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Iran Pushes for EU Measures to Preserve Oil Sales | P4+1 and Iran Nuclear Deal Alert
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Iran Pushes for EU Measures to Preserve Oil Sales

Iran’s Supreme Leader Ali Khamenei said Aug. 29 that “hope should be abandoned” for the multilateral nuclear deal that Iran reached with six countries and the European Union in 2015 and he seemed to dismiss European efforts to sustain the deal as insufficient.

Khamenei and other Iranian officials contend that the remaining P4+1 parties to the nuclear deal (China, France, Germany, Russia, and the United Kingdom) are not doing enough to counteract sanctions reimposed by the United States. With U.S. sanctions targeting Iran’s oil sector set to enter into effect Nov. 5, Iran is looking for the EU to create mechanisms that will allow oil exports to continue.

Deputy Foreign Minister Abbas Araghchi said Sept. 4 that Iran will give Europe until Nov. 5 to come up with “practical mechanisms” to circumvent U.S. oil sanctions. European countries are considering options, such as using their central banks, to facilitate the necessary transactions. Europe may be betting that the United States would not take the extreme step of penalizing the central banks of its allies, but it is unclear if this approach is viable and will proceed.

Khamenei also said if Iran reaches the conclusion that the Joint Comprehensive Plan of Action (JCPOA) “doesn’t allow us to stand by our national interests, we will set it aside.” Behrouz Kamalvandi, the spokesman for the Atomic Energy Organization of Iran, said Sept. 5 that if Iran leaves the JCPOA, the country will pursue “much more advanced activities” and go beyond where the country’s nuclear program was in 2013 when negotiations began.

Despite Iran’s frustrations with the sanctions situation, Tehran is continuing to abide by the deal. EU foreign policy chief Federica Mogherini confirmed Aug. 31 that the latest International Atomic Energy Agency (IAEA) report demonstrates that Iran is complying with the terms of the agreement. The report will likely be released next week during the IAEA Board of Governors meeting in Vienna, Sept. 10-14.

The United States announced that President Donald Trump will chair a Sept. 26 UN Security Council meeting on Iran. U.S. Ambassador to the United Nations Nikki Haley said the meeting would focus on Iran’s “violations of international law and the general instability Iran sows” in the region.

Russia’s Deputy Ambassador to the UN, Dmitry Polyanskiy, said the Sept. 26 meeting should focus on the implementation of the JCPOA and hoped that there would be “views voiced in connection with the U.S. withdrawal.”

Iran’s Foreign Minister Javad Zarif tweeted Sept. 5 that Trump is abusing the U.S. presidency of the Security Council to blame Iran for “horrors that the U.S. & clients have unleashed” across the Middle East. Zarif said there is only one UN Security Council resolution on Iran, and Trump is “violating it and bullying others to do the same.” Zarif is likely referring to Resolution 2231 (2015), which endorsed the JCPOA.

Iran does not sit on the Security Council but Haley said the United States, which holds the presidency of the council for the month of September, would not object to Iranian President Hassan Rouhani speaking at the meeting.

Rouhani is expected to attend the UN General Assembly and is scheduled to speak Sept. 25, the same day as Trump. Trump says he is open to meeting with Rouhani, but Khamenei has stated that "no negotiations at any level will be held with the Americans."—KELSEY DAVENPORT, director for nonproliferation policy

Iran Announces Ramp Up in Missile Production

Iran’s Defense Ministry announced plans Sept. 1 to boost production of ballistic missiles and cruise missiles. Specifically, Amir Mohammad Ahadi, a senior adviser at the Iranian Defense Ministry, said Iran will be enhancing the power of “different types of ballistic and cruise missiles.” He said Iran has developed the necessary infrastructure to pursue these developments. Iran’s recently unveiled new short-range Fateh ballistic missile with “pinpoint accuracy” appears to confirm the plans to enhance the country’s missile capabilities.

Iran is not prohibited, either by the JCPOA or UN Security Council Resolution 2231, from developing and producing ballistic missiles. However, Resolution 2231 “calls upon” Tehran to refrain from undertaking “any activity” related to ballistic missiles designed to be nuclear-capable. Resolution 2231 does prohibit transfers of ballistic missiles and related technology without Security Council approval and there is evidence that Tehran is violating this provision.

