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The Outcome of the Iran Talks and the Next Steps
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Wednesday, December 3, 2014
9:30 - 11:00 a.m.

The Carnegie Endowment for International Peace, Choate Room
1779 Massachusetts Avenue, N.W., Washington, D.C.

Negotiators from the P5+1 (China, France, Germany, Russia, the United Kingdom, and the United States) and Iran are racing toward a comprehensive agreement on Iran's nuclear program by the Nov. 24 deadline. Many issues, such as establishing a formula that limits Iran's uranium-enrichment capacity, are still to be solved, but both sides of the negotiating table have stressed the need to reach an agreement.

The Arms Control Association and Carnegie Endowment for International Peace host a briefing on the outcome of the negotiations and next steps.

Speakers include:  
  • George Perkovich, Director, Nuclear Policy Program, Carnegie Endowment for International Peace;
  • Karim Sadjadpour, Senior Associate, Middle East Program, Carnegie Endowment for International Peace;
  • Daryl G. Kimball, Executive Director, Arms Control Association;
  • Elizabeth Rosenberg, Senior Fellow and Director of the Energy, Environment, and Security Program, Center for New American Security; and
  • Moderated by Kelsey Davenport, Director of Nonproliferation Policy, Arms Control Association.


The Arms Control Association is an independent, membership-based organization dedicated to providing authoritative information and practical policy solutions to address the threats posed by the world's most dangerous weapons.

Transcript by
Federal News Service
Washington, D.C.

KELSEY DAVENPORT:  We’re about to get started, so if I could ask everybody to take their seats.

Thank you all so much for joining us today, and thanks of course to the Carnegie Endowment for co-sponsoring this event with the Arms Control Association.  I think it’s a very timely discussion, and I’m certainly looking forward to the remarks from each of our panelists.

Originally, I had hoped that we would be gathered here today to discuss a comprehensive nuclear agreement that was reached.  Unfortunately, that was not the case.  And as many of you know, on November 24th, Iran, the United States and its P5+1 partners announced that they were going to extend nuclear talks for a second time.

Under the terms of this second extension, the parties will try and reach a political agreement within four months and then wrap up the technical annexes for the – to complete the comprehensive agreement by June 30th.

However, the length of this extension I think opens the space for critics, particularly in Washington and Tehran, to derail some of the significant progress that has already been made.

However, a good deal certainly still is possible.  The negotiators made progress on some of the most intractable issues in Vienna.  And if both sides are willing to be flexible, they can still get to a good agreement.

So speaking first today about the progress that has been made and the obstacles that remain to be overcome is Daryl Kimball.  Daryl is the executive director of the Arms Control Association.  Previously he served as the executive director of the Coalition to Reduce Nuclear Dangers.

Then we will have Karim Sadjadpour.  Karim is a senior associate at the Carnegie Endowment for International Peace.  He previously was an analyst with the International Crisis Group based in both Tehran and Washington, and he’ll be looking more closely at the domestic scene sort of on the Iranian side.

He’ll be followed by Elizabeth Rosenberg.  She is the senior fellow and director of the Energy, Environment and Security Program at the Center of a New American Security. She previously served as a senior adviser at the U.S. Department of Treasury, where one of her key initiatives was to help oversee the tightening of global sanctions on Iran.  And if you missed Liz’s New York Times op-ed from last month, I would suggest you go back and read it.  It was highly relevant to both today’s discussion and the talks and an excellent piece.

And then finally, to close out our panel today, we will have George Perkovich.  George is the vice president for studies at the Carnegie Endowment for International Peace, where his research focuses on nuclear strategy and nonproliferation with a concentration on South Asia, Iran and the problem of international justice in the international political economy.  And he will be looking at some of the issues that still remain to be overcome and providing some ideas for how to move forward during the time of the extension.

So Daryl, I’ll turn it over to you.

DARYL KIMBALL:  Thank you very much, Kelsey.  Thanks, everybody, for being here.  Good morning.

It is certainly disappointing that the P5+1 and Iranian negotiators did not conclude a comprehensive nuclear agreement last month because they appear to have been very close to concluding an agreement.  According to diplomatic sources that we’ve talked to on both sides of the negotiating table, a historic, comprehensive, long-term verifiable agreement is within sight if the two sides act with determination and a bit more flexibility on two or three of the key remaining issues where there are gaps.  If Congress does not, as secretary – as Susan Rice, national security adviser, said last night, if Congress does not blow up the negotiations with a new set of sanctions, I believe it’s a matter of when, not if, Iran and the six powers will conclude this agreement.

Now, the decisions that the two sides still need to make in order to get to yes don’t become easier with time.  A number of us were a bit surprised that they did not use the final day of their period, the 24th, to try to work through the remaining issues, but they decided to spend that time talking about the terms of the extension of the Joint Plan of Action.

The conditions for the negotiations could deteriorate over time, and some of my colleagues will talk about that and how to deal with that.

So I would just say that both sides need to continue to work, not take a long holiday break.  They need to act decisively and with all due speed because the conditions right now are best for resolving these issues.

Now, just a word about what this is about.  OK, what is a good agreement?  We often forget what a good agreement is from a nuclear nonproliferation perspective.  This has to block all of Iran’s potential pathways to nuclear weapons.  As the Obama administration describes it, and I think it’s a good frame, that means the uranium enrichment path has to be blocked, the plutonium route and the clandestine route.  And that means that there need to be sufficient limits on Iran’s capabilities to give the United States and our other international partners sufficient time to detect and disrupt any potential future effort by Iran to pursue nuclear weapons.

So let me, as Kelsey said, in the few minutes I have, review some of the key issues, highlight some of the areas of progress, talk about some of the remaining differences that are out there.

So since last year, since the November 2013 Joint Plan of Action was agreed to, the two sides have worked out solutions on several of the key issues, including some that appeared to be ridiculously difficult a year ago.  For instance, they agree in principle that the design of and the fuel for Iran’s heavy water reactor project at Arak can and should be modified in ways that drastically cut the plutonium production potential of that reactor.  It could – is currently designed to produce enough fuel for about two nuclear bombs a year, if it were fully operational and the fuel were removed and reprocessed, but the modifications and the approaches they’re looking at could reduce that amount by some 95 percent.  They also agree that under a comprehensive deal, Iran would not build the reprocessing facility that you would need to separate the plutonium, the weapons-grade plutonium from that spent fuel.  So there is a solution on the plutonium path that is within sight.  Details need to be worked out.  But they appear to have agreement in principle on the solution.

To guard against the clandestine nuclear weapons path, it’s clear that the two sides agree that Iran can and should implement and ratify additional authorities for the International Atomic Energy Agency, particularly the additional protocol, which would give the agency the authority for short notice inspections of undeclared sites, military, nuclear, whatever the IAEA would deem to be of interest.  The other thing that they both agree to is that Iran should adopt something called Code 3.1 of their safeguards arrangements of the agency, which requires that Iran provides earlier notification about any new projects.  And all of this gives – would give the agency and the international community to ability to promptly detect and disrupt any clandestine effort that Iran might pursue.

On the issue of possible military dimensions, both sides understand that the ongoing IAEA investigation of past Iranian activities with possible and, I would say, probably military dimensions will continue after a comprehensive nuclear deal is reached.  At the same time it’s clear to both sides that major sanctions relief, including many of the UN Security Council-mandated measures tied to that issue, will not be removed until and unless the investigation is concluded.  And the agency has said that that could take some 12 to 18 months, so sometime in 2015, maybe sometime in 2016, if there is sufficient Iranian cooperation.

Now, this is a side note.  You know, there are some members of Congress who are now arguing that without a, quote, unquote, “full explanation” of Iran’s past weaponization efforts, it’s impossible to fully understand its nuclear capability.  It’s always better to understand more about Iran’s past, but it is incorrect to say that without all of the knowledge about the past, we cannot effectively verify what Iran is doing with its nuclear program in the future.  It’s already well-understood, Iran’s nuclear capabilities.  Its past activities are also well-understood by the United States and other Western governments.  It should be assumed that Iran’s scientists have acquired some information, important information for building nuclear weapons.  An admission from Iran that scientists once engaged in working to help build nuclear weapons is not going to erase that knowledge, and such admission is not going to happen.  It’s naïve to think, and I think it’s silly to suggest that Iran issue a mea culpa before the comprehensive nuclear agreement is concluded.  So, you know, realists and all members of the P5+1 understand and agree that the goal is not to extract such admission from Iran about their country engaging in nuclear weapons – work intended for nuclear weapons in the past but to ensure that the IAEA has sufficient information that no such efforts are taking place now or in the future.  And getting to that point is far more likely with a comprehensive agreement than without one.

