The Fate of JCPOA, Sanctions and Iran’s “Virtual Deterrence” Strategy

Iran stopped implementing the additional protocol of the International Atomic Energy Agency (IAEA), which allowed intrusive inspections of its facilities, last week. That is one of several measures Iran has taken under the Act of “Strategic Action to Lift the Sanctions and Protect the Interests of the Iranian Nation”, which had been approved by the Iranian parliament and ratified into law by the Guardian Council, a constitutional watchdog, on 2 December 2020.

On 4 January 2021, Iran resumed production of 20 percent enriched uranium at its fortified underground Fordo nuclear facility under the same act. Under the nuclear deal reached between Iran and world powers in 2015, known as the Joint Comprehensive Plan of Action (JCPOA), Iran is allowed to enrich uranium up to 3.6 percent, not more, at its Natanz uranium enrichment plant, not at the Fordo facility.

The United States under former President Donald Trump unilaterally pulled out of the multilateral JCPOA in May 2018. It then re-imposed draconian sanctions against Iran despite IAEA’s verification and confirmation that Iran had fully complied with the deal. The White House adopted a hostile policy of “confrontation” against Tehran. It enforced its infamous “maximum pressure” campaign to force the Islamic Republic to agree to a new deal that would please Washington; a new deal that was tantamount to Iran’s “surrender.” Iran didn’t give in to coercion.

Yet, Tehran continued full compliance with the JCPOA for a year in response to European promises that they will keep their part of the agreement. With Europe reneging on its promises, Iran, in May 2019, began reducing its commitments under the deal gradually. But Iran’s tiny steps were not sufficient to force the United States or Europe to stop their breaches and re-consider their position.

The JCPOA stipulates that sanctions against Iran would be lifted in exchange for Tehran agreeing to specific restrictions, including limiting its uranium enrichment programme.

The 2 December law is the Islamic Republic’s latest response to the United States and Europe aimed at convincing them to change their calculations.

Iran, however, has clarified that all of its actions are reversible. If sanctions are fully lifted, it will return to full compliance quickly.

The new U.S. administration of President Joe Biden has publicly admitted that U.S. withdrawal from the JCPOA was wrong and that the “maximum pressure” campaign was counterproductive. It has vowed to re-join the JCPOA but has not done so yet.

“The Trump administration’s maximum pressure approach to isolate and cripple Iran was a miserable failure," admits prominent Democrat Senator Christopher Murphy. (1)

This paper argues that Europe’s failure to adhere to its commitments and America’s pull-out from the nuclear deal has left no choice for Iran but to further reduce its compliance with the JCPOA in order to create a balance. It also argues that Iran’s new steps put it in a better negotiating position and increase its leverage to force the other parties to change their calculations and lift the sanctions. Moreover, this paper discusses the fate of the JCPOA and potential scenarios ahead.

U.S. agenda: Who acts first?

The Biden administration has publicly announced that it is willing to return to the JCPOA only if Iran fully abides by the deal first. Biden has clarified both during his election campaign and later as President that “the U.S. would rejoin the agreement as a starting point for follow-on negotiations.” (2)

U.S. Secretary of State Antony Blinken has shed more light on Washington’s strategy: “Working with allies and partners, we will also seek to lengthen and strengthen the JCPOA and address other areas of concern, including Iran’s destabilizing regional behavior and ballistic missile development and proliferation.” (3)

Iran has categorically rejected demands for a new deal or changes to the terms of the existing JCPOA. It has also dismissed U.S. preconditions, saying it – not Washington – is in a strong legal and moral position to demand that sanctions be lifted first because the United States was the party that pulled out of the JCPOA and ceased performing its commitments under the deal in the first place.

Tehran has insisted all along that it will return to full compliance if the United States fulfils its obligations under U.N. Security Council Resolution 2231, which endorsed the JCPOA, and lifts the sanctions first. “JCPOA is of no value to Iran if sanctions are not lifted,” (4) according to Iran’s Deputy Foreign Minister Abbas Araghchi.

Biden and Blinken, according to Foreign Policy, “are concerned about being perceived as weak if they make any concessions at the outset. And so, they are still playing a game of chicken with Tehran.” (5)

But Hadi Ajili, Associate Professor of International Relations at Allameh Tabataba’i University in Tehran, says re-joining the JCPOA and lifting sanctions is not Washington’s priority. “Biden’s priority is tackling domestic issues such as the coronavirus crisis and social tensions in the United States. In foreign policy, competition with China is his top priority. The Biden administration does want to rejoin the JCPOA but it’s not in a hurry,” he said. (6)

Ajili argues that Trump issued executive orders to pull out of the nuclear deal and re-impose sanctions on Iran. He did not take it to Congress. Biden could have re-joined the JCPOA and lift the sanctions by issuing executive orders. More than a month has passed since Biden took office but he has not done so. The Biden administration’s calculation is that Iran’s next government, even if dominated by principlists, known as conservatives in the West, would still be eager to get the sanctions lifted; and Washington does not want to put all its eggs in the basket of President Hassan Rouhani.

