Iran to return to talks in November

On October 27, 2021, Iran’s lead negotiator announced the return to nuclear talks with the world’s six major powers by the end of November this year. 

Ali Bagheri, the new Deputy Foreign Minister, tweeted the announcement after meeting in Brussels with Enrique Mora, the EU coordinator for the talks.

In response, White House press secretary Jen Psaki said that the Europeans and the US negotiators would determine next steps. “Our framing continues to be compliance for compliance,” she told reporters. 

A return to negotiations in Vienna, however, is no guarantee that the diplomatic process will resolve the deep differences between Tehran and Washington over both substance and sequencing.

On substance, Iran wants guarantees that the United States will never reimpose sanctions if it returns to compliance with the 2015 nuclear deal, while the Biden administration says it cannot guarantee what another president might do.

On sequencing, Iran wants the United States to lift sanctions before Tehran reverses breaches that began in 2019, after the Trump administration abandoned the deal and reimposed sanctions. 

The Biden administration has stipulated that both countries must simultaneously return to their commitments in the Joint Comprehensive Plan of Action (JCPOA).

From April to June 2021, Iran and the world’s six major powers held six rounds of talks on restoring the 2015 nuclear deal. Diplomacy stalled in June during Iran’s presidential campaign and the political transition as Ebrahim Raisi took office and appointed his cabinet in August. The two main issues in the talks are lifting US sanctions and reversing Iran’s nuclear program that can be addressed in the following three likely scenario.

Scenario 1

President Raisi's team agrees to a deal that is marginally better for Iran than the package that was on the table in June. Although they were close to their bottom lines, both sides probably still have some maneuvering space. If they are willing to compromise, this would be the least costly option. It would provide the Raisi administration with an early political win, which could be framed as their victory given that the hardliners now control all levers of power and dominate the country’s media. It would also constitute a much needed economic reprieve amid a confluence of crises that Iran is facing, ranging from economic stagnation and social unrest to the raging COVID-19 pandemic.

The Biden administration, which has had a major setback in Afghanistan, would benefit not just by defusing a simmering nuclear crisis, but also by potentially paving the ground for de-escalation in Iraq and in the Gulf. This would allow Washington to shift its focus to the larger challenge of great power competition with China and Russia. The parties could then try to achieve a better-for-better deal that is more satisfactory for both sides and thus more stable than the JCPOA.

Scenario 2

Raisi's team drives a hard bargain and makes maximalist demands that are unacceptable to the United States and European powers. This is the most likely outcome because the Iranian leadership seems to believe that time is on its side. Iran sees an advantage in the exponential growth of its nuclear program. It also views the US leverage from sanctions as past its peak and now at the point of diminishing returns. Iran also believes that the West has no appetite for military confrontation. This calculus is underpinned by an optimistic view on Iran’s ability to remain afloat as its economy has stabilized and oil exports to China hover around a million barrels per day. 

In this scenario, Iran would insist that the United States lift all the sanctions that were imposed and reimposed since 2017, provide the sanctions relief upfront and allow several months for Tehran to verify its effectiveness. Iran would also demand guarantees. It is not hard to predict what comes next.

In 2005, when Mahmoud Ahmadinejad came to power, Iran pursued a similar confrontational approach, which led to 10 years of mutual escalation in what can be called the race of sanctions against centrifuges. It was a lose-lose game for both sides and brought them to the brink of military confrontation.

Renegotiating the package that has been coming together in six rounds of talks is not going to shift Washington’s bottom lines or core demands, but it risks bringing down the JCPOA. This is primarily because there are pressure points on the timeline. The United States and European powers are increasingly concerned that Iran’s advances are approaching the point of irreversibility, making the existing agreement, even if fully restored, insufficient.

At the same time, Iran is in a standoff with the IAEA over access for its inspectors and outstanding issues with regards to Iran’s past nuclear activities. If these issues are not resolved before the end of 2021, another referral to the UN Security Council is almost certain.

Scenario 3

Raisi's team seeks to negotiate a new deal to replace the JCPOA. A consensus seems to have emerged among the Iranian hardliners, who now control all levers of power that the JCPOA was flawed from the beginning and that its restoration is futile as it will only produce the same outcome ‑ depriving Iran of its nuclear leverage with an empty promise of economic incentives, followed by a return of sanctions. This approach has a lot of appeal to those in Tehran and Washington who deem the JCPOA inadequate and seek a more advantageous agreement, JCPOA-Plus. 

Kayhan, the daily whose editor in chief is appointed by the Supreme Leader, recently wrote, “The JCPOA must change is the one issue upon which Iran and the US converge.” But the path to a new deal is likely to pass through a risky escalation. 

Iran might up the nuclear ante further, prompting the United States to impose more coercive measures, both looking for more leverage ahead of a return to talks. Iran, as it has already indicated in the six rounds of talks in Vienna, would want more sanctions relief, including from US primary sanctions. They were the main obstacle to the Iranian banking sector’s return to the US$-dominated global financial system after the United States lifted sanctions in 2016. Iran also wants compensation for damages incurred during the Trump administration’s “maximum pressure” campaign. 

The path to a JCPOA-Plus does not need to be so treacherous. One option to avoid the escalatory cycle would be to quickly strike an arrangement that amounts to a JCPOA-Minus. Iran could agree to freeze proliferation-sensitive activities, including uranium enrichment above 3.67 percent, advanced centrifuge work, and uranium metal production. In return, the Western powers could accept an agreed-upon level of oil exports and/or partial access to its frozen assets.

An interim arrangement could cap the immediate nuclear proliferation crisis, deliver economic reprieve for Iran, and buy time for the parties to negotiate parameters of a more-for-more JCPOA-Plus that addresses their broader demands. One pertinent question here is whether such an interim agreement would trigger the Iran Nuclear Agreement Review Act (INARA) of 2015 – a US law requiring any new deal with Iran to be subject to a congressional review, but a JCPOA-Minus is not a new deal, it is a waystation toward the original agreement.