Now, on uranium enrichment, the two sides have – understand that there is going to be a combination of measures that are necessary, a combination of limits that are necessary to establish verifiable, long-term limits on Iran’s uranium enrichment capacity.  It’s been very difficult for the two sides to come up with the right formula because it has to be sufficient and irreversible enough so as to block Iran from quickly amassing enough fissile material for weapons while at the same time providing Iran with a politically and technically acceptable enrichment capability consistent with its practical needs.

Now, as we’ve said before, I think everyone here in Washington understands Iran’s nuclear fuel supplies needs today are very limited but theoretically could grow in future years.  Its current uranium enrichment capacity involving the 20,000 total centrifuges and the 10,200 operating machines exceeds its practical needs.  And theoretically, they could use the stocks that they have and the machines that they have to amass enough weapons-grade uranium gas sufficient for one nuclear bomb, 25 kilograms, in about two or three months if not detected first.  So the P5+1 have been up until the 24th of November and I think will continue to press Iran to significantly reduce its uranium enrichment capacity for a period of several years.  And that involves a number of different steps, not simply limits on centrifuge numbers.  Those are extremely important, but effective long-term limits on Iran’s overall enrichment capacity will involve several complementary measures.

So for instance, if you were to reduce the number of operating IR1 centrifuges by half, if you were to verifiably disable the centrifuge machines that are installed but not yet operating, if this agreement were to reduce the size of the country’s low-enriched uranium stocks to 200 kilograms and convert it to outside form or remove those stocks entirely to a third country, like Russia, the time it would take Iran to produce enough weapons-grade uranium ex-fluoride gas for one nuclear device would increase from where it is today to about nine to 12 months or more, which is certainly enough time to detect and disrupt any effort by Iran to develop nuclear weapons.

So the two sides are, according to our conversations with people on both sides, in agreement on some of these uranium enrichment-limiting measures but not all of them.  And in particular the uranium enrichment – I should say the centrifuge number is one of the issues that the two sides still remain divided on.  We understand that in the days leading up to November 24th, Iran proposed lowering the number of its operating IR1 machines to at least 8,000 – not sure for how long, and how long matters here, but it – I think it will – it must and can reduce that number even further for a significant number of years in order for the two sides to get to yes.

It is not clear exactly what number the P5+1 are looking for.  And I would urge you all to be very cautious about believing that there is some specific number – you know, 5,557 – that they’ve got to hit because as I’ve said, there are a number of variables that go into this complicated equation to determine how much uranium enrichment capacity Iran has and several different ways to combine these different measures.

Now, what does – what does the P5+1 have to do to get yes and to be flexible?  I think in exchange for a significant additional reduction in the number of operating IR1s, the P5+1 is going to have to be more flexible with respect to the issue of advanced centrifuge machine research.  It is unrealistic to expect that Iran is going to stick with its IR1 centrifuge, a very bulky, unreliable type of machine, for the indefinite future.  This agreement can and should in place verifiable restrictions that block Iran from manufacturing large numbers of advanced centrifuges for production-scale enrichment but would allow Iran, could allow Iran to test and research those machines for the duration of the agreement.

Now, another key issue of – that has divided the two sides has been the scale and the pace of sanctions relief.  You’ve heard and seen the reports from the Iranian side arguing for an immediate lifting of all sanctions in exchange for the very significant nonproliferation measures that Iran is being asked to take on.

Well, some of those measures cannot be immediately lifted because many of them are tied to the UN Security Council sanctions tied to a resolution of the investigation on the possible military dimensions issue.  But there are some things that I think the P5+1 could do to be more persuasive with the Iranians to encourage them to take the steps to limit their enrichment program that are necessary and to get to a win-win solution.

For instance, the EU sanctions that are in place now could be lifted much more quickly, certainly than the United States sanctions.  Maybe Liz can tell us more about that and other issues.  And then after the – after the agreement is concluded, it’s also possible for the P5+1 to lift some of the sanctions that apply to investments in non-nuclear items in Iran, which was part of UN Security Council 1737.  That could be viewed by Iran as a significant win.  It would be something that President Rouhani could pocket.  But it would still give the P5+1 a great deal of leverage to ensure that Iran follows through on its commitments.

So they are close, but there are issues that they still need to bridge.  Its’ going to require that both sides are a bit more courageous than they have been and take some risks.  And in the final analysis, I think this deal, if agreed to along the broad outlines that I described, would be a very good one in the sense that it is going to effectively prevent Iran from pursuing the nuclear weapons path.  We could easily detect any effort to try to break out.  And this agreement would remove a huge security risk from the Middle East for many years to come.

So with that, let me turn it over to Karim for the view from Tehran, so to speak, so –

MS. DAVENPORT:  Thank you, Daryl.

KARIM SADJADPOUR:  Thank you all for coming.  I preface my comments by saying I forgot my eyeglasses, so I can’t see beyond the second row.  And I also preface my comments by saying that I have a much less optimistic perspective than Daryl that we were close to a deal or that we are near a deal, and I really hope that he’s right and I’m wrong.  And I’m giving the view from Tehran, but I think one of the important rules about Iranian politics is that those who know don’t talk, and those who talk don’t know, and by definition, I’m up here on stage, so I’m in the latter category.  (Laughter.)

I – my cliff notes for following Iranian politics is to pay very close attention to what the supreme leader says and pay less close attention to what the foreign minister and the president say.  I think everyone in this room would probably agree that if it were only up to the foreign minister and the president, we would probably would’ve reached a nuclear deal a long time ago, but there’s a reason why we haven’t reached it.

So let me focus on what I would describe as the supreme leader’s three-part strategy for the nuclear talks, and I’ll give them to you upfront and then I’ll go over each one of them.  But part one of the strategy is to support negotiations; part two of the strategy is to undermine the negotiations with impossible red lines; and part three of the strategy is to prepare for unsuccessful negotiations.  So let me start with part one, which is to support the negotiations.

As we’ve seen, there’s been universal support of not only the negotiations, but there’s been universal support of the extensions – the extension of negotiations as well.  I haven’t seen anyone, even amongst the hardliners, come out and oppose the extension of negotiations.  So why would they support the negotiations if they’re not interested in resolving this issue?  I think for two reasons.

Number one is that there is – there is I think a recognition on the part of the leadership, on the part of the leader that Iran’s society overwhelmingly wants to see this deal.  This is a population which is suffering under tremendous economic pressure, and the society – this is one important reason why Rouhani won the presidency, to resolve this issue.  So he doesn’t want to appear to be, in the eyes of the Iranian public, the obstacle to reaching this deal.  So I think it makes very good political sense for him to continue to support negotiations.

The second reason:  I think they learned that during the Ahmadinejad years they gratuitously united the international community against Iran, and this time around, I think, if you continue to support the negotiations, to support diplomacy, the hope is that you split the P5+1 if things fail.  

So let me move on.  My presentation is – has the merit of being brief, although it’s pessimistic.  So I’m going to move on to number two, which is undermine the negotiations with impossible red lines.

The newspaper of note which is, I think, the one many who follow Iran pay close attention to is Kayhan newspaper.  The editor is Hassan Shariatmadari – Hossein Shariatmadari, who was – is someone who was appointed by the leader.  He came out with an editorial shortly after the extensions, calling for – saying Iran’s red line was the immediate lifting of all sanctions.

And this is an interesting twist, in contrast to the previous two decades, when the supreme leader and hard-line officials in Tehran used to praise sanctions.  They would – they will praise sanctions and say, we welcome sanctions because it forces us to become self-sufficient.

And so now they say the red line is the immediate lifting of all sanctions.  And I think the leader is smart enough to know that that’s not within the realm of possibilities, an immediate lifting of all sanctions.

We saw prior to the first extension last July that he came out shortly before the July 24th deadline, I believe it was, and said that Iran’s practical needs are 190,000 centrifuges.  That also, I think, came as a surprise to Iran’s negotiating team and undermined the negotiations.  It’s true he didn’t say that we – that Iran needs that overnight, but he said that – you know, in the next five to 10 years.