“The Biden administration has changed America’s tone but not its strategic direction towards Iran. In practice, Biden is following Trump’s direction. The nuclear steps Iran has taken so far have not alarmed the United States or Europe. And Iran continues to suffer under the sanctions. The White House feels that the Rouhani administration is in a hurry to get the sanctions lifted. Thus, it may give concessions,” Ajili said. (7)

The professor opines that Iran’s calculation now is that it has to dramatically expand its uranium enrichment programme and intensify its nuclear activities to alarm the West and, thus, make it a priority for the United States and Europe to lift the sanctions.

Iran’s next steps

The Additional Protocol provides additional tools to the IAEA, beyond the Safeguards Agreement, for verification. It grants the agency expanded rights of access to information and locations. It allows snap inspections and drastically enhances the IAEA’s ability to verify nuclear activities in member states – but not anymore in Iran. That means IAEA routine monitoring of Iran’s nuclear facilities and activities will continue under the Safeguards Agreement but no access will be given beyond that.

However, Iran and the IAEA reached a “temporary technical understanding” last week to create room for diplomacy. The deal creates a political opportunity to revive the JCPOA and save it from a quick collapse. Under the formula, Iran would keep recordings from monitoring equipment and cameras installed by the IAEA at Iranian nuclear sites (under the terms of the Additional Protocol) for the next three months but would not release the information unless sanctions are lifted. If sanctions remain, the data (tapes of those cameras) would be erased. (8)

The Additional Protocol, despite the “temporary technical understanding”, is the latest casualty but it will not stop there. Should the United States and Europe fail to lift the sanctions, Iran will further boost its nuclear programme.

Under the December 2020 Act, if sanctions are not lifted, Iran will take several more steps in the coming weeks and months:

• In March, Iran will put into operation a minimum of 1,000 advanced IR-2 and at least 164 (a single cascade) IR-6 centrifuges. These modern centrifuges are capable of producing more enriched uranium in a shorter period of time than first-generation IR-1 centrifuges. That will allow Iran to dramatically expand its uranium enrichment program. Within a year, IR-6 operating centrifuges will have reached 1,000 machines. Under the JCPOA, Iran is allowed to only use its IR-1 centrifuges for enriching uranium.
• In May, Iran will inaugurate its uranium metal production plant in Isfahan, central Iran. Uranium metal has both civilian and military applications. According to Iranian officials, the Islamic Republic is carrying out research activities to design a new advanced fuel for its Tehran research reactor. Some countries use metallic uranium fuels for their reactors. Iran will be one of them. But European powers are extremely worried. Britain, France and Germany have argued that the production of uranium metal has “no credible civilian use” and “has potentially grave military implications.” (9)
• The Atomic Energy Organization of Iran (AEOI) will be required to complete and launch the 40-megawatt heavy water reactor outside Arak in central Iran within a specific period of time and begin designing another 40-megawatt heavy water reactor.
• The AEOI is required to produce at least 120 kilograms of 20 percent enriched uranium in one year and stockpile it inside the country. It is also obliged to meet the country’s needs for enriched uranium above 20 percent. That means Iran may go to enrichment higher than 20 percent in the coming months, if necessary. Supreme Leader Ayatollah Ali Khamenei has hinted that Iran may jump to 60 percent enrichment, which will be much closer to weapons-grade level. (10) The 120 kilograms is half the amount of uranium, if enriched above 90 percent, needed to build a single nuclear weapon.

These steps are likely to either force the U.S. and Europe to lift the sanctions or lead to unprecedented heightening of tensions.

“More U.S. delay on clean compliance will be rewarded with more Iran clean distance from the JCPOA and the greater domestic obstacles Tehran and Washington will face envisage full compliance,” Hossein Mousavian, Middle East Security and Nuclear Policy Specialist at Princeton University, said. (11)

Mousavian, a former Iranian nuclear negotiator, stated that Iran still implements 70 percent of its JCPOA commitments while the United States and Europe’s enforcement of their obligations is zero. China and Russia carry out just 30 percent of their deal undertakings. “They have a long way to go to equate with Iran,” he said.

Interim road map

The Biden administration “is looking for an interim road map … the most pressing question in the days ahead will be whether Washington and Tehran can find an interim diplomatic solution.” (12) The interim solution may include reducing sanctions to encourage Tehran to agree to start talks for an arrangement that will commit both sides to return to full compliance with the JCPOA under a timetable.

