Exploring likely solutions to break nuclear stalemate with Iran

The Politico magazine has proposed three solutions to the US President, Joe Biden to break the deadlock to restore the 2015 nuclear deal with Iran. The article is written by founder and CEO of the Bourse and Bazaar Foundation Esfandyar Batmanghelidj and policy fellow at the European Leadership Network (ELN) Sahil Shah. Following is the text of the article: 

Joe Biden has promised for months to reverse Donald Trump’s policy on Iran, saying Trump pulled out “recklessly” from the 2015 Joint Comprehensive Plan of Action (JCPOA)—the Iran nuclear deal—and that the rest of Trump’s approach was a “dangerous failure.”

The issue is becoming only more urgent. Three reports from the International Atomic Energy Agency this week highlight dangerous, albeit reversible, advances in Iran’s nuclear program. Iran will continue to roll back its implementation of the deal if it does not see economic benefits of the agreement restored.

But it’s far from obvious how to restart nuclear talks in the current environment, never mind revive the full deal. In his first press conference as US Secretary of State last month, Antony Blinken declared that “if Iran comes back into full compliance with its obligations under the JCPOA, the US will do the same thing.” However, Iranian officials have publicly questioned why they should be the first to move when the US is the country that left. Iran contends that notwithstanding its moves to increase its capabilities and uranium stockpile, it remains in full compliance with the deal, interpreting paragraph 36 of the agreement to mean that Iran can “cease performing its commitments” should another party do the same.

In the current political context, Iranian rejection of Blinken’s proposal is understandable. The Trump administration eroded American diplomatic credibility, not only on the Iran nuclear deal, but across a wide range of international agreements. Even those Iranian leaders who remain strongly in favor of the nuclear deal are concerned that the Biden administration will lack the political will to provide Iran the full range of sanctions relief it was promised. Conservatives in Tehran continue to mock deal supporters for being naive.

Iranian President Hassan Rouhani once stated that the JCPOA would either persist as a “win-win” agreement for all parties or end up as a “lose-lose.” As the US looks toward reviving it, it’s important to remember that Iran’s experience of sanctions relief following implementation of the JCPOA was disappointing. Lifting sanctions proved complex, and Iran’s economy had been thoroughly stigmatized. The Obama administration struggled to deliver Iran the economic benefits it had promised. In a nod to this bitter experience, Iran’s Supreme Leader Ali Khamenei recently stated that “getting sanctions lifted has failed” and that Iran should instead seek to “nullify” sanctions pressure.

But if Iran stands pat, the US is unlikely to be the first to restore its own commitments under the deal. Moving first would go a long way to restoring American credibility with European allies and the wider international community and would be consistent with Biden’s vow to restore multilateral diplomacy. But any such move will worry some US allies and members of Congress about the Biden administration's willingness to drive a tough bargain with Iran, both on its current nuclear program and on future regional security issues such as ballistic missiles.

With neither Washington nor Tehran aiming to be the first to come back into full compliance with the deal, Biden needs to find a way to do something artful and difficult: Get both sides to restore compliance at the same time. This approach may be the most palatable option, but it will require significant technical discussions between the two sides. Iranian Foreign Minister Javad Zarif has indicated Iran would be open to such an approach, stating that it may be possible to “choreograph” the mutual restoration of commitments with the Biden administration.

“Even those Iranian leaders who remain strongly in favor of the nuclear deal are concerned that the Biden administration will lack the political will to provide Iran the full range of sanctions relief it was promised.”

But Biden must open the door for these direct talks. His first step must be significant enough to restore belief in the original “win-win” logic of the deal and offer Iranian officials a credible rationale for engagement with the US. At the same time, it may be limited enough to keep the US outside of the deal, offering him political cover with critics and underscoring the necessity for Iran to also take reciprocal steps.

Taking this kind of first step could, in its way, be a signal of strength for Biden: He’d be showing domestic opponents of the JCPOA that he will not be bullied into compromising his Iran policy. The fight over the appointment of Robert Malley as Iran envoy showed that hawks will “play dirty” to undermine the credibility of Biden’s outreach to Iran. Biden ought to nip this kind of cynical politics in the bud.

If Biden goes this route, officials in the US, Europe, and Iran are currently deliberating what a reasonable first move could be. Our conversations with officials suggest that there is awareness that breaking out of the political deadlock may require Biden to be bold. He has a few options.

First, the Biden administration could restore temporary waivers that enable Iran to sell oil, while US sanctions remain in place. Iran’s oil production and exports are rising faster than projected despite the COVID-19 crisis and US sanctions. This trend has reduced the perceived urgency of restoring the nuclear deal among key political stakeholders in Tehran who may gain more power after the upcoming Iranian presidential election. The Biden administration’s efforts to re-enter the JCPOA would be best served by making already increasing oil sales once again subject to the “win-win” logic of the nuclear deal. Iran’s earnings from these oil sales would be accrued in escrow accounts and subject to strict oversight as per the waiver terms. Revenues would be used by Iran for sanctions-exempt trade with the country in which the funds are held. Such a step would serve to remove a key piece of tension with US allies such as South Korea, Japan, and India whose energy security has been impacted by US sanctions on Iran.

Second, the Biden administration could support Iran’s loan request for funds from the International Monetary Fund. Iran’s request has languished despite the IMF’s technical assessment that Iran qualifies for financial support to address the balance of payments crisis created by the pandemic. Iran has indicated it is ready for these funds to be disbursed to its accounts outside of the country to be used for paying for sanctions-exempt imports. The funds would not flow directly into Iranian government coffers, but rather be used to address trade deficits. The Biden administration should grant this loan as part of its commitment to address the humanitarian impact of sanctions and a wider push to encourage the IMF to use its full financial capacities to address the ongoing economic crisis brought on by the pandemic.