The other things I would say is that if you’re the supreme leader and you’re really interested in reaching an accommodation with the United States, you would probably refrain from tweeting that Israel should be annihilated shortly before these negotiations are to conclude, and you would probably avoid saying that ISIS was created by the CIA and the Mossad, if you’re really interested in reaching these – in concluding these negotiations.  And I thought it was quite interesting, as an aside, that the leader’s comments about ISIS we know now, in retrospect, came after President Obama’s letter to Khamenei saying that we a mutual adversary in ISIS, and his response has been to say that ISIS was created by the United States.

So why the opposition to a deal?  I have – I teach a class at Georgetown University, and I have a brilliant young guy from Argentina, who’s an engineering student, who is kind of tabulating the costs and benefits of Iran’s nuclear program, and he’s just totally perplexed that – why are they doing this?  You know, why do you cannibalize your main source of income, which is oil and gas, to pursue a nuclear program, which can at best provide 2 percent of your energy needs?  It doesn’t make much economic sense.

But I would argue, from the perspective of the leader, looking at it from a more macro perspective, not just the nuclear deal, but that the political risks of a deal with America outweigh the economic risks of no deal with America.  So if you’re the leader, you’ve risen to the top and you’ve sustained your room, you’ve sustained your authority, in this kind of somewhat closed status quo environment, maintaining this antagonism with the United States, I would argue it’s potentially more unsettling to you to reach an accommodation with the United States than it would be to significantly change course and do an economic deal, even though an economic deal certainly would be in the national interests of the population.  

But you know, I’ve always thought that the – kind of the ideological prerogatives of the Islamic Republic and the more parochial interests of the Islamic Republic have always come before the national interests of Iran.  This was the case of the hostage crisis.  The hostage crisis did tremendous damage to Iran’s international standing, to Iran’s economy, but it helped the Khomeinis consolidate power.  The Iran-Iraq War did tremendous damage to Iran’s economy, to Iran’s international standing, but it allowed the revolution to consolidate as well.  So I would argue that they’ve long put kind of their more parochial interests before national interests, and I would put the nuclear issue into that context as well.

And I think this is a fundamental contradiction in much of – much of the analysis of Iran, which is – I would argue, suffers from what we call motivation biases, motivated biases, and that I think most people would agree that if we can resolve this issue diplomatically, it’s in the interests of the United States, it’s in the interests of Iran, it’s in the interests of the region.  

But we make the argument that a deal concluding this nuclear issue, resolving it diplomatically, is going to weaken the hard-liners in Tehran and strengthen the moderates.  Well, it’s the hard-liners in Tehran who have to sign off on a deal.  So why are they going to agree to something which is going to strengthen the domestic adversaries and weaken themselves?  That’s something I think we haven’t managed to really reconcile.

So let me move on to point number three, which is if there is no negotiation, if there is no conclusion, what is the strategy to prepare for unsuccessful negotiations, to prepare for failure?

One of the themes you hear in every single speech from the leader, not just recently but going back the last several years, is this concept of resistance economy. Whereas the Rouhani government is talking about increased oil investment, increased foreign investment, reintegrating with the international economy, the leader is constantly talking about the notion of resistance economy, being self-sufficient, resisting international pressure.  He doesn’t talk about wanting Iran to become part of the G-20.  His argument is that we’re going to prevent the colonial powers from making us buckle, from bringing us to our knees.  That’s a common theme.  And he’s also said – he said in a speech afterwards that is there is no deal, that it’s going to be America which loses the most, not Iran.

Now I think the – a big X factor in these – in these negotiations and a reason why a lot of people are hopeful now is the drop in oil prices and the belief that maybe this precipitous drop in oil prices is going to force Iran to recalibrate its nuclear – its nuclear intentions.  

I would argue that when I first joined Carnegie I tried to do a study which looked at the correlation between – because when I first joined Carnegie in 2007, oil prices were, I believe, over a hundred dollars a barrel.  In 2006 I think they peaked at $147 a barrel.  So if you just look at two data points, you see that when Iran decided to swallow the poison chalice, to end the Iran-Iraq War, oil prices were around $10 a barrel, and Ahmadinejad started to deny the Holocaust and be very, you know, belligerent, oil was well over a hundred dollars a barrel.  So if you just look at these two data points, you say there’s a correlation between the two, because when oil prices are very high, Iran is very kind of hubristic and bombastic, and when oil prices are very low, Iran is keen on compromising.

But the reality is there’s not a great correlation between the two.  I haven’t seen a great correlation between the two.  The reality is that oil prices are not going – no one’s predicting oil’s going to drop to $20 a barrel, and no one is predicting that it’s going to go back up to 140 (dollars).  As long as it stays somewhere in this range between, I would say, you know, 30 (dollars) and 110 (dollars), I haven’t seen a real huge distinction in Iranian behavior.  

And looking at it from the vantage point of the leader, who’s been in power since 1989, oil prices at $70 are still pretty high.  That’s still historic highs for him.

So I think that – let me – let me actually – I’ll just end there and hand it over to George and happy to go until more questions.  Thank you.

MS. DAVENPORT:  OK.  I think we’re actually going to go to Liz next, to talk about sanctions now.  Thank you.


Thanks to the – our sponsors and hosts for having me here.

I’m going to talk about three things – can you hear me in the back?  Yeah.  OK.  I’m going to talk about three things in my remarks:  the first, Iran’s economic situation, picking up – that was a great segue; thank you for that – second, what the interim deal, this extension, provides for sanctions, so what happened new last week; and third, what new sanctions now –imposed by the U.S. Congress, for example – would look like and do to nuclear diplomacy.  

So on the first, Iran’s economy, as you all know, there have been sanctions on Iran for decades.  However, the sanctions of the last several years, since 2012, which have been which have been most punishing and imposed not just by the United States but of course also by the EU and a variety of other countries, they have caused major economic pain for Iran.  They have slashed oil revenues.  Iran has forgone perhaps 110 billion, 135 billion, more than that, even, in income because of these sanctions.  They’re rather – since 2012 highly correlated with the period of most intensive sanctions.  Oil revenue fell by more than half from 2012 to this year.  And also with this – what is as of yesterday a 37 percent slide in oil prices from highs in June, that adds a lot of additional pressure, budgetary pressure, on Iran, because it depends on two things:  one, a lot of oil revenue in its – for its economic planning, its revenue basis, and also a relatively high price for oil, and many analysts agree that it – that breakout – break-even price for Iran is about 140 dollars, which is well above 70-ish dollars, which it is at right now.

Unemployment is high, of course.  In Iran official rates may be around 10 percent.  Unofficial are at least double.  Inflation has been above 20 percent since this past summer.  The value of the currency has plummeted roughly 50 percent, over 50 percent drop, since January 2012.  Foreign investment has dwindled.  It’s very difficult to make payments into Iran or receive payments.  There was a massive GDP contraction in 2012 and 2013.  Estimates for this year are positive, slightly.  We’ll see what happens, based on the oil price slide.  And of course Iran’s foreign exchange reserves of over a hundred billion are primarily locked up abroad, inaccessible to Iran.  

So the poor economic performance in Iran is not only due to sanctions; also corruption and profound domestic economic mismanagement, particularly under President Ahmadinejad, were contributors.  But many people agree – and I certainly subscribe to this theory – that sanctions had a significant role in bringing Iran to the nuclear negotiating table.

So in these nuclear negotiations, what’s the relief that’s been given to Iran?  A number of areas of relief that extend from the beginning in January and will now extend, per the agreement last week.  They include rolling back of various auto industry, petrochemical, precious metals sanctions in both the U.S. and the EU.  The P5+1 committed to no new nuclear sanctions, though they can enforce, and have, existing nuclear sanctions.  

Iran has had access to about $7 billion of its foreign exchange reserves abroad and repatriated those, so far, and about another $700 million per month, going forward, through the remainder of this extension period.  

It’s able to sell oil at roughly a million barrels per day, a bit more if you’re including light quality – light API gravity, so high-quality crude, referred to as condensate.  It can stay steady at that level and doesn’t have to decrease, which would otherwise be required by statute.  

And there’s opportunities for greater facilitation of humanitarian transactions and ability to access replacement airplane parts.  

