Geopoliticalmonitor.com

The US-Iran Nuclear Breakthrough in Geneva

November 25, 2013

Zachary Fillingham

Hassan Rouhani

Geopoliticalmonitor.com

A preliminary deal has been reached between the P5+1 parties and Iran, establishing a series of restrictions on the country’s nuclear program in exchange for a partial reduction of the sanctions that have decimated the Iranian economy. The agreement represents a breakthrough in US-Iranian diplomacy since the 1979 Revolution, and the new normal it envisions could have a profound impact on not just the geopolitical reality of the Middle East, but the global economy as well.

The deal was helped along by secret talks between US and Iranian representatives – another exceptional event given the disregard and mistrust that generally passes for bilateral exchange between the two countries.

The Geneva deal is only a temporary agreement which is set to expire in six months. Talks will continue over this period in the hope of hammering out a permanent deal.

The agreement lifts sanctions targeting Iran’s ability to trade in gold, petrochemicals, and car and plane parts. Some estimates put the amount of relief Iran can expect from these concessions at $7 billion (the majority of which comes from $4.2 billion in frozen assets being released). Opponents of the deal offer an even higher number, arguing that Iran can expect to benefit to the tune of $20 billion, even though some of the harshest sanctions targeting oil sales and the banking sector remain in place.

In return for the easing of sanctions, Iran has agreed to: stop enriching uranium above 5%; dilute its existing stockpile of 20%-enriched uranium; stop stockpiling low-enriched uranium; freeze its enrichment capacity and the installation of any new centrifuges; keep the heavy-water reactor at Arak inoperable, neither adding fuel to it nor turning it on; not build any new facilities; and accept a series of stringent inspections from the International Energy Agency.

The net result of these concessions, particularly the dilution of its stockpile of 20%-enriched uranium, would be to shift the Iranian nuclear program further back from the threshold where it could quickly produce a nuclear weapon. The kind of inspections laid out in the agreement (daily, intrusive, and far-reaching) would make it very difficult for Iran to operate a parallel enrichment program in secret without being discovered early enough for the international community to react.

Winners and Losers

Supporters of the deal are holding it up as a historic breakthrough. They point to the fact that it puts verifiable limits on Iran’s ability to produce a nuclear weapon. The more optimistic among them even see it as a potential harbinger of the normalization of US-Iranian bilateral relations.

Detractors see things differently. For them, the deal represents a caving in on the part of the United States and its Western allies, which ultimately decided to drop the precondition of a total and permanent halt of enrichment activities, as well as the dismantling of certain facilities such as the reactor at Arak. The survival of Iran’s right to enrich uranium in the deal is their main point of contention.

The right to enrich uranium, which is carefully delineated as being ‘mutually defined’ in the text of the Geneva agreement, will figure prominently in the following six months of negotiations. It is the point of convergence where Iranian nationalism meets international law, and the argument will revolve around whether uranium enrichment is included in the “inalienable rights” of peaceful nuclear development set out in Article IV of the Non-Proliferation Treaty.

One of the most vocal detractors so far is Israeli Prime Minister Benjamin Netanyahu, who has declared that the world has been made a more dangerous place by the deal. Israel had been one of the parties pushing for a complete halt to enrichment activities as a prerequisite for any sanction relief. Thus, the deal comes as a blow, as it represents the fracturing of the international coalition pressuring Iran. It follows that Israel would face a more pronounced international backlash if it were to unilaterally move against Iran’s nuclear infrastructure in the post-Geneva international climate.

Saudi Arabia is another government that isn’t taking many positives from the deal. If Geneva represents the first step in the international rehabilitation of Iran, then the Saudi government stands to lose as its regional rival steps out of the shadow of international isolation and begins to throw its weight around more freely in the Middle East. In this sense, the Geneva deal might be less about binding Iran’s nuclear potential and more about the United States disengaging from a volatile region of the world, one that is less geopolitically crucial in the wake of the North American energy boom.

Domestic Backlash

While it’s apparent that President Obama and President Rouhani want the Geneva process to succeed, albeit each with their own nuanced view as to what that success should entail, both leaders are presiding over domestic political opposition that could scuttle the deal in the next six months. In the United States, members of Congress are already lining up to voice their disappointment with the agreement, and a bipartisan group of 15 senators has announced their intention to pass additional sanctions against Iran in the coming weeks. Any additional sanctions would be seized upon by hardliners in Iran as evidence that the US is not negotiating in good faith, and a breakdown in the negotiating process would likely follow.

Oil Exports

Although the Geneva deal represents a potential turning point in US-Iranian relations, it is far from a game-changer in terms of Iranian oil exports; at least for now. Among the sanctions that remain in place under the temporary deal are those restricting foreign investment in the oil sector, as well as an export cap of one million barrels per day (bpd). Consequently, Iranian oil exports can only hope to increase by around 285,000 bpd, up from the 715,000 bpd recorded in October, over the short term.

The real surge in exports would come if the Geneva deal was extended into a comprehensive agreement, though even then it might take some time for Iran to reach its previous capacity. The added supply on global markets would reduce oil prices by up to $13 a barrel according to one estimate by Citigroup, giving an added impetus to economic recovery worldwide.

Zachary Fillingham is a contributor to Geopoliticalmonitor.com

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  • Tim Mahoney

    As always, the devil is in the details. Cynically, after decades of waving at America, one finger at a time, and aggressively pursuing nuclear weapons