Finally, a third option could be easing Iran’s access to its existing foreign exchange reserves. Presently, Iran has free and ready access to an estimated 10 percent of its reserves, a circumstance that has placed extraordinary pressure on Iran’s currency and generated high levels of inflation that harm ordinary Iranians. Iran has been engaged in fraught negotiations with numerous countries to try and get access to frozen assets, who continue to look to the US Treasury Department for the final say. The Biden administration could give these countries, including allies Germany and South Korea, the approvals and guidance necessary to enable both central and commercial banks to readily execute payments on behalf of Iranian account holders. As with the oil waivers and IMF loan, these payments can be restricted to sanctions-exempt trade, a key outcome of which would be lower rates of inflation.

Should Biden take any of these three steps, Iran can be expected to cease ramping up its nuclear program. Neither country would be fully implementing its commitments under the JCPOA, but an opportunity will have been created for new talks in the spirit of “win-win” diplomacy. There is no guarantee that these talks, and the complicated choreography of JCPOA restoration, will succeed. But Biden needs to give himself a shot. After the last four years, timid gestures will fail to do that. It’s time to be bold.

 

Iran inducts new boats for ensuring security of ships passing through Persian Gulf

Iran’s Islamic Revolutionary Guard Corps has inducted new, mostly small but faster boats, for the security of ships passing through the Persian Gulf. The boats were displayed at Bandar Abbas, Iran. 

Reportedly, the boats are equipped with multiple rockets, light anti-ship missiles and lightweight torpedoes. The boats received include a design from the UK called ‘bladerunner’ that has been repurposed by Iran. There is also a Taedong-B, North Korean submersible boat. North Korea and Iran have cooperated in the past on missile technology. There are also C-14 “China cat” missile boats which Iran has been using for many years.  

Of particular interest is the fact that Iran has now mounted drones on some of the boats. These drones are termed ‘Ababil’. Fars News didn’t mention the drones but video and still images show these mounted atop several vessels. Fars News quoted, “The speedboats are capable of carrying and firing various missiles and rockets and supporting diving operations joined by IRGC Naval Combat Organization in Bandar Abbas. The light, fast and offensive speedboats which were built in the centers affiliated to the IRGC Navy and in cooperation with the Defense Ministry will be ready for missions and operations in Persian Gulf, Sea of Oman and Caspian Sea.” 

Drones were first mounted on Iranian IRGC boats in 2020. According to reports at the time, some 70 Ababil-2 kamikaze drones were put on the IRGC vessels. It is not clear how well they work. However, the addition of the drones is aimed at providing additional security to ships passing through Persian Gulf. However, the US has termed these boats threat for its naval ships present in the region and former US President Donald Trump even threatened to sink IRGC boats.  

Iran drills 117 oil and gas wells in first 10 months of current calendar year

National Iranian Drilling Company (NIDC) has completed drilling of 117 oil and gas wells during the first nine months of the current Iranian calendar year. Managing Director of the company, Abdollah Mousavi said the drilled wells consisted of 27 development wells, one appraisal well, 85 workover wells and four exploratory wells.

The official stated that during this period, 18 wells were drilled 326 days earlier than the schedule and handed over to the applicant company for operation, adding that the early production of the wells, rig clearance, and cost reduction, which are resulted through cooperation between the experts of NIDC and the operating company, is economically viable significantly.

After the US re-imposed sanctions on Iran, indigenizing the know-how for the manufacturing of the parts and equipment applied in different industrial sectors is one of the major strategies that the Islamic Republic has been strongly following up to reach self-reliance and nullify the sanctions.

Oil, gas and petrochemical industries have achieved outstanding performances due to indigenizing of the knowledge for manufacturing many parts and equipment that were previously imported. Among different sectors of the mentioned industries, drilling could be mentioned as a prominent example in this regard.

NIDC managed to indigenize the knowledge for manufacturing 6,000 drilling equipment in collaboration with domestic manufacturers and engineers in the previous Iranian calendar year.

Before this success, the technology for manufacturing the mentioned equipment was in the possession of a handful of foreign companies.

The equipment indigenized by NIDC includes drilling mud pumps, blowout preventers, traction motors, draw-works, drilling fluid recycling systems, mission centrifugal pumps, top drives, and drilling rig slow circulation rate pressure systems.

The company has also managed to indigenize the know-how for manufacturing 242 parts highly-applied in the drilling industry during the first half of the current Iranian calendar year.

In order to indigenize the technology to manufacture these parts, NIDC inked six research deals with domestic universities and knowledge-based companies.

At the beginning of the current Iranian year, NIDC managing director had said that his company’s performance will be more outstanding in this year, which is named the year of surge in production.

The official’s saying has already come true, as his company managed to indigenize the know-how for manufacturing some significant parts, and also in completing the digging operations sooner than the schedule.

NIDC accounts for a major part of drilling exploration as well as appraisal/development wells in Iran. It holds 70 onshore and offshore drilling rigs as well as equipment and facilities for offering integrated technical and engineering services.

Will Biden withdraw US recognition of Israeli sovereignty over Golan?

The Golan Heights will always be part of Israel; Prime Minister Benjamin Netanyahu said on Tuesday after US Secretary of State Antony Blinken walked back the Trump administration’s recognition of the Golan Heights as part of Israel.

“The Golan was and will remain part of Israel,” Netanyahu said while visiting a health clinic in Zarzir, near Nazareth. “With an agreement, without an agreement, we are not coming down from the Golan. It will remain a sovereign part of the State of Israel.”