So recall, of course, that the entire framework for sanctions in the U.S., in the EU, as imposed by a variety of the other countries, is still in place, and the UN sanctions, of course, remain in place during this period.  

This economic relief that’s been granted to Iran, that I just went through isn’t enough to create structural economic reform for Iran, and even while GDP is projected to be slightly positive this year, I think we should compare this more to a confidence-building measure rather than a significant economic reform package.  And so it’s for this reason that Iran still would like to see very significant economic relief and is of course proceeding with negotiations to exact significant sanctions relief, including, of course, as was mentioned by Daryl at the beginning, would like to see a lot of relief up front in in a deal, and for reasons he mentioned, that’s pretty unrealistic.  Of course there needs to be a track record of Iranian concessions and participation – successful participation in a framework agreement and deal before major sanctions relief is offered.  That will take months and years and perhaps until the P5+1 have parallel normalization of diplomatic relations.  

And in any case, UN sanctions relief won’t come immediately.  The concerns that are laid out in the Security Council resolutions that set forth those sanctions won’t be addressed immediately, and also removing those is ceding too much leverage too fast.  I think it’s a total nonstarter.  

So new sanctions.  There’s a lot of momentum on Capitol Hill for new Iran sanctions now.  For some, this is out of a desire to urge Iran to move quickly towards a deal in the framework of nuclear diplomacy.  For some, it appears that this is – the motivation may be more to compel an Iranian capitulation, basically, on its – concession in its enrichment ambitions.  

This has always been a bipartisan effort for new sanctions, and it’s one of the few areas over the last several years where there’s been tremendous, even unanimous agreement about policy.  So it’s – there’s an awful lot of precedent here, and the framework is in place to do new legislation.  It’s possible that we could see something this December and even more likely in January.

So there’s two main areas I would characterize of the legislative efforts for new sanctions that we’re looking at right now on the Hill.  And one is on creating tougher sanctions on Iran, including forcing Iranian oil exports out of the market.  And that’s really the heart of the Kirk-Menendez bill.  That may include triggers to impose the sanctions tied to the deadlines that have now been announced in this most recent extension, so March and June.

This effort, I would say, has legs.  There’s even a majority of support for it, and I think it stands a pretty good chance of being passed.  

The second focus area for legislative efforts now is one more tied to the U.S. administration, specifically interested in tying its hands, in its use of discretion, its waivers that are written into statute, and measures also that could require congressional approval of a deal.  

So I think that it’s less likely that those kind of measures will make it into statute, and it’s certainly not as much of a priority for as many lawmakers as the first focus area I was just describing.

So the administration and those members of Congress opposed to more sanctions now were successful a year ago and in July in opposing new sanction – the imposition of new sanctions.  I think that will be much harder now and certainly in January.  But if that opposition effort is not successful and there are new sanctions, imposed by Congress, what’s the effect on nuclear diplomacy?

I have said publicly – as Kelsey mentioned, in that op-ed that I had last month – that new sanctions may very well be self-defeating, even fatal for talks, notwithstanding the positive intent of some of the backers of them to try and advance nuclear diplomacy and success of a potential deal.

There are three main effects I think that passing new sanctions will have now.  First, it will be seen as an act of bad faith in Iran on the part of the U.S. and a sign that the U.S. negotiating team will not be able to deliver what it promises and that it won’t be able to successfully coordinate with Congress.  That will elicit a response from hard-liners in Iran, a kind of reciprocal action, which could look like violation of the interim agreement, violation of sanctions.  It will escalate tensions.  It could cause the talks to stall or end.  

Secondly, as a unilateral act, I think it will frustrate deeply other members of the P5+1, who placed quite a great deal of emphasis, as has the U.S., of course, on multilateral coordinated approaches to nuclear diplomacy with Iran.  And because these new sanctions will come down quite hard on the countries that still engage in permitted trade with Iran, which includes most of the members of the P5+1, the European partners and China most significantly, of course, it’ll have an economic sting for them, and that will make them less willing to continue to participate in sanctions, and that could seriously jeopardize the effectiveness of sanctions on Iran, which are – that effectiveness is significantly due to the multilateral nature of them.

A third effect is that it – new sanctions won’t stop nuclear enrichment activities, and because of the ill will it could generate, that I’ve just described, there could be less insight into the Iranian nuclear program, much more confusion about the sanctions and how to follow sanctions, more cheating and a much difficult effort of enforcement of them.

So even if there is a trigger in new sanctions and they don’t kick in or ramp up until Iran misses a deadline or violates the terms of the interim negotiations, they can still backfire and cause Iran and other P5+1 members to walk away from these negotiations.  And the message of these sanctions will be seen as punitive and escalatory.  

And of great concern, the hurdle to turn them off and to certify that Iran has met deadlines could be too high.  Iranians may not believe that Congress won’t change the goal posts again, you know, coming up to the period at which these sanctions are supposed to be triggered, even if they do comply with the sanctions – or rather with the terms set out in an interim agreement.

And if these sanctions are mandatory, and they will be, the administration – and the administration therefore can’t create or control an off-ramp for the sanctions, then there is quite a diminished incentive for Iran to show good behavior with the P5+1 if the P5+1 don’t actually control the mechanisms for an off-ramp or for de-escalating these sanctions.  

So to summarize, more tough sanctions now may very well be self-defeating and fatal for negotiations.  They could make Iran and the other P5+1 members leave negotiations and fail to accomplish the meaningful achievements in halting Iran’s ability to create a nuclear weapon that of course these negotiations are designed to pursue.  I’ll stop there.

MS. DAVENPORT:  Great.  Thank so you much, Liz.  


GEORGE PERKOVICH:  Great.  Thanks.  And again, thanks, Daryl and Kelsey and the Arms Control Association.  And thank all of you for coming.  I’ll be brief.  I just want to say a few prefatory things, picking up on what my colleagues said, and then just make one proposal as a possible way forward.  

The first point was I think – I think when Karim said that, you know, the leader, Khamenei, is smart enough to know that the immediate relief of all sanctions is impossible, yeah, but then I’m listening thinking, U.S. leaders should be smart enough to know that Iran won’t accept several of the terms in proposed new legislation too.  So I start thinking that intelligence or IQ doesn’t actually equal comprehension and wisdom.  (Laughter.)  And it’s not limited to one place.

So while I could agree with almost everything Karim said about describing the leader, I could import that description to key actors in Washington as well.  And I think that’s part of the dynamic that we’re dealing with.  So maybe the answer is to have Forrest Gump and Chauncey Gardinar go out and negotiate – (laughter) – and we could get a deal.

I think a second point – and this is something that was alluded to in several of the other comments – is that for a long time I felt that as much as we worry about Iran fulfilling a deal, if there is a deal, and about bringing Iran to a deal, there has always been at least as great a worry on the leader’s side that the U.S. would ever fulfill a deal.  And there’s lots of examples that they can point to, that once you get a deal the actual implementation on the U.S. side has lagged, often because of Congress; that to fulfill longer-term deals it required the expenditure of money and Congress has to authorize it, whether it was North Korea or other instances.

And so if you were – if you were – I would ask anybody here, if you’re advising the Iranian leader and he calls you in and says, all right, we’re going to make this deal and it’s got phases – three years, seven years, 10 years, 12 years – and it requires cooperation by Congress over this time, are you telling me I should sign this deal because you’re confident that Congress is going to cooperate in lifting these sanctions and everything else?  Francois is going to raise a question and I can’t wait for it.  (Laughter.)  

Q:  (off-mic) Just that proving that there’s a bigger doubt on that.

MR. PERKOVICH:  Right, but there – so there’s this issue about delivery here.  And Liz just pointed to some of the reasons why this could come up again.  So you say, well, there’s waivers, but you can write new legislation to remove waiver clauses.  And so it is a problem of confidence building that has to work both ways.

Third is the issue of pressure.  And again, that lies behind some of the proposed new legislation.  I am among those also who have no doubt that we wouldn’t be in this negotiation were it not for Iran’s being isolated and sanctioned and so on.  So pressure is absolutely vital.  But you have to look at it in the fullness of the issue, which is pressure works both ways, because the higher the cost and the more pressure that you’ve experienced, also you may demand more in a deal to reach compromise.  