Reports surfaced in Reuters Aug. 31 that Iran sent short-range ballistic missiles to Shia groups in Iraq and is exploring options to produce additional systems in that country. Reuters reported an Iranian official as saying the “logic was to have a backup plan if Iran was attacked” and that the number of missiles is not high. Some Iraqi officials denied that the transfer took place, others confirmed it.

In addition to the destabilizing implications of the spread of ballistic missiles, transferring the systems outside of Iran without Security Council permission is a clear violation of Resolution 2231. The UN Secretary-General is already investigating evidence that Tehran has violated Resolution 2231 by exporting ballistic missiles, including systems used by the Houthis.

While the Trump administration maintains that its approach to Iran is designed to counter Iran’s regional activities and missiles – areas not covered by the JCPOA – as well as fixing what it sees as the “flaws” in the nuclear deal, the decision to pull the United States out of the JCPOA only makes negotiations on Iran’s ballistic missiles more challenging. Not only has the United States lost the credibility to conduct such a negotiation, but the P4+1 are now having to spend time trying to save the deal, rather than focus on areas of shared concern.

The E3 (France, Germany, and the United Kingdom) in particular had been open to working with the United States on a fortified approach to address Iran’s ballistic missiles outside of the JCPOA, but Trump’s shortsighted approach effectively ended that cooperation. Now, Iranian officials consistently maintain that they are not interested in negotiation on ballistic missiles.

Haley Mischaracterizes the JCPOA

U.S. Ambassador to the UN Nikki Haley blatantly mischaracterized the terms of the JCPOA in an Aug. 28 speech when she said: “Iran was going to be able to start nuclear testing after 10 years.”

Under the JCPOA, Iran is prohibited from nuclear tests in perpetuity. There is no expiration date on the requirement that Iran refrain from certain activities relevant to developing the explosive package for a nuclear device (Annex I, Section T.) Furthermore, Iran is a signatory to the 1996 Comprehensive Nuclear Test Ban Treaty (CTBT), which prohibits nuclear test explosions. Although the CTBT has not yet entered into force, Iran, as a signatory, is obliged not to take steps contrary to the intent of the treaty.

Additionally, Haley said “nothing happened” when the United States went to the other countries in the deal and requested help on areas like ballistic missiles. Her remark is at odds with the statement issued by the E3 leaders in October 2017 expressly offering to cooperate on ballistic missiles and regional activities, but maintaining those talks should be separate from the JCPOA.

It is also at odds with reported comments by U.S. Secretary of State Mike Pompeo who, days before Trump pulled the United States out of the deal May 8, said the United States was close to an agreement with the E3 that addressed U.S. concerns and talks with Europe should continue.

States Seek Exemptions from U.S. Sanctions

In the last few weeks, several states have said publicly that they will seek waivers from the Trump administration to continue purchasing oil from Iran after the remaining U.S. sanctions come into effect Nov. 5. The Trump administration has said its goal is to push Iran’s oil exports as close to zero as possible but is open to granting waivers on a case-by-case basis for states that make a “significant reduction” in oil imports from Iran.

India made clear Aug. 29 that it would not be cutting out imports of Iranian oil completely and is seeking a waiver to continue purchases after Nov. 5. Indian officials did not announce the size of the cut New Delhi will be offering in exchange for a U.S. waiver, but U.S. Secretary of State Mike Pompeo said Sept. 6 that Washington would consider a waiver, but the country must eventually get to zero. Iranian news outlets have also reported that, similar to China, India will use the National Iranian Tanker Company for transport, as other shippers are finding it difficult to find insurance for Iranian oil due to sanctions.

Iraq is also looking for exemptions from certain sanctions on Iran, a move that Iraq’s Prime Minister Haider al-Abadi said Aug. 28 is necessary given the how interconnected the two countries are. Al-Abadi said he was also focused on securing “what Iraq really needs,” namely natural gas imports from Iran. Al-Abadi said that an Iraqi delegation would be visiting Washington to discuss the matter. He called the U.S. sanctions “oppressive” and recalled the Iraqi experience under sanctions after the First Gulf War and said that Baghdad would not be part of any “blockade” on Iran.