It may be recalled that Blinken in an interview on CNN on Monday night said “As a practical matter, the control of the Golan in that situation I think remains of real importance to Israel’s security.”

“Legal questions are something else, and over time if the situation were to change in Syria, that’s something we look at, but we are nowhere near that,” he stated.

Blinken added that Syrian President Bashar al-Assad’s government, as well as the presence of militia groups backed by Iran; pose a “significant security threat” to Israel.

US President Joe Biden’s advisers had said previously that he would not withdraw US recognition of Israeli sovereignty over the Golan.

Former US president Donald Trump officially granted US recognition of the Golan as Israeli territory in 2019, a dramatic shift from decades of US policy.

Israel gained control of the Golan Heights from Syria in the 1967 during Six-Day War, and applied its laws to the area in 1981. No country other than the US has recognized Israeli sovereignty over the Golan.

Right-wing parties running in the Knesset election in March said Blinken’s statement would not deter them from developing the Golan Heights.

New Hope leader Gideon Sa’ar tweeted that Israel, under former Prime Minister Menachem Begin, applied its sovereignty to the Golan Heights 40 years ago.

“The Golan will always be an inseparable part of Israel,” Sa’ar wrote. “A government led by me will strengthen and grow our settlement in the Golan Heights.”

Yamina responded that “the future of our land will be decided by Israel’s actions and not by words.

“An Israeli government led by Naftali Bennett will act to strengthen our hold on the Golan Heights, Samaria, the [Jordan] Valley and Judea and the rest of the land,” the party stated.

The Religious Zionist Party led by MK Bezalel Smotrich used Blinken’s statement as an opportunity to attack New Hope and Yamina for not unequivocally endorsing Netanyahu.

“Whoever thinks that they can put their values aside even at the price of joining a left-wing government will find himself fighting not only for the recognition of the Golan Heights but against towns being evacuated,” the party said.

In the same interview, Blinken reiterated past comments that “if Iran returns to compliance with those obligations in the nuclear agreement, we would do the same thing, and then we would work with our allies and partners to try and build a longer and stronger agreement, and also bring in some of these other issues, like Iran’s missile program, like its destabilizing actions in the region, that need to be addressed as well.”

“The problem we face now,” he said, “is that in recent months, Iran has lifted one restraint after another… And the result is they are closer than they’ve been to having the capacity on short order to produce the solid material for a nuclear weapon.”

Blinken criticized the Trump administration’s decision to leave the Iran deal in 2018.

As for how the Biden White House viewed the previous administration’s efforts to broker peace in the region, Blinken said “We applaud the Abraham Accords.”

“This is an important step forward,” he continued. “Whenever we see Israel and its neighbors normalizing relations, improving relations, that’s good for Israel, it’s good for the other countries in question, it’s good for overall peace and security and I think it offers new prospects to people throughout the region through travel, through trade, through other work that they can do together to actually, materially, improve their lives, and that’s a good thing.”

But he added, “That doesn’t mean that the challenges of the relationship between Israel and the Palestinians go away. They don’t. They’re still there and they’re not going to miraculously disappear. So we need to engage on that, but in the first instance, the parties in question need to engage on that.”

Blinken posited that a final resolution between Israel and the Palestinians and the creation of a Palestinian state will not happen soon, but the Biden administration would try to ensure that neither side took unilateral actions to make peace more challenging.

“Hopefully, we’ll see both sides take steps to create a better environment in which actual negotiations can take place,” he said.

Whether he regards Jerusalem as Israel’s capital, Blinken replied: “I do, yes. And, more importantly, we do.”

When pressed, Blinken would not commit whether the Biden administration would recognize a potential Palestinian capital in east Jerusalem, opting instead to say that an issue of this sort should be negotiated by the involved parties.

Israel unveils new WASP surveillance system

According to a report published in The Jerusalem Post, Israel Aerospace Industries (IAI) has unveiled its new WASP surveillance system on Monday. The new system provides a high-resolution situational awareness picture of moving targets day and night and within a wide area of interest.

 “Utilizing state-of-the-art EO (Earth observation) and (infrared) IR sensors, AI (artificial intelligence) algorithms and adaptive rule engines, the system captures large areas in high revisit rate, to track, identify and alert the system operator of moving targets that correlate with mission requirements and objectives," the IAI said in a statement.

"Compact, light-weight and requiring low power consumption, WASP complies with a wide range of aerial platforms such as tactical UAVs, drones, fixed and rotary-wing aircraft, or tethered surveillance balloons.”

Mounted on a tactical UAV, such as the BirdEye 650D, WASP covers two square kilometers in optimal resolution to detect all types of moving targets. When mounted on a male UAV such as the Heron 1, the coverage area expands over 15 square kilometers to detect mostly vehicle size objects and the like, the company said.

“The development of WASP exemplifies IAI’s novel strategy of ISR systems development, intelligence and information fusion capabilities," said Moshe Levy, IAI Executive Vice President and General Manager, Military Aircraft Group.

"By providing a highly detailed intelligence picture in a wide area, WASP provides excellent two-layer situational awareness that comprises both visual and intelligence information," he said. "As a compact and light system, it can be mounted on a range of platforms to provide strong intelligence capabilities already on the tactical level.”

US-Turkey Relations and future of NATO

At present, the North Atlantic Treaty Organization (NATO) faces more challenges than ever. For some, NATO is ‘clinically dead’. After the fall of the Soviet Union, NATO has become a Cold War remnant of a global security organization, whose mission and existence is being questioned openly.

Geopolitical developments over the last three decades have further marginalized NATO’s role around the world. In the past, military intervention decisions were usually made within an alliance framework by some powerful NATO member states.

