in a national currency that Iran can then use to buy Indian goods. There were reports in June that Indian refiners were told to prepare for dramatic reductions in Iranian oil imports, but India’s Ministry of External Affairs said New Delhi agreed to “maintain the momentum” of bilateral cooperation with Iran after a July 16 meeting with Iranian officials.
China also says it will not abide by U.S. sanctions reimposed on Iran. One Chinese refiner has stopped all imports of U.S. oil and upped purchases from Iran to make up the difference. China is also contemplating tariffs on U.S. oil as part of the trade dispute escalating between Washington and Beijing.
In response to earlier comments by U.S. officials calling for zeroing out Iran’s oil exports, Iranian government spokesperson Mohammad Baqer Nobakht said the position is “absurd” and Iran will continue to meet its OPEC quota.
Joint Commission Lists Objectives for Collaboration
At the July 6 ministerial-level Joint Commission meeting, representatives from the P4+1 and Iran discussed sustaining the JCPOA. Iranian Foreign Minister Javad Zarif tweeted after the meeting that parties are “moving in right direction on concrete steps” and that all parties committed to ensuring Iran benefits from the deal.
The chair’s statement released after the meeting noted that all parties “welcomed the extensive work undertaken to-date, the intensification of technical dialogues and the mobilisation of considerable resources by all” to continue implementation of the nuclear deal.
The parties also affirmed their commitment to the following objectives and committed to working on these issues:
Iran Makes Complaint Against United States at International Court of Justice
Iran filed a complaint July 16 against the United States at the International Court of Justice (ICJ), accusing Washington of breaching its obligations under the 1955 Treaty of Amity, Economic Relations, and Consular Rights.
According to the Iranian compliant, Trump’s May 8 reimposition of sanctions breaches several articles of the treaty, including one prohibiting either party from “applying unreasonable or discriminatory measures that would impair their legally acquired rights and interests.” Iran called for the United States to terminate the sanctions reimposed May 8 and compensate Iran.
According to a July 17 press release from the ICJ, Iran is arguing that the ICJ has jurisdiction because the United States and Iran agreed in the 1955 treaty that any dispute not satisfactorily resolved through diplomacy shall be submitted to the Court.
According to a State Department release, Iran’s case is “baseless” and the United States will “vigorously defend” its actions to the ICJ.
Congress Softens Legislation Penalizing ZTE
Congress eased up on legislative provisions banning ZTE, a Chinese telecom company found guilty of conspiring to evade U.S. sanctions on Iran and North Korea and lying to investigators, from operating in the United States and buying U.S. components for at least a year after demonstrating compliance with U.S. sanctions.
In April, the U.S. Department of Commerce initially proposed a seven-year ban from the United States after ZTE violated a 2017 agreement with the United States over its past sanctions evasion. The Commerce Department said ZTE lied about disciplining employees responsible for sanctions evasion as required by the 2017 agreement. The ban announcement caused a crisis at ZTE and sparked concerns of collapse.
Trump, however, said in May that he was working with President Xi Jinping to get ZTE “back into business fast” to prevent job losses in China. Under a subsequent deal, the United States agreed ZTE could resume operating in the United States if it paid a $1 billion fine, agreed to more intrusive compliance monitoring, and replaced its leadership.
The Senate, however, voted in favor of an amendment to the fiscal year 2019 National Defense Authorization Act (NDAA) in June that would require the president to certify that ZTE had not violated U.S. sanctions for a full year before it could resume operations. The Senate provision also banned the U.S. government from purchasing ZTE technology.
However, the Senate provisions requiring the one-year delay were stripped out of the bill in conference with the House of Representatives. The agreed-upon compromise will allow ZTE to do business in the United States with private companies. The ban on U.S. government contracts with ZTE did remain in the NDAA, which is expected to pass and be signed by the president.
Republicans and Democrats criticized the weakened language on ZTE. Senator Marco Rubio (R-Fla.) said Congress caved on the ZTE provisions and Senator Chris Van Hollen (D-Md.) said the decision was “weak and shameful” and called out Republican leadership to refusing to take substantive action. Rubio and Van Hollen were co-sponsors of the stronger provisions on ZTE.
The Commerce Department lifted the April ban on ZTE July 13, after the company paid the $1 billion penalty and put an additional $400 million in escrow. ZTE must also allow a U.S. team to monitor its compliance with sanctions for ten years and will forfeit the $400 million if there are any future violations.
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