Several other states, including South Korea and Japan, have already indicated that they will seek a waiver to continue oil purchases from Iran, although news outlets in Japan and Iran indicate that thus far, Tokyo has not been successful in securing a waiver. China, Iran’s biggest purchaser of oil, still has not indicated any plans to cut imports.

An adviser to Saudi Arabia’s Energy Ministry conceded that sanctions are unlikely to completely cut off Iranian oil. Speaking at a Norwegian oil conference, Ibrahim al-Muhanna projected that Tehran may maintain exports at about 1 million barrels per day. But he also noted that if Iran followed through on threats to close down the Straits of Hormuz—through which an estimated two-thirds of the world oil supply travels—Tehran would suffer as well.

While Pakistan does not import Iranian oil and petrochemical products at rates comparable to that of China, India, South Korea, and Japan, the new government in Islamabad said it looked forward to expanding bilateral ties.

When Zarif met with his counterpart, Mehmood Qureshi, in early September, Qureshi said “Pakistan stands with Iran” and supports Iran’s principled stance toward continuing to implement the JCPOA. Pakistan’s new Prime Minister Imran Khan also called for reviving a planned pipeline connecting the two countries.

Israel and United States Form Sanctions Monitoring Group

The United States and Israel agreed to set up a working group to monitor sanctions enforcement on Iran. Israel is one of the few states that supported Trump’s decision to withdraw from the JCPOA and reimpose sanctions.

The announcement was made Aug. 29 after a meeting between U.S. Secretary of the Treasury Steven Mnuchin and Israel’s Finance Minister Moshe Kahlon. Few details were released at the time of the announcement and it is unclear what precisely the working group will do beyond the existing cooperation between the United States and Israel on sanctions, but Khalon said that the team “will be of great importance in tightening sanctions on Iran.”

Russia and Iran Resume Talks Over Bushehr Power Plant Units

Iranian and Russian officials met in August to discuss the construction of a 3,000-megawatt nuclear power plant in Iran.

Tehran and Moscow are already engaged in civil nuclear cooperation, which is permitted under the nuclear deal. Annex III of the JCPOA states that the parties to the deal “as appropriate, will facilitate Iran’s acquisition of light-water research and power reactors.”

Rosatom, the Russian nuclear energy company, contracted to build two additional units at the Bushehr site. Construction on one of the additional units, Bushehr-2, began in October 2017. Russia was also instrumental in completing the first unit at Bushehr, Iran’s only nuclear power plant, which was turned over to Iran to operate in September 2013.

Moscow is also playing a key role in assisting Iran in transforming the Fordow facility from a uranium enrichment site to a research center, as required by the JCPOA.

Iran and U.S. Argue Over Sanctions at the ICJ

The International Court of Justice (ICJ) heard arguments from Iranian and U.S. legal teams Aug. 27-28 on Tehran’s allegation that the reimposition of sanctions violated a 1955 treaty between the two states.

Iran’s lawyer Mohsen Mohebi argued Aug. 27 at the ICJ that Washington is “publicly propagating a policy intended to damage as severely as possible” Iran’s economy and Iranian businesses in violation of the 1955 US-Iranian Treaty of Amity and Economic Relations. Iran argued that it sought a diplomatic resolution, but the United States dismissed Iran’s overtures.

Pompeo described Iran’s case as “meritless” and said in an Aug. 27 statement that the U.S. reimposition of sanctions is a lawful action “necessary to protect our national security.”

Jennifer Newstead, a lawyer for the State Department, argued the U.S. position Aug. 28 and said that the ICJ does not have jurisdiction to hear the case. She said that the United States has the right to withdraw from the JCPOA and the Iranian case is “entirely about an attempt to compel the U.S. by order of this court” to resume implementation of the nuclear deal.

Newstead responded to arguments referencing Iran’s economic problems, by arguing that the current issues have “deep roots” stemming from mismanagement and repression.

Decisions by ICJ, located in The Hague, are legally binding on UN member states, but the court has no enforcement arm. The ICJ is expected to deliver a ruling sometime in September.

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