The biggest challenge facing NATO cohesion is the US-Turkish antagonism that has arisen mainly as a result of the different geopolitical priorities set by Ankara and Washington in the Eastern Mediterranean and the Middle East.

The US sanctions against Turkey have highlighted deficiencies in the Alliance’s ranks. Among other urgent issues, the new US administration will need to focus on NATO cohesion issues and take important initiatives along with other member-states about the future of the Alliance.

The new US President faces the difficult task to restore trust in US-Turkey relations. This dialogue will entail existing and new areas of collaboration to de-escalate tensions in bilateral relations. Yet, such de-escalation presupposes a US initiative require US concessions for Ankara. The next few months will be of utmost significance both for the prospects of US-Turkey relations and the NATO future of Turkey.

The US sanctions against Turkey are a source of concern in the ranks of the Alliance. The suspension of the shipment of F-35 fighters to Turkey based on the signed purchase contract and their prepayment by Ankara was an introductory part of these sanctions.

Their significance is mainly psychological and confirms the tense US-Turkish relations and lack of trust as a result of developments in North Syria. Ankara’s calm reaction to the US sanctions in terms of words and actions does not mean that there is no US-Turkey crisis or the issue is over.

It is the Russian-Turkish approach that has challenged US-Turkish relations, because the revisionist policy of Moscow and Ankara aims to reshape the post-WW2 power balance in the Eastern Mediterranean and the Middle East.

The existing power vacuum in the region and the inability of the US to fill it allows new revisionist forces to emerge and fill the gap. Russia and Turkey are in effect seeking to redistribute the geopolitical power share in the region.

Turkey is the first NATO country to use both Russian and US technology. Many believe that Russian-Turkish cooperation is just the beginning, and other forms of such cooperation will follow against the NATO set of principles and modus operandi.

US must lift curbs before Iran rejoins deal; Khamenei announces final and irreversible decision

Iran’s Supreme Leader Ayatollah Ali Khamenei said on Sunday that Tehran’s “final and irreversible” decision was to return to compliance with the 2015 nuclear deal only if Washington lifts sanctions on the Islamic Republic, Iranian state TV reported.

The deal between Iran and six major powers limited Iran’s uranium enrichment activity to make it harder for Tehran to develop nuclear arms - an ambition Iran has long denied having - in return for the easing of the US and other sanctions.

It may be recalled that former US President Donald Trump had abandoned the deal in 2018, denouncing it as one-sided in Iran’s favour, and reimposed sanctions that have crippled Iran’s economy.

“Iran has fulfilled all its obligations under the deal, not the United States and the three European countries ... If they want Iran to return to its commitments, the United States must in practice ... lift all sanctions,” state TV quoted Khamenei as saying in a meeting with Air Force commanders.

“Then, after verifying whether all sanctions have been lifted correctly, we will return to full compliance ... It is the irreversible and final decision and all Iranian officials have consensus over it.”

Western media has been saying that in response to Trump’s withdrawal, Tehran has breached the deal’s key limits one after the other, building up its stockpile of low-enriched uranium, refining uranium to a higher level of purity and using advanced centrifuges for enrichment.

US President Joe Biden, who took oath last month, has said that if Tehran returned to strict compliance with the pact, Washington would follow the suit and use that as a springboard to a broader agreement that might restrict Iran’s missile development and regional activities.

Iran has repeatedly said it could quickly reverse those violations if US sanctions are removed but has ruled out any talks over the country’s ballistic missile programme and Tehran’s influence in the Middle East, where Iran and Saudi Arabia have been involved in proxy wars for decades.

Will United States allow Iran to meet global gas shortage?

Qatar witnessed a prosperous start to 2021, first scoring a major political goal by restoring diplomatic relations with Saudi Arabia and ending its almost 4-year long embargo. Qatar’s capacity to meet the global demand for LNG has elevated the Middle Eastern state into worldwide limelight.

The LNG price hike in Asia was a combination of 3 key factors – low temperatures, low spot cargo availability and persisting COVID-19 ramifications. All three were badly intertwined; low temperatures by themselves need not cause a market distortion if there is ample LNG availability in the market. Qatar’s competitors, due to their geographic location and previously concluded commercial commitments, could not reorient such volumes towards Asia.

The fact that Asia needed LNG urgently was further supported by the fact that January 2021 LNG arrivals have reached an all-time high of 28 million tons LNG. A whopping 23% of this came from Qatar and only 6% and 5%, respectively, from the United States and the Russian Federation.

Under the prevailing circumstances, the world has to find another dependable source of supply, which is Iran, to the utmost displeasure of United States and its Middle Easter allies. To save the world from tyranny, Iran must be allowed to sell its gas.

Lately, Managing Director of Pars Oil and Gas Company (POGC), responsible for developing Iran’s giant South Pars gas field, has said that the development of the mentioned field is nearly completed and all phases of the field will be fully operational in near future.

South Pars, which Iran shares with Qatar in the Persian Gulf waters, is currently divided into 24 standard offshore phases, the output of which is processed by 14 gas refineries on land.

South Pars gas field covers an area of 9,700 square kilometers, 3,700 square kilometers of which are in Iran’s territorial waters and the remaining 6,000 square kilometers, called North Dome, are situated in Qatar’s territorial waters.

The first train of the South Pars phase 14 Refinery is going to go operational early next Iranian calendar year, after which every three months another train will be inaugurated, and by the end of the next Iranian calendar year this refinery will be fully operational.

Underlining the reliance of domestic capacities and capabilities for the development of the mentioned field, it is worth noting that only 33% of the required equipment for this field was produced in Iran, but at present 75% of the necessary equipment has been indigenized.