So you don’t entirely cave in, but in fact it raises your costs.  And we’ve seen this with the Iranians, that as we’ve put pressure on, each time we’ve added sanctions, they’ve increased the level of enrichment, the number of centrifuges, or whatever, to kind of change the term and try to maintain some parity in the costs that we’re imposing and the alarm that they’re causing in us.

And so one of the ways – I was in Iran in June talking to one of the chief negotiators, and he said, you know, why they won’t come down in numbers of centrifuges.  He said, look, we’ve paid for them:  hundreds of billions in sanctions, the martyred of our assassinated scientists and engineers.  We’ve paid in blood.  We’ve paid in treasure for these centrifuges.  We’re not giving them – we’re not giving them away.  So it works both ways, and I think we have to be mindful of that.  

And finally, on a prefatory note of optimism, while I agree with Karim’s kind of analysis and cautions about the leader, I think it’s also possible that the leader actually doesn’t have to sign off on a deal.  And in fact, his past habits would suggest there are ways he can have it both ways.  He can say the government has made this deal – namely the president and Zarif – and I’m not going to block it.  

And that way he gets it both ways.  If it goes badly he says, I told you, I – you know, this was the government.  It’s their fault.  If it goes well he says, well, you know, I didn’t – I didn’t block it.  And he’s done that so far in every step on the negotiations.  He says, well, I think you’re fools, I don’t think it will work, but I won’t stop you.  Go ahead and negotiate.  And so it’s not quite the same as having to sign off.  

All right, with that as background, I want to turn to the sanctions issue and kind of the next moves in Washington.  And I entirely agree with Liz that it will be better off if there were no injection or interjection of legislative action at this point.  And I tend to be on that side when there are Republican administrations as well.  And even when I worked in the Senate 25 years, I’d say, why don’t we just let them do their job?  But anyway – and that was when the first Bush administration was.

I’m a realist also, and so I sense that there is a move to do something, and so then I would suggest that if there is new legislation, at least it should serve a strategic purpose.  And it seems to me that the current proposals don’t serve a strategic purpose but that it wouldn’t be hard to structure legislation that would serve a strategic purpose.  And Karim has testified about this and others of our colleagues are working on this.  

It seems to me those purposes are, first of all, you – we want – we have an interest in locking in what’s Iranian conduct under the Joint Plan of Action with its, now, revision after November 24th, where they’ve agreed, we understand, to further turn material into fuel plates, where they’ve agreed, we understand, on basically protocols for doing R&D on future centrifuges.  

So the situation we’ve been living under since November of 2013, with Iranian kind of negotiated restraint, is much more positive than the situation between 2006 and 2013.  It’s in a lot of countries’ interests, including Israel’s – and we see this from statements by the Israeli government – after Netanyahu said this was the worst deal in the century they started amending it.  So now we were wrong, actually.  It’s positive.  So lock in that, at least don’t mess up that, should be one of the strategic objectives.  

Number two would be to deter Iran from undoing the restraint in the Joint Plan of Action, and certainly to deter Iran from now making moves that hasten the time in which it could make nuclear weapons, right?  So you want to deter that.  And what’s really missing is it seems you would want to give them incentives to actually take additional steps that would lengthen the time it would take them to make nuclear weapons.  You want them to take additional steps that reassure the international community that they don’t seek nuclear weapons.

And then the last strategic purpose is – again, Liz pointed at this – the U.S. shouldn’t want to weaken the international coalition that has pressed and isolated Iran and imposed the sanctions.

I would argue that you could design legislation that would do all of that but that we haven’t – that – none of the proposals do.  So you would have legislation that says you welcome the positive steps of the Joint Plan of Action, and then you say, you know, if Iran takes steps to increase its capabilities, you know, in dangerous ways, then these sanctions would kick in; if Iran takes further steps to reassure, then there would be – further sanctions relief would already be authorized.  And you would do this in a way where it’s not the U.S. Congress or the U.S. being to provocateur, the first actor that breaks up the process, but you let Iran be the one to change the dynamic in a negative way, and then you react to that rather than the other way around.  It seems to me this is strategically kind of self-evident that one would want to do that if the purpose was to be strategic.  And their – people on the Hill would have to explain, you know, what their purposes are.  But I think there is a way to do – to express themselves and to serve a positive purpose.

Let me stop there.

MS. DAVENPORT:  Well, I’m sure after such excellent presentations, we have a lot of questions, so I would ask that you please introduce yourself, wait for the microphone and be brief.

Yes.  Barbara.

Q:  Thank you very much.  Barbara Slavin from the Atlantic Council.  That was a great summary.

We had an event yesterday at the Atlantic Council where Cliff Kupchan suggested that where we’re headed is what we called JPOA forever.  And frankly, George, with your description of your legislation, it sounds like it is basically JPOA for at least a very, very long time, possibly improved over time but somehow never getting to the comprehensive deal.  Do all of you think that’s a realistic possibility, or is that bound to break down one way or the other?  Is that something that would allow people not – on both sides not to have the make the hard choices of a comprehensive deal?  Thanks.

George, would you like to start?

MR. PERKOVICH:  I think that would be – I mean, personally, I wouldn’t lose a lot of sleep with JPOA forever.  But I – but I think, you know, things happen and would make it hard to sustain forever.  But the issue to me, it seems like it’s – the alternatives are either worse or harder.  In other words, the alternative of a final resolution is just super-hard in Iran and is super-hard in Washington.

And by the way, I think it’s super-hard for friends in the Gulf – and Israel in a different way.  I mean, I think a diplomatic resolution for Israel, they would – they would want it if it’s a good deal, but something people haven’t thought about there is then a lot of tension would shift to Israel’s nuclear weapons because the international community would say, OK, fine, we saw the Iran problem and everything else diplomatically; now what about you?

Whereas right now, when the issue is confused as it is and stuff, there is not this pressure on Israeli weapons.  The Gulf Arabs don’t have to deal with their nightmare of rapprochement with Iran.  But Iran doesn’t have the bomb either.  The Iranians don’t have to make the hard decision, but, you know, we can live with it because they don’t have the bomb.  So there is a lot in the current situation that actually works better for many actors than either the alternative of a final deal or a war.  And so I – so I think that’s one of the reasons why we kind of landed here for now.

MR. KIMBALL:  Well, what I would say, you know, Cliff’s a smart guy.  Yes, it is a true observation that policymakers often take the easiest path rather than the hardest path.  In this particular moment, the easier path was to extend by another seven months because they didn't make the hard decision necessarily to get a comprehensive deal.

But I think to say that we’re going to have a series of extensions assumes a lot.  It assumes that the current political conditions in the United States are generally stable, that the political conditions in Iran are stable, that the price of oil doesn’t go to $140 a barrel or drop or whatever.

So I would also just point out that from a nonproliferation perspective, there is a big problem, OK, which is that right now the international community does not have the ability to inspect undeclared sites.  The clandestine path is theoretically still there for Iran.  It would be extremely difficult, I think very unlikely, but it’s theoretically still there, and it’s the one that the intelligence community has said for many years is the more likely path if Iran were to pursue the bomb.  So for all those who are concerned about Iran’s nuclear program, including me, I think, you know, they should look at the JPOA as an interim measure and not a permanent solution.

The other thing is that Iran still has 20,000 installed centrifuges, OK, and those are theoretically capable of producing, you know, X amount at Y pace leading to a theoretical breakout capability that is shorter than I think we would like it to be.  And only with a comprehensive agreement are we going to get the better inspections we want and a verifiable, you know, limits on the overall enrichment capacity that lengthens the theoretical breakout time.

So that’s what I would just add to that that we have to keep in mind on that question.

MS. DAVENPORT:  Karim, you wanted to add anything?

MR. SADJADPOUR:  Well, I just say it’s unfortunately becoming like the Palestinian-Israeli conflict in that people say, well, once – a two-state solution is no longer tenable, but a one-state solution is impossible.  So where does that really leave you?

We always thought there is three potential outcomes here:  There is the comprehensive resolution, there is conflict, and there is managed resolution – what Cliff said, JPOA forever.

I would say maybe better-case scenario is JPOA-plus.  The – I know the philosophy on both sides has been that nothing is resolved until everything is resolved.  I’m not sure if that is necessarily the wisest approach, if you can kind of make forward progress by isolating one issue and keep that momentum going.  I think reaching an enduring, comprehensive deal, I don’t see how that happens.  So why not try to isolate certain aspects of the deal, improve on it to keep the momentum going?