Washington has indicated that it may support the Iranian demand to get a loan from the International Monetary Fund (IMF) to fight the coronavirus pandemic but will not lift the biting oil and banking sanctions. But such measures are unlikely to get Iran to stop its nuclear expansion if oil and banking restrictions remain in place.

Ali Vaez, an expert on Iran with the International Crisis Group, argues that each party insisting the other party go first is not helpful. “I'm afraid … that significant nuclear escalation is on the horizon” if no progress is achieved.

He maintains that, instead of playing chicken, Iran and the United States can set out a road map that would spell out “staggered but coordinated and simultaneous steps for coming back to full compliance with the deal.” (13)

That road map may include face-to-face talks, freezing steps that go against the JCPOA and agreeing on a timetable committing all sides to return to full compliance with the deal.

That requires the United State to re-join the JCPOA first because, in Iran’s view, no talks are possible as long as America remains out of the deal; and re-joining the JCPOA would be meaningless without the lifting of sanctions.

In the meantime, a European Union proposal for an informal meeting between the remaining JCPOA members (4+1 and Iran) and the United States (invited as a guest) – before Washington re-joins the deal – has put Tehran in a difficult position. Iran says it is studying the proposal.

“If Iran agrees to meet with the U.S. in an informal setting, it has lowered its own bar, which could be interpreted by Washington as a sign of desperation; but if it refuses to meet, it might shift the burden of blame from Washington to Tehran … Both sides have a set of expectations, and they need to coordinate their steps so that neither side believes that it’s taking too much risk,” Vaez maintained. (14)

Ajili believes that simultaneous steps may be a workable final arrangement but that it is not to Iran’s benefit at this point because currently there is no balance. Iran needs to accumulate more leverage before agreeing to a simultaneous arrangement. Symbolic gestures such as backing Iran’s request to obtain IMF loan would be a joke.

Short window of opportunity

Iranian Foreign Minister Mohammad Javad Zarif has warned Washington that it will lose a golden opportunity to save the JCPOA if it does not act fast. “Time is running out for the Americans, both because of the parliament bill (Act) and the election atmosphere that will follow the Iranian New Year (which falls on March 21),” Zarif told Hamshahri newspaper recently. (15) Iran’s presidential elections are set for 18 June 2021.

Experts like Vaez argue that Rouhani and Zarif are the architects of the JCPOA and have strong incentives to preserve it but Iran’s next government, likely to be dominated by principlists, may not be so eager to save the deal if sanctions remain in place. So, the JCPOA needs to be saved before Rouhani steps down in August.

Iran’s U.N. envoy Majid Takht-Ravanchi says the “window is closing” for the United States to lift the sanctions. (16)

But Ajili says America’s reckoning is that opportunity will still exist after Iran’s June elections. “The Biden administration is following two goals: First is to once again create a global consensus against Iran. And second is to create rifts within Iran. Trump’s unilateralism broke global consensus against Iran and brought solidarity inside Iran. Reformists and principlists united to stand up to Trump’s coercion. Now, Biden seeks to reverse that. Building global consensus against Iran and breaking domestic unity in Iran is more of a priority for Biden than how soon the JCPOA can be saved,” he said. (17)

Non-nuclear issues

Many American politicians, both Republicans and Democrats, have called on the Biden administration to use sanctions as leverage to force Iran to make concessions and agree to a broader and longer deal that would lengthen limitations on its nuclear programme, restrict its missile programme and curb its regional influence.

Blinken appears to have listened, saying the United States would seek to build a “longer and stronger agreement” that would deal with non-nuclear issues. That would also please the Israelis and Saudis. “And we also need to engage other issues that were not part of the original negotiation that are deeply problematic for us and for other countries around the world: Iran's ballistic missile program, its destabilizing actions in country after country. All of that needs to be engaged,” he said. (18)

From Tehran’s perspective, raising non-nuclear issues or follow-on negotiations to lengthen the restrictions on Iran’s nuclear program are out of the question. That is seen by Tehran as extortion and additional coercion. It will complicate the issue even further instead of solving the problem caused by U.S. withdrawal from the nuclear deal.

The JCPOA covers Iran’s nuclear programme only. It has absolutely nothing to do with Iran’s missile programme or its regional policies. Any demands from the Biden administration or Europe to include non-nuclear issues are non-starters. Such an approach would be the same coercive Trump policy. If there was any possibility of Iran agreeing to discuss non-nuclear issues, it would have done so under Trump and avoided suffering from draconian sanctions for years.