Initially, the first two projects of the field, namely phase two and three and phase four and five, were carried out with the participation of France’s Total and Italy’s Eni, but after that the remaining phases were completed by the Iranian companies.

At the beginning of the work, five platforms were built abroad, but after that all the remaining 35 platforms were built within the country.

Iran has attained complete self-sufficiency in all aspects of gas production from South Pars field that include drilling, platform building, pipeline construction, and onshore refineries, which are the four main sectors in extracting gas from South Pars field. All equipment and machinery have become indigenized and the operators are also domestic companies.

OPEC is dead, long live OPEC plus

OPEC has been the most important factor in global oil markets with the ability to influence prices for decades. The shale revolution in the United States has brought much uncertainty for traditional producers due to the vast amounts of oil and gas that are flowing from the American energy heartland in a short period. 

The looming threat is so big, that the traditional competitor Russia agreed to align its policies with that of cartel. Moscow seems eager to squeeze all it can from the agreement, leaving little for Saudi Arabia in particular who risks losing much more due to the particular phase of the country’s economic development.

Over the years, geopolitical and economic developments have transformed the power balance between the organization’s members. One factor that determines influence more than any other is production capacity. In this context, Saudi Arabia has been the undisputed king for decades.

The level of professionalization of national oil company Saudi Aramco has made it into a formidable energy king that controls the world’s second-largest conventional oil reserves. While Venezuela's reserves are bigger, Aramco's low production costs continued Western, in particular the US political support, and relative political stability have gradually increased and maintained OPEC’s largest production capacity.

Influence is not only derived from how much one can produce but more specifically from how much one chooses not to produce. Spare capacity is the defining factor behind leverage over price development. In this area, none is bigger than Saudi Arabia. The geography and type of wells make it possible for Aramco to ramp up and bring down production relatively quickly. On average, the Arab country has usually kept 1.5 - 2 million barrels per day (mbpd) of spare capacity on hand, which is 1.5 – 2 percent of global oil demand before the Covid-19 pandemic.

The unprecedented threat of the US shale industry drove Moscow and Riyadh into each other’s arms in 2016. The first time an agreement was struck, the participants agreed to cut production by 1.8 mbpd (1.2 from OPEC and 600,000 from non-OPEC). Despite some friction and disagreements, the OPEC+ format has survived for years.

However, the disparity in interests and share of dependence on oil revenues is a continuous source of instability. According to Ronald Smith, a Moscow-based analyst at BCS GM, “as long as oil is US$45/barrel or below, it is pretty easy to get everyone in OPEC+ on the same page and cut production. And when it is US$65-70, everyone agrees it is time to put oil back on the market. But between US$50 and US$60, that is where the interests diverge.”

The price of oil currently is hovering around US$55, which means that Riyadh finds the alliance with Russia more important than the other way around. The IMF estimated that Saudi Arabia's fiscal breakeven oil price for 2021 is at US$68. Russia, in contrast is US$46. Furthermore, a larger share of the Saudi production is exported while Russians consume more of their produce domestically. Also, the economy of the latter is more diversified which gives it another trump in its negotiations with Riyadh.

Another advantage in the hands of Russian producers and the Kremlin is the weak ruble. While the riyal in Saudi Arabia is fixed against the US$, oil is traded internationally in US$ meaning the export from Russia earns producers a handsome fee when exchanged into rubles. Saudi Arabia does not enjoy the same benefit and won’t any time soon either.

The low production costs in the Arab country give it an advantage over competitors such as shale producers in the US. Riyadh expects demand for oil to return later this year when vaccination against Covid-19 kicks-in. Therefore, policymakers in the Kingdom think they'll claw back customers when oil becomes scarcer.

Recently, Saudi Crown Prince Mohammed bin Salman announced that Aramco may offer additional shares to the market in the next dew few years. This shows the necessity for Riyadh to voluntarily lower production by one mbpd while Russia will increase by 130,000 bpd. Saudi Arabia is in a rush to modernize and diversify the economy by earning much-needed petrodollars while it still can.

Macron seeks to add Israel and Saudi Arabia to negotiation with Iran

According to a Reuters report, French President Emmanuel Macron has praised decision of the United States to engage with Iran. He also suggested Saudi Arabia and Israel must ultimately be involved in the negotiation with Iran. 

Macron claimed it was time for a new negotiation because Iran was closer to a nuclear weapon.  He also said the international community has to deal with Iran’s missile program.

Speaking with the Washington-based Atlantic Council think tank in a video conference from Paris, Macron noted, “We do need to finalize, indeed, a new negotiation with Iran.”

“I will do whatever I can to support any initiative from the US side to reengage a ... dialogue and I will be here ... I was here, and available two years ago and one and a half (years) ago, to try to be an honest broker and a committed broker in this dialogue,” he added.

Iran has already objected to the inclusion of Saudi Arabia to the JCPOA let alone Israel which Iran does not recognize and that it opposes a nuclear weapons free zone in West Asia.

In remarks on Wednesday, President Hassan Rouhani said there will be no changes to the content of the JCPOA and that no other country will be added to it.

Rouhani was in fact responding to Saudi Arabia which has said if the new Biden administration plans to rejoin the JCPOA its country should also be included. French President Emmanuel Macron has also called for inclusion of Saudi Arabia in the agreement. 

Rouhani emphasized, “The undue words should not be said. We did a job resulted from hard work. It took more than ten years to gain the achievements (JCPOA). In the beginning of the eleventh government, we made efforts during the first two years” to reach the multilateral agreement. 