MS. ROSENBERG:  Yeah.  I come down in roughly the same place as what you were just saying.  And, you know, are we headed to JPOA forever, JPOA-plus?  Perhaps.  But will that work?  Well, the question is, let’s look significantly at the external variables here.  And so one of those very significant external determinants will be what Congress does.  So Congress will do something.  It is of course technically possible to write reasonable legislation.  That we could brainstorm right here and figure that out.  But the question is can – will it be possible to match the political desire for sending a strong message with a version of legislation that does not sabotage, either intentionally or unintentionally, this JPOA-plus managed situation for the long haul?

MS. DAVENPORT:  I’m going to start taking I think two questions at once given that there are a lot of hands.  So if we could have Rachel and then this gentleman here in the front in the – in the red shirt, please.

Q:  Hi.  This question is for George and also Elizabeth.  George, could you – well, could both of you kind of expound on the specific components of a sensible legislation a little bit more?  And Elizabeth, could you talk a little bit about how U.S. sanctions are also wound up with Iran’s ballistic missile activities and support of terrorism and what that would mean for unwinding them if Iran doesn’t also make progress on those two fronts?

MS. DAVENPORT:  And then Rachel, if you could just hand it to the gentleman in front of you there.  Thank you.

Q:  Thank you very much.  I am Dr. Nisar Chaudhry with the Pakistan-American League.  As Karim mentioned also, lifting of sanctions is an impossibility at one time because if – once they are lifted, you will never be able to clamp them again because of veto power by other countries in the Security Council.  So that is understandable.  But at the same time, as George mentioned, both sides have to come up with a dignified, pragmatic and a realistic way to resolve the issue where both sides have to demonstrate flexibility, not only one side, both sides.  And still, as you mentioned, Saudi Arabia, Persian Gulf, Israel, none of them are really happy with this kind of negotiation.

And how would you bridge the gap in this case?  My question is Netanyahu says there should be zero uranium, and the parties are working out and deciding and negotiating and playing with 3 – between 3 to 4 percent.  So how would you bridge this gap, and how would you really conclude with the idea of resolving the issue instead of putting more pressure on Iran and you don’t push anybody against the wall and putting up – coming up with more legislations that will frustrate the negotiators, who are already putting so much of resources to resolve this issue.  Thank you.

MS. DAVENPORT:  Thank you.  

Liz, would you like to start with the elements of Rachel’s question?

MS. ROSENBERG:  Sure.  So what is sensible legislation?  We could – we could talk a long time about that, but I liked George’s principles.  I’ll get on board with those.  But the devil is always in the details, and let me make two smaller technical points.

I think that what will matter a tremendous amount is how you write into them the mandatory nature of them, what is mandatory and how, and when they kick in.  And so, wrapped up in mandatory is the kind of flexibility and implementation and the use of waivers or discretion.  So that’s one, is one of those devilish details.  

And the other one I want to call out is the certification clause.  So who has the authority to say whether Iran has missed a deadline or has violated it?  Is it the IAEA?  Is it the Congress?  Is it an independent body?  Is it the administration?  That matters so much.  And flipping the presumption is one way to try and foster a reasonable political – politically viable set of language that you could use there, but mandatory – the mandatory nature and also the certification clause.

So to your second question about how do you deal with sanctions that are tied up with – if I got this correctly – both nuclear concerns and also terrorism and other weapons proliferation concerns – ballistic missiles and others weapons proliferation issues?  So in the sanctions regime for the U.S., there’s a lot of interplay and interlocking nature of these authorities, and it’s politically infeasible to roll back terrorism-related sanctions or particular designations tied to terrorism authorities or human rights violation or regional destabilization concerns.  That’s not going to happen.

And so I think if you’re trying to create a sanctions relief scheme, both based on precedent – say Libya and Burma, for example – and also given the constraints here, what you’re looking at, realistically, is creating bands of commercial activity that you can license into availability for Iran.  And that avoids the problem of removing sanctions on persons or entities designated for their support for terrorism or regional destabilization or commitment to and participation of proliferation financing for ballistic missiles, that sort of thing.

So for people who think that sanctions relief may constitute removal of whole lists of SDNs off the U.S. sanctions list, that’s not what it will look like, and because of the reasons that you point out, for example, that they’re tied – the Iran sanctions in the United States are in fact – they exist under a variety of different legal authorities and they tie to a variety of different concerns related to Iran.

MS. DAVENPORT:  Will you add, George?

MR. PERKOVICH:  Just really quickly, and all of that complexity is another reason why, you know, the legislative branch ought to let the executive have more discretion in foreign policy in both parties.  

And I guess that would be part of my answer to Rachel is, you know, write it like you would want to write it if your party had the presidency, is one thing, because these things do create precedents and things get layered in sediment over time, and then it just totally impairs the conduct of foreign policy in general and then the reputation of the United States in the international community, and the conduct of business and so on.  So it’s not just like a game.  

More specifically, it seems to me you could acknowledge the benefits of the JPOA, which, again, are acknowledged in a lot of other places, and that would be – that would reinforce the negotiations, and I think the parties to the negotiations.

And then you can talk about, you know, steps to build international confidence, which, if taken by Iran, you know, would lead the Congress to welcome, you know, proportionate sanctions relief.  Those would be in the areas of greater transparency, access to, you know, nuclear sites and individuals, lower numbers of installed centrifuges, you know, designs – you know, new plans or modification of the Iraq reactor stuff that’s already been alluded to, that if Iran actually agreed to that, that would be welcome.

And then in terms of the steps that would trigger, again, it seems to me it would be, you know, clearly a – you know, violating the terms of the JPOA.  But then with Liz’s important point about how you certify that and everything else, it seems to me it’s very important to have the executive have the discretion, but with reporting requirements to Congress.  So you show them your work in classified fora, or whatever, saying, we certified it and here’s why.

So Congress gets to look at it, and if they totally disagree they can go out and erupt, but rather than making it something where the Congress or the IAEA – because this isn’t the IAEA’s job – would have to certify.  Those are just initial ideas.

MR. KIMBALL:  If I could just – a thought about what Congress ought not try to do, which some people are thinking about, and Liz alluded to this as one of the possibilities that’s in the works, which is to pass legislation that says that certain sanctions will go into effect if the negotiations do not produce a comprehensive agreement, or if the comprehensive agreement does not produce specific outcomes on specific issues, OK?  

And here’s just one example:  Today, at 2:00, there will be a hearing before the Senate Foreign Relations Committee.  The title is dismantling Iran’s nuclear program, or something like that.  This is a line that’s been in many letters written by members of the Senate to the – in the House to the president, calling for a dismantling of Iran’s illicit infrastructure.  

Well, if you’re going to be a serious legislator and you’re going to put together serious legislation that has a serious effect on U.S. international policy, you need to try to understand and explain what that exactly means.  For some people that means, like Mark Kirk, you’re going to take apart every centrifuge the Iranians have and put it in a trash bin.  For some people it means eliminating those centrifuges that the two sides don’t agree the Iranians are allowed to keep and continue to operate.

So, I mean, I think my point here is that there is a lot of misunderstanding about what it’s actually going to take to stop short – stop Iran short of pursuing nuclear weapons.  And there’s a lot of political posturing going on about the language that’s used.  And I’m afraid that Congress, at this point, at this juncture, is just not capable of making the fine distinctions that would be necessary to put together the very good legislation that George would outline.  I would be happy if you would sit down and write it all – (laughter) – and put it together.  But unfortunately George is not working up there at the moment.

So that’s one caveat I would just remind everybody about.  And I would remind the folks in the Hill that, you know, this is a point at which you need to start paying attention to the nitty-gritty details and understand the consequences of some of the words and provisions that you’re contemplating.

MS. DAVENPORT:  OK, let’s go to the back, please.  There are two gentlemen here along the center aisle, by it.  Thank you.

Q:  My name is Evan Lewis.  I work with the Program on Public Consultation.  My question sort of leads into George’s proposition of what if you were an Iranian negotiator and you had the ability to go and suggest a strategy.  What if one of – one possible strategy is to say, resist as much as possible but eventually come to a deal that – knowing that the United States is going to reject the deal in the Senate?  