The United States needs to re-join the JCPOA and fully lift the sanctions in order to expect Iran to fully return to the deal.

Iran’s missile programme or regional policies can be discussed separately from the JCPOA under a regional formula. Iran itself would have a long list of own grievances: U.S. military bases in the Middle East and the deployment of U.S. aircraft carriers in the, which pose a grave danger to Iran’s territorial integrity and national security; Israel’s nuclear weapons that can destroy the whole planet; Israel’s long-range nuclear-armed Jericho missiles and Dolphin submarines; Saudi Arabia’s long-range missiles obtained from China; the Saudi-led military aggression and genocide in Yemen; and the list goes on and on.

Putting the JCPOA aside, there will be no deal after long years of negotiations if non-nuclear issues are going to be raised.

Iran’s nuclear strategy: virtual deterrence

Iran’s nuclear strategy is meant to serve as a deterrent without building an atomic bomb or violating Iran's obligations under the nuclear Non-Proliferation Treaty (NPT). In other words, Iran seeks to possess nuclear fuel cycle technology and take a nuclear programme to an advanced stage short of weaponisation. That means the country has the technological basis – know-how, specialist workforce and materials – to build a nuclear weapon in less than a year but has not done so. It only needs to retool its advanced civilian nuclear programme to produce nuclear weapons. This capability is called “nuclear hedging.”

“Nuclear hedging” is not proscribed by the NPT. Possessing such capability allows the country to manufacture a nuclear weapon quickly at will. It creates, in effect, a de facto nuclear power with all the parts but just not pieced together. Basically, that is one screwdriver away from becoming a weapon.

This strategy shows how a signatory to the NPT can legitimately maintain a nuclear fuel cycle capability and possess expertise, technical capacity and huge quantities of fissile material without diverting it towards a nuclear weapon.

Japan, South Korea, Taiwan, Australia, Canada, Germany, Switzerland, Brazil and Iran are examples of non-weapon states which maintain this posture. (19)

Former IAEA chief Mohamed ElBaradei calls them “latent weapons states.”

“It’s a description that fits a lot of countries that have the know-how. The only key is the fissile material. If you are really smart, you don’t need to develop a weapon, you just develop a capability. And that is the best deterrence,” he asserted. (20)

The greatest benefit of this strategy is the “virtual” deterrence posture it generates towards potential aggressors. So, Iran’s nuclear strategy has been to remain in compliance with the NPT and at the same time provide Tehran with a legitimate deterrence that would dissuade its enemies from attacking it.

Under the JCPOA, Iran could have been about a year away from having enough fissile material to produce a bomb if it made the political decision to go in that direction. Now, experts estimate that Iran’s “breakout” time –the time it takes for a country to produce sufficient fissile material for a single nuclear weapon – has been reduced to about six months.

With Iran accumulating more 20 percent enriched materials and further distancing from the JCPOA, its breakout time will become shorter and shorter. This will compel the United States and Europe to make it a priority to drop the sanctions if they want Iran to return to full compliance under the deal.

Iran’s Intelligence Minister Mahmoud Alavi has hinted that Iran may reconsider its policy and develop a nuclear weapon if sanctions remain in place. “Our nuclear program is peaceful and the fatwa by the Supreme Leader has forbidden nuclear weapons, but if they push Iran in that direction, then it wouldn’t be Iran’s fault but those who pushed it,” Alavi told Iran’s state TV recently. “If a cat is cornered, it may show a kind of behavior that a free cat would not.” (21)

Worst-case scenario

Iran has heard a lot of “good talk and promises” and was not only let down but shown the opposite. “This time only action. If we see action from the other side, we will also act. The Islamic Republic will not be satisfied with promises of actions,” Khamenei said recently. (22)

If key sanctions are not lifted, Iran is sure to expand its nuclear programme. Iran’s parliament is likely to force the Rouhani administration to take harder steps should Iran continue to suffer under the sanctions.

Then, it may come the worst-case scenario: The two sides fail to save the JCPOA and Europe triggers the snapback mechanism and refers Iran’s nuclear dossier to the U.N. Security Council, which will automatically re-impose all previous resolutions and sanctions against Iran. That would be a lose-lose situation.

“The U.S. and Europe know what happens if the snapback mechanism is enforced. If it happens, Iran will cut cooperation with the IAEA. There will be no inspection, no access to Iran’s facilities. And Iran will very likely withdraw from the NPT altogether,” Ajili said. (23)

However, according to Ajili, the worst-case scenario for the Islamic Republic would be the Biden administration’s success in creating global consensus against Tehran and creating rifts within Iran at the same time; and the worst-case scenario for the United States would be the materialisation of Alavi’s warning.