In 2018, former US President Donald Trump quitted the JCPOA, which was designed to restrict Iran’s peaceful program in return for the lifting of the US and other sanctions. His successor, President Joe Biden, has said that if Iran returns to “strict” compliance with the deal, the US will too.

The Trump administration restored the US sanctions that Obama removed in 2015. Trump and his Secretary of State, Mike Pompeo perused a “maximum pressure” campaign against Iran with the aim of strangulating the Iranian economy. 

Abolfazl Amouei, the spokesman for the Iranian Parliament’s National Security and Foreign Policy Committee, has responded to a French call to include Saudi Arabia in any future talks with Iran about the nuclear issue by saying that there are no links between Riyadh and the issue.

“Saudi Arabia has nothing to do with the nuclear agreement,” Amouei told the Qatari-owned Al Arabi Al Jadid newspaper, declaring his country’s refusal to include Riyadh in any possible talks with the parties to the nuclear agreement reached with Iran in 2015.

He stressed, “The Islamic Republic will not negotiate again about this agreement.”

According to Amouei, Riyadh did not have a place in the nuclear negotiations and that it has nothing to do with the issues related to the nuclear agreement between Iran and major world powers, officially known as the Joint Comprehensive Plan of Action (JCPOA).

Saeed Khatibzadeh, the spokesman for Iran’s Foreign Ministry, put out a statement dismissing the French president's recent remarks about the need for a new nuclear deal with Tehran. He called on Macron to “exercise self-restraint and refrain from hasty and ill-advised stances.”

“The JCPOA is a multilateral international agreement that has been endorsed and stabilized by the (UN) Security Council Resolution 2231. It is by no means re-negotiable, and its parties are also definite and unchangeable,” Khatibzadeh noted.

Pointing to the US withdrawal from the nuclear deal and Europe’s failure to maintain it, the spokesman said, “If there is any willingness to revive and save the JCPOA, the solution is easy. The US should return to the JCPOA and lift the whole JCPOA and non-JCPOA sanctions that have been imposed (on Iran) during the tenure of the previous president of that country.”

Aviv Kochav, chief of staff of Israeli armed forces, has recently issued stark threats against Iran while railing against the nuclear deal.

He said that Israel is not welcoming the expected efforts by the US and its European allies to revive the 2015 nuclear deal. The top Israeli general claimed that he had ordered several plans to launch offensive operations against Iran while voicing Israel’s opposition to any efforts to revive the JCPOA or even to improve it.

“I have instructed the IDF to prepare several operational plans in addition to existing ones, which we will develop throughout the coming year. The power to initiate them lies with the political echelon. However, the offensive options need to be prepared, ready and on the table,” Kochavi said in remarks delivered at the Israeli Institute for National Security Studies 14th Annual International Conference.

Apprehensions of Bangladesh Media

Reportedly, leading newspapers in Bangladesh have expressed frustration over a media environment in which a major investigative report leveling allegations against senior leaders and key institutions in the country had been met with “silence” in the domestic press. 

Editorials in The Daily Star and The Dhaka Tribune noted that media outlets had widely reported on the government response to an Al Jazeera report published on Monday, without describing allegations it contained.

“We are facing the absurd situation of publishing the government response without publishing what the government is responding to. So far, we have neither carried what the Al Jazeera reported nor any synopsis of it,” The Daily Star wrote in its Wednesday editorial.

The Tribune’s editorial, meanwhile, said the nation’s Digital Security Act “has had a chilling effect on Bangladeshi media.”

“The silence of the Bangladeshi media in this instance has been all-encompassing and deafening,” the Tribune wrote.

“The reason for our silence is simple: The current state of media and defamation law in Bangladesh, and how it is interpreted by the judiciary, makes it unwise for any Bangladeshi media house to venture into any kind of meaningful comment on the controversy.”

The nation’s Digital Security Act “contains language proscribing reporting that is so broad in its scope and threatens such draconian consequences that no responsible editor can take the chance of publishing reports that might even conceivably fall into its purview.”

A BenarNews review of at least 10 prominent Bengali- and English-language news portals on Wednesday found that they all based their reports on news releases from the Foreign Ministry and the army, while none of them included Al Jazeera allegations.

The 1st February report by Qatari-based television network Al Jazeera alleged that Bangladesh Army Chief Gen. Aziz Ahmed kept close links with his two foreign-based brothers who are on the run from justice after being convicted of the 1996 murder of a rival political leader.

The Al Jazeera documentary linked Aziz to corrupt deals with at least one of his brothers, who the report said had been able to travel to Bangladesh to meet with the army chief despite being a fugitive.

The report said that Prime Minister Sheikh Hasina had previously hired Aziz’s brothers Haris and Anis Ahmed as bodyguards when she was opposition leader. It alleged that the Ahmed clan’s fortunes “have been long intertwined with that” of Hasina.

It claimed that the military had secretly purchased surveillance equipment manufactured by an Israeli company, even though Bangladesh does not recognize Israel and forbids nationals from traveling there or engaging in commerce with Israelis.

The Bangladesh foreign ministry and army dismissed the allegations contained in the documentary and accompanying stories.

The Bangladesh foreign ministry in a statement on Tuesday described the report as “false and defamatory” and “anti-Bangladesh propaganda.”

It however, did not specifically address any of the charges leveled against Aziz Ahmed in the report.

“The report is nothing more than a misleading series of innuendos and insinuations in what is apparently a politically motivated ‘smear campaign’ by notorious individuals,” it said, linking them to the “extremist group” Jamaat-e-Islami, one of the largest Islamic parties in Bangladesh.

The Bangladesh Army said the surveillance equipment had been procured from Hungary for an army contingent deployed in a U.N peacekeeping mission, and that the Al Jazeera allegation was based on “false information.”