And if that’s the case, you could then use that as leverage to break apart the multilateral sanctions as a means of getting the kind of economic relief that you need, because as several people have mentioned, it’s the multilateral sanctions that have had the greatest effect on Iran in getting them to come to the table.  So if you can break the P5 cooperation, then you can just blame the United States for not being able to affirm the deal and move on from there.

Q:  Good morning.  Erich Ferrari, Ferrari & Associates.  We talked about the sanctions relieve under the JPOA, and it falls into three categories.  We have waivers used on some of the secondary sanctions authorities.  Liz talked about the auto industry and so forth.  We have the financial channel that’s been set up for humanitarian transactions, and we have the licensing policy for aviation parts and services.  

Now, the financial channel is set up for transactions which are already exempted or otherwise authorized.  The licensing policy is merely an expansion of 31 CFR 560.528, which was an existing licensing policy in favor of licensing aircraft part exports to Iran.  And then the secondary sanctions authority is allowing foreign companies to engage in those transactions in those particular sectors.

However, if you look at it, we’ve had to set up a financial channel just so foreign banks would be willing to process transactions related to exempted activity.  And everything we’re hearing is that if foreign financial institutions are not interested in facilitating any funds transfers related to the type of activity for which waivers were granted.  So this all raises the question, one, did Iran get a bad deal; two, if so, is that bad deal a result of being outmatched from a technical expertise perspective; and three, how will the future negotiations be impacted by the kind of sanctions brain drain that’s going on with a number of key officials leaving both State and Treasury?  Thank you.

MS. DAVENPORT:  Thank you.

George, would you like to start with the first question?

MR. PERKOVICH:  Yeah, I’ll – I think that the possibility of, you know, the Iranians agreeing to a deal that they count on the U.S. to then break, and so I – that’s a little farther than I’d go, but I think the basic strategy is there.  And this is what Rouhani and Zarif did in 2003 and 2004, and they’ve come back to do it – see this as a contest of isolation.  Who can – you know, can the U.S. isolate Iran or can Iran isolate the U.S. in the international system.  And so I think that is part of their logic.  It will be kind of the blame game if the process breaks down.  (Inaudible) – said, they will publish whatever the kind of the last offer was if the talks break down.  They’ll publish and let the world see who is prepared, you know, to make the accommodations, and it’s precisely to then try to unravel the sanctions process in other ways.  And so one concern would be, depending on what the U.S. Congress does, that process could already start without a deal – without a deal that Iran had accepted.  If you get unilateral action here, you can start using that to break the isolation.  So I think that is a viable concern, and that’s what these guys are thinking.

MS. DAVENPORT:  And on the question of relief?

MS. ROSENBERG:  Right.  So I love technical questions like that, so thanks.  But to keep this for a general audience, let me just say, so did Iran get a bad deal from a technical perspective?  I think the real question here is, let’s look at what’s have – what they got on paper versus in practice.  So you’re right, that’s right, that in fact some of the relief that’s called out here is basically facilitation measures to try and make happen in practice what is permitted on paper.  So is it relief on paper?  Well, some of it, you might think that’s a little redundant, because these channels do exist.  But in practice, is it having that effect?  And I agree that in practice it hasn’t had as much effect as it could because, in fact, many financial institutions and companies still aren’t interested in doing this kind of business.  It’s not lucrative enough to pay for the compliance costs and to wade into the reputational risk.

You didn’t also mention the repatriation of money, so the $7 billion that Iran gets.  So that’s real.  It’s only $7 billion for a whole country, but the premise of this, I think we were coming from is, I think of this as relatively modest relief, but confidence building nonetheless.  

Is the – who’s outmatched here technically?  There are very few people in the world who – in this country, in this town, in this government who weighed in all the way and understand what these sanctions are, so it is very difficult for anyone else to have true technical mastery of this and furthermore be able to think creatively about opportunities for their modification and, and that’s a huge challenge, as is this brain drain.  So it’s not a deep bench in the administration.  It’s not a deep bench in Congress, of the staff who work on this and the members who do too, and there is attrition here.  That’s concerning.  But this is not impossible, and smart, careful people, oftentimes lawyers – though I am not, and spend a lot of time doing this myself – can develop this mastery and apply creativity to try and get to yes if there is a political will to do it.  But I think, actually, the political will is so much harder than the technical mastery.

MS. DAVENPORT:  Great, thank you.

Carolyn, let’s take this – a question from this gentleman here in the second row.

Q:  Thank you.  I’m – (inaudible) – representing the European Union, and the former negotiator with Iran, the first phase in 2005 – till 2005.  My question – just a small comment, if you’ll allow me, to George Perkovich on sanctions.  There is a fourth element for having sensible sanctions.  They have to be coordinated with the EU.  We are the one way.  You know, this has been mentioned by Elizabeth.  We have – (inaudible) – working with Congress recently.  It’s not impossible.  But this a real important prerequisite.

My question is mostly to Karim.  I am in the happy situation of agreeing with what has been said, which shows the main difficulty today is a – (inaudible) – political will in Iran and particularly with Khamenei and the hardliners.  So do you think that the present strategic situation, original situation, particularly with Iraq, where Iran feels, in a way, reintegrated in a way in the international society because the stability in Iraq and maybe also in Syria is partly dependent of Iran goodwill – flexibilize (sic) the guide and the hardliners, or the contrary, makes them feeling more empowered and then more radical?  And is it – are there measures that we could take in respect to our principles which could “flexibilizing” these hardliners and making them more interested in the deal?

MR. PERKOVICH:  What’s the French verb for “flexibilize”?  

Q:  “Flexibize” (ph).  (Laughter.)  (Off mic.)

MR. PERKOVICH:  Oh, is it really?  Oh, that’s great.  Oh, no, that’s good.  

MS. DAVENPORT:  And then, Paul, did you have – yes.

Q:  A couple of questions for Karim.  Karim, I wonder, what are your thoughts about how Iran would react if Congress does impose tough new sanctions?  And secondly, if you don’t think the supreme leader is willing to budge too much, what’s your – what’s your hunch – I’m just asking for a hunch – about how this will all come apart?  I mean, in other words, do you think that we’ll get up to the end of June, there will be no movement, the talks will collapse, or what would be your best guess?

MS. DAVENPORT:  Karim, if you would just address all of those questions please.

MR. SADJADPOUR:  Second question, which is hypnotically, if Congress were to sanction which would, let’s argue hypothetically, they’d take effect immediately, they wouldn’t just be deterrent in nature, but Congress passes new legislation, how does Iran react to that?  I think there’s – I would say there’s two possibilities.  Possibility number one is that Iran says, well, you’ve abrogated your end of the deal, so we’re going to leave negotiations.  There’s no point in negotiating.  But we’re not going to recommence our activities.  

Possibility number two, which I think is the more likely one, is they say you’ve abrogated your end of the deal, so we’re going to recommence our activities, but we’re going to remain in the negotiations.  I think that’s the more likely option.  I just mentioned possibility number one because we did a simulation with my Georgetown students and a young woman from Germany took option number one, which was she said, OK, we’re going to leave negotiations but we’re not going to – we’re not going to move forward.  And everyone was incredibly confused.  The other countries on the simulation – you know, China, Europe, the United States, you didn’t know what to really do aside from really try to get Iran back to the negotiating table.  But again, if I’m the leader, I think that if you – you know, you can argue well, you’ve – you are the ones who reneged on the deal, so we’re going to do what we were doing in the past.  And my sense is that going back to something that George has been talking about and maybe others in the audience have argued as well, is that they are confident that the world is going to blame the United States for the failure, not blame Iran, because it will say that it was Congress that exploded this deal.  

With regards to, you know, how Iran is feeling on a regional level, I was just reading a quote this morning from Khamenei’s adviser in the Revolutionary Guards, and he says – this is a quote – he says:  “No regional developments can take place contrary to the will of Iran.  The developments in Palestine, Lebanon, Iraq, Afghanistan, Syria, Yemen, Bahrain, must go through Iran.”  So I’d argue they’re feeling very confident at the moment.

