On April 2, 2015, the US, EU and Iran announced they have worked out a framework to guide further negotiations towards an agreement on Iran's nuclear program and related economic sanctions.
What has been announced
The US, EU and five other countries (Germany, France, the UK, China and Russia), who are referred to as the P5+1 or the E3/EU+3, have been negotiating with Iran in these areas for several years. Yesterday’s announcement came after a marathon week and all-night session of negotiations. There appears to be some momentum among the negotiating countries to work towards an agreement prior to an agreed deadline of June 30.
No text for the framework has been released. Information can be gleaned from:
- a fact sheet issued by the US State Department;
- a press conference by US Secretary of State Kerry;
- a shorter press conference by the EU High Representative, Federica Mogherini, and the Iranian foreign minister; and
- a brief statement by OFAC that the announcement does not lift or alter any US sanctions.
No lifting of sanctions likely until late 2015 or 2016
To be clear, there is not yet any agreement on the related nuclear and sanctions issues. Indeed, the US government has stressed that "nothing is agreed until everything is agreed". The term "Joint Comprehensive Plan of Action" has been widely used, but is only the working title for the agreement the parties hope to reach in the coming months.
Furthermore, even if the open issues are resolved and an agreement is signed, it appears there will be no lifting of sanctions for several more months.
Parameters for an agreement with Iran
The key parameters for any future agreement, as set out in the US fact sheet, include the following:
- Enrichment. Iran will limit its ability to enrich uranium (e.g., reducing its installed centrifuges by approximately two-thirds), reduce its current stockpile of enriched uranium by over 97%, convert its Fordow facility to peaceful scientific research, and not build any additional enrichment facilities for 15 years. Many of the details apparently have not yet been worked out.
- Arak reactor. Iran will rebuild its Arak reactor so that it does not produce weapons grade plutonium, and take agreed steps regarding heavy water to be fed into the reactor, and spent fuel coming out of the reactor.
- Transparency. The International Atomic Energy Agency (IAEA) will have very broad access to monitor Iran’s entire nuclear program (e.g., nuclear facilities, supply chain, uranium mines, and removed enrichment infrastructure).
- Timeline. The technical parameters of the agreement will be set to increase the time it would take Iran to acquire enough fissile material for one nuclear weapon from the current 2-3 months to a full year.
Proposed future sanctions relief
Limited information has been provided to date regarding the sanctions relief that is proposed to occur under any future agreement. The US State Department fact sheet indicates that if Iran acts in accordance with its commitments under the future agreement, certain US, EU and UN sanctions will be suspended:
- Performance before sanctions relief. Before any sanctions relief will occur under the proposed agreement, Iran will be required to complete all of its Iran’s “key nuclear related” commitments. These include the steps summarized above relating to uranium enrichment, conversion of the Arak and Fordow facilities, assurances on the Iranian nuclear program’s “possible military dimensions” (PMD), and establishing the broad inspection regime.
- Initial suspension of sanctions. Once these steps have been taken and confirmed by the IAEA, the US and EU will "suspend" their nuclear-related sanctions (sanctions not related to nuclear issues will remain in effect), and UN Security Council resolutions relating to the Iran nuclear issue will be lifted. On April 2 Secretary Kerry suggested it would take Iran between 4 months and a year to take the steps required for the first round of sanctions relief.
- US sanctions that may be lifted. In our view, on the US side, this relief will likely include many of the secondary (extraterritorial) sanctions relating to the Iranian banking, petroleum, shipping and ports sectors that have prevented non-US companies from engaging in general commercial activity with Iran for fear of being penalized by the US government. However most other US sanctions will remain in place, including general prohibitions on US persons and non-US entities they own or control engaging in most transactions with Iran or its government.
- New UN regime. A new UN Security Council resolution will be adopted to create a system of reviews and approvals of Iranian imports of nuclear-related goods and technologies, and impose restrictions on other sensitive, military and missile-related equipment and technology.
- Current sanctions suspensions. In the meantime, according to Secretary Kerry, the current limited sanctions relief adopted in January 2014 as part of the ongoing negotiations (under the “Joint Plan of Action” or JPOA), will remain in effect. Our briefings describing these suspensions are available here and here).
- “Snap back” of sanctions. If Iran fails to perform under the agreement sanctions will “snap back into place.” This will likely be achieved on the US side by leaving the relevant US regulations in place, subject to general licenses and other authorizations that can easily be revoked. It may not be as simple for EU sanctions to "snap back", and re-imposing UN sanctions would likely require a potentially difficult UN Security Council process
Prospects for the further negotiations
While President Obama, President Rouhani of Iran, the EU High Representative and Germany’s foreign office have stated that the goal is to finalize the deal by June 30, 2015, it is our understanding that there are important issues left to negotiate. Many of the parameters set out above give rise to additional questions. For example, how Iran will greatly reduce its stocks of enriched uranium, how violations of any future agreement will be determined, and how EU and UN sanctions would be re-imposed if that became necessary.
In addition, negative reaction to the announcements can be expected both in the US and Iran (and is already being heard from many members of US Congress). It remains to be seen whether the negotiations can progress while under significant pressure from skeptics on both the US and Iranian side. President Obama has indicated the White House will be lobbying intensively to head off bills pending in Congress that the President believes could derail the negotiations, including a bill to require Congressional authorization of any future agreement.