The Daily Star editorial praised the government for its “mature decision” not to block Al Jazeera’s report or “its spread on social media.”

It also expressed frustration over the lack of reporting in the domestic media on allegations that it said raised questions about the security of the country and the integrity of its institutions.

“There are people who served the PM at various times, especially during her days of struggle, who are now taking full advantage of her sense of gratitude and indulging in influence-peddling for payment in some of our highly sensitive areas,” The Daily Star said.

“There is reference to our purchase of sensitive listening devices from Israel, a country that we do not recognize. There are also the issues of false passports, NID cards and bank documents that should be looked into, especially as they involve institutions on whose integrity and honesty our security depends.”

Considered by many the leading English-language newspaper in Bangladesh, The Daily Star has a circulation of 44,000 and an editor who faces dozens of criminal charges over its journalism.

Mahfuz Anam faces 81 criminal charges filed since 2016, one of his lawyers told BenarNews.

“All of the cases were criminal in nature such as defamation and others. Currently, the courts have issued stay orders on the cases,” Chaitanya Chandra Halder said.

Mahfuz Anam turned down a request to be interviewed for this article.

Passed in 2018, the Digital Security Act empowers police to make arrests on suspicion and without a warrant. Fourteen of its 20 provisions do not allow for bail, so that whenever an accused is brought before a magistrate, he or she is almost automatically sent to jail.

A media advocacy group, the Committee to Protect Journalists (CPJ), said that the Bangladesh media’s decision to self censor was not surprising, while the draconian law requiring it reflected the government’s fear of a free press.

“By and large we are seeing how much of a chilling effect the Digital Security Act has had in Bangladesh,” Aliya Iftikhar, senior CPJ Asia researcher, told BenarNews.

“In the past year, we have seen dozens of frivolous DSA cases filed against journalists, and many of them have been detained for months at a time under the draconian law, for no reason other than they dared to publish critical reports. So it is not surprising that after seeing numerous colleagues in jail, the media in Bangladesh is choosing to self-censor,” Iftikhar said.

“The Bangladesh government is showing its weakness with its constant fear of a free press.”

Turkish exports to Saudi Arabia coming to grind halt

An unofficial Saudi boycott of Turkish goods reduced Turkey’s exports to the Kingdom to a record low in January 2021, despite diplomatic efforts to mend ties between the two countries. Turkish exports to Saudi Arabia dropped by a remarkable 92% in January, from US$221 million to just US$16 million YoY, according to data released by the Turkish Exporters Union (TIM).

Last year, Riyadh ramped up its efforts targeting the Turkish economy after a Turkish court’s decision to accept two separate indictments against Saudi officials said to be involved in the murder of Jamal Khashoggi in Istanbul in October 2018.

Relations between the two regional powerhouses have been at a low since the murder of the Saudi journalist, whose killing is believed by the CIA to have been ordered by Saudi Crown Prince Mohammed bin Salman.

Since October, the Saudi government has been systematically pressuring local businesses not to trade with Turkish companies and to drop their goods from their shelves.

The statistics indicate a steady slowdown in Turkish exports since then. As a result, Turkey’s annual exports to Saudi Arabia decreased by 24% in 2020, to US$2.3 billion from US$3.1 billion.

Turkish President Recep Tayyip Erdogan last year tried to remedy the situation by talking to Saudi King Salman, and both agreed to hold consultations on the issue.

However, Turkish Foreign Minister Mevlut Cavusoglu’s first meeting with his Saudi counterpart Faisal bin Farhan in November 2020 ultimately failed to change the situation.

 “We have agreed to have a second meeting to discuss the problems,” one senior Turkish official said, speaking anonymously, at the time. Since then, no second meeting has taken place.

Burak Onder, a Turkish houseware and kitchenware manufacturer and exporter, told Turkish media that exports to Saudi Arabia had come to almost a complete halt because goods that had been sent to the country had been held in customs for months without any official explanation.

One senior Turkish trade ministry official, speaking anonymously, told Middle East Eye that from time to time the Saudis would release exports held in the customs after official interventions, but the general problem was still ongoing.

Turkish officials have been considerably muted over the Khashoggi murder and other issues of friction with Riyadh, such as Ankara's relationship with the Muslim Brotherhood, since last year.

"We don't have any issue other than the Khashoggi affair, which we have done as much as we could to resolve," a Turkish official said last November. "It is time to move on."

China and Russia demand unconditional US return to JCPOA

President Joe Biden is under pressure from three sides to return the United States immediately to compliance with the Iran nuclear deal, as Washington and Tehran both remain unwilling to make the first move.

China and Russia, two of the other Joint Comprehensive Plan of Action signatories, are pushing the Biden administration for a full return to the 2015 accord under its original terms, as Iranian leaders continue to do the same.

Biden said during his election campaign that he wanted to reverse Donald Trump's 2018 decision to withdraw from the JCPOA. Trump embarked on a "maximum pressure" campaign against Iran, trying and failing to force Tehran to negotiate a new, more restrictive nuclear deal.

For Iran, Trump's withdrawal and sanctions mean it is Biden who must take the first step towards a thaw. Iran has expanded its nuclear activity since Trump's JCPOA withdrawal and its leaders are refusing to scale back the program until Biden lifts his predecessor's sanctions.

Russian officials have repeatedly urged the Trump and Biden administrations to return to the deal without any conditions. Lately, Chinese Foreign Ministry spokesperson Wang Wenbin said China backed "the unconditional return of the United States to the JCPOA as early as possible, its resumption of compliance and elimination of all relevant sanctions."