ISIS doesn’t – it constitutes a nuisance to Iran.  It doesn’t constitute an existential threat to Iran.  And, you know, as always, whether it’s a correct calculation or a miscalculation, they feel that America needs their help in fighting ISIS more than – more than vice versa.  So, you know – so how could we perhaps change their regional calculations and, you know, is there a risk that they’re going to even, you know, further radicalize the regional policies?  My sense is that there’s been tremendous continuity and tremendous consistency in Iran’s regional policies for the last few decades.  If you remember during the time of the Khatami presidency, despite the fact you had a president who was calling for a dialogue of civilizations and a more constructive relationship with the United States, Iran was continuing to support Assad, continuing to support Hezbollah, continuing to support groups like Palestinian Islamic Jihad.  So whether or not there’s a nuclear deal, I don’t see Iran’s regional policies really changing dramatically.  

Now, you could make two arguments.  One is that if we try to work together with them and we engage them on regional issues, that could potentially moderate their behavior.  The most recent data point we have, as I mentioned earlier, is President Obama writing a letter to the Supreme Leader saying we have a common adversary in ISIS, let’s work together.  And Khamenei’s response was to say that ISIS has been created by the CIA.  What was interesting is when Foreign Minister Zarif was visiting the United Nations in September, he gave a talk at the Council on Foreign Relations in which he mocked conspiracy theorists who said that ISIS was created by the CIA.  And just a few weeks ago, his deputy, someone who works under Zarif, Abdollahian, came out and said that ISIS was created by the Mossad.  And the – you know, it’s a conspiracy theory, but there’s a logic to it in which they believe that, you know, the uprisings in the Middle East, which they call the Islamic Awakening, not the Arab Spring – the Islamic Awakening was movement against the United States to unite the ummah, and the United States and the Mossad have created ISIS in order to divide the ummah.  

So I could – so my argument, I guess, implicitly I’m trying to make is that I haven’t seen any signs that a more conciliatory rhetoric toward Iran changes the regional policies.  I think perhaps when things potentially start to change is when they feel that Assad is really facing existential threat; that he’s potentially on the verge of collapse.  Maybe then they start to engage more seriously in thinking about an alternative in Syria.  But, you know, I tell people, if you’re sitting in Tehran and you’re reading op-eds and you read in the New York Times that Ryan Crocker, who’s one of the most eminent U.S. diplomats of modern times, argues that as bad as Assad is, the alternative is worse, why would you feel that you have to – you compromise on Assad?  You feel that the world, the West, the United States, is gradually coming around to your point of view, which is that the alternative to Assad is worse.  I don’t think they feel that they’re in a position that they have to compromise on the regional policies.

MS. DAVENPORT:  We’re going to take two questions just very quickly here at the end.  If I could have this gentleman here in the middle, and then in the back, please.  And please make your questions very, very brief.

Q:  (Off mic.)  Hello.  I’d like to go back to a kind of macro question and long term, because I’ve got a feeling this is going to go on – this negotiation and these issues are going to go on for a while.  The basic element, it seems to me, is that – to ask the question:  Does Iran as a whole – not just the leader, but Iran as a whole – really want nuclear weapons, and what it thinks its risks are and what it thinks its benefits might be?  As against the other alternative, which is integrating Iran into a larger economic security structure that’s at work as process and whether that debate – I guess Karim might be a good person to do – look at that – is this debate possible and useful over the long term?  And what would be – given America’s interests?  Because the other alternative for Iran, by the way, seems to be war, which I don’t think would be good, or being isolated.  On the American side, the – ask the question is what do we want, and are we willing to do piece meal?  What is it – what is it that we are going to do?  What will either destroy the possibility of their looking rationally at it, or whether or not we have a strategy that works?  Thank you.

MS. DAVENPORT:  OK.  And then the final question, please.

Q:  A lot of talk here about what would be a good – some good legislation that could come out of Congress that would lead to a – you know, wouldn’t scuttle a deal.  But don’t you think a lot of the congressmen and senators really want to scuttle a deal, that they don’t think any deal would be a good one and that the – no matter what you get, the Iranians will always cheat and so on, so that the real approach is essentially to try and scuttle it?

MS. DAVENPORT:  All right.  Thank you.  Karim, would you like to address the first question about Iran’s intentions?

MR. SADJADPOUR:  Yeah.  So I would never deign to speak on behalf of 18 million Iranians to say, you know, what is Iran’s intentions as a whole.  I’d just make a couple points.  One is that the lessons they’ve drawn, which are obvious lessons that all of us can see, is that when Gaddafi gave up his nuclear program, made himself vulnerable to NATO intervention.  Ukraine’s abdication of its nuclear program made it vulnerable to outside intervention.  Iraq’s not having a nuclear weapon made it vulnerable to outside intervention.  So that’s not an argument to say that they are in pursuit of nuclear weapons – I’ve always thought their end game is more to have the capability – but it is an argument that they – they’ve seen – and the leaders said this publicly that, you know, when those countries – particularly Libya, I think, was a compelling case, from when they – when they abdicated the nuclear program, they made themselves vulnerable to outside intervention.  

I’d just say one thing about the popular discussion on this:  The last time I was in Iran, until I can no longer go there or stay – go there and stay out of prison, was 2005.  And I was based there between 2003 and 2005, and I can tell you even that time – we’re talking about almost 10 years ago – people were really tired of the nuclear issue.  They were really tired of reading about enriched uranium and centrifuges.  I don’t think people really cared that much about it.  This notion that it’s a source of national pride and dignity for all Iranians I think has always been exaggerated.  Remember, this is a population which experienced an eight year war with Iraq, so I don’t think people really romanticize about the prospect of further militarization.  And I think if you were to present to the Iranian people – this is outside – this is – I’m just talking about a hypothetical, which will never happen, but if you were to present to the people even this nuclear deal which was discussed last week in Vienna, and say, OK, either you can make a few compromises on the number of centrifuges and, you know, transparency in exchange for potentially billions – tens of billions of dollars of sanctions relief and increased foreign investment, which would – which would really bolster your economy, or you can forego those incentives in order to have a couple thousand more centrifuges, I think it would be a no-brainer for the Iranian people.  But the economic welfare of the Iranian public has never been the motivating factor of this nuclear program.  

And I just will make one point in conclusion, which is I’ve always thought one of the challenges of concluding this deal is that we’re trying to find a technical resolution to a political conflict and the – I think if President Obama and Secretary Kerry could push a button and normalize relations with Iran, they would and – but the opposite is not true, in that, you know, I think that the leadership in Tehran has made clear that this is only about the nuclear negotiations; we’re not interested in rapprochement.  Araghchi, one of the nuclear negotiators, said that, you know, America’s still the great Satan for us; the leader said this as well.  So that’s why I’m not terribly optimistic we’re going to conclude this deal, but I think, you know, containing the program where it’s at now, until there is, you know, leadership with different calculations and Tehran, is not – is not a terrible option.

MS. DAVENPORT:  All right.  Thank you.  Regarding the second question -- (inaudible) -- address that briefly?

MR. PERKOVICH:  I just have just a quick comment on the second question about – you know, look, in life, you run it – we all have an experience of having contradictory views at the same time.  My experience in talking with members of Congress about this is they have contradictory views and have the luxury of not having to reconcile them.  So they say no, no, of course I want diplomacy to succeed, of course I want diplomacy to succeed, but I want a really good deal and the Iranians will never agree to a good deal.  And then you say well, but your legislation would do X, and they go well no, it won’t – it won’t do that, and they just kind of leave it there as this kind of contradictory mess that the executive ultimately has to take responsibility for.  And then Congress will bash it, so –

MR. KIMBALL:  Well, I think one thing that we need to remember is that yes, there may be some people who don’t want a diplomatic solution, or they may be taking actions that undermine a diplomatic solution without realizing it, but – and we don’t know exactly what the Iranian leadership will – wants or will do 5, 10 years from now, but what we do have is despite all the difficulties, despite the history between the United States and Iran, there is a comprehensive, long term, verifiable deal that is within sight – it is, because the negotiators have been working extremely hard.  There are technical solutions to some of the problems.  Ultimately, political choices are going to have to be made about what appear to be technical issues, but they are there within close reach.  And so what I would say is, before Congress has a chance to either get things right, as George suggested, or get things wrong, as some people are suggesting, finish the job.  The choice for the Iranians, if you’re looking at it rationally, should be clear, also.  So we’ve got, I think, a short amount of time to get an agreement that is effective and is a win-win for both sides.

MS. DAVENPORT:  OK.  Well, we have to end on that optimistic note.  Thank you so much for coming and please join me in thanking our panelists.  (Applause.)


Posted: December 3, 2014