"On this basis Iran should resume full compliance," Wang added. "China is following the situation closely and maintaining close communication with all relevant sides. We support a step-by-step and reciprocal approach and will continue to work with relevant parties and the international community to bring the JCPOA back on track and promote the political settlement of the Iranian nuclear issue."

Russia's representative to the international organizations in Vienna said US demands for Iran to make the first move would prove "fruitless." Mikhail Ulyanov wrote on Twitter "This is high time for US and Iran to make coordinated steps to restore full implementation of JCPOA."

Biden administration officials have warned that a return to the deal is not imminent, demanding that Iran curtail its nuclear expansion before talks can resume. Iranian Foreign Minister Javad Zarif had told CNN that Tehran would be open to a step-for-step return to compliance, with the European Union (EU) acting as a referee.

Zarif said EU foreign policy chief Josep Borrell could "choreograph the actions that are needed to be taken by the United States and the actions that are needed to be taken by Iran...The United States needs to come back into compliance and Iran will be ready immediately to respond. The timing is not the issue."

State Department spokesperson Ned Price, however, was lukewarm on the idea during a press conference on Wednesday, saying the administration was currently focused on consulting Congress and foreign allies on the JCPOA.

"We haven't ... had any discussions with the Iranians and I wouldn't expect we would until those initial steps go forward," Price said. "There are (many) steps in that process ... before we're reaching the point where we are going to engage directly with the Iranians and willing to entertain any sort of proposal."

 

Is OPEC ready to face tough time?

OPEC and its allies may celebrate their success in buoying world oil markets, but the coalition will soon be faced with some tough choices. Russia has already expressed fears that high prices will facilitate US shale comeback and Iran could revive exports, if it succeeds in improving relations with the United States.

Oil prices extended gains on Thursday after the OPEC alliance decided to stick to a reduced output policy. There was another blessing as crude stockpiles in the United States fell to their lowest levels, since March last year. Brent were traded at US$58.97/barrel, by 0741 GMT and West Texas Intermediate (WTI) futures were traded at US$56.22, after reaching its highest settlement level in a year on Wednesday.

Last month’s pledge by Saudi Arabian Energy Minister Prince Abdulaziz bin Salman to slash production by a further one million barrels a day has supported global markets against the latest onslaught from the pandemic.

While that relieves OPEC+ of any need to adjust its policy, it’ll need to start considering how long to restrain output -- a calculation clouded by the potential return of supply from Iran.

At the heart of the dilemma is a fundamental tension between the Saudis and their most critical partner in the alliance, Russia. While Riyadh has sought higher prices to cover government spending, Moscow will certainly try to maintain its market share.

“Prince Abdulaziz bin Salman’s doctrine that you err on the side of caution has been vindicated,” said Helima Croft, chief commodities strategist at RBC Capital Markets LLC. “We might get the contours of the arguments that will be made next month.”

OPEC and its partners have resolved this year to restore some of the 7.2 million barrels of daily output, roughly 7% of global supplies, they continue to idle after making vast production cuts when the pandemic erupted last spring.

The restrictions have proved effective, turning around an oil market that in April 2020 briefly saw prices plunge below zero in New York, and throwing a financial lifeline to producers around the world, from tiny African states to corporate giants.

Restoring the halted production, however, is turning out to be a delicate process.

OPEC+ is scheduled to revive a total of 2 million barrels a day this year; it agreed a two-month pause after the first 500,000 barrel installment in January as new virus infections menaced fuel demand. Riyadh doubled down on the curbs by announcing an extra one million-barrel cutback of its own.

The panel that oversees the alliance’s strategy, the Joint Ministerial Monitoring Committee, will convene online to assess the outlook. The JMMC is unlikely to recommend new policies, which will instead be tackled at the next full OPEC+ meeting in early March, according to delegates who asked not to be identified.

“The Saudi cut has bought OPEC+ some time,” said Bill Farren-Price, a director at research firm Enverus and veteran observer of the cartel. The question of what to do next will loom over their discussions on Wednesday.

Russia on the other hand fears that supporting prices too long will backfire, provoking investment in US shale oil and a flood of new supply that will negate OPEC+’s hard work. At last month’s meeting, Deputy Prime Minister Alexander Novak proposed a production increase, and tried to dissuade the Saudi Prince from his unilateral cut.

 “It is going to be a hell of fight at the OPEC+ March meeting,” said Helge Andre Martinsen, senior oil market analyst at DNB Bank ASA. “Russia will consider it a massive failure if OPEC+ cuts starts to stimulate growth in US shale again, while at the same time they’re sitting on plenty of spare capacity.”

Russia isn’t the only member that might push for relaxing the curbs. Iraq is in the grip of an economic crisis and desperately needs the revenues that would come from higher oil sales. The United Arab Emirates is seeking to promote a benchmark oil contract that depends on plentiful output, and last year briefly broke ranks with Riyadh to open the taps.

Then there’s the complication of Iran. President Joe Biden is seeking to reactivate a nuclear agreement that would lift US sanctions on the Islamic Republic, allowing the return of almost 2 million barrels of daily output. With the end of the “maximum pressure” campaign waged by former President Donald Trump, Iranian exports have already crept higher.

Still, Secretary of State Antony Blinken says an agreement remains a “long way” off. As the two sides jockey for leverage -- and Tehran presses on with uranium enrichment -- they could be headed for a new rupture rather than reconciliation, according to RBC’s Croft. Instead of extra barrels, markets may need to brace for “a geopolitical tremor,” she cautions.

But if a deal is struck, OPEC+ will need to choose between cutting output further, or seeing their efforts to drain surplus oil stockpiles founder. It is unclear how readily Saudi Arabia would make way for the comeback of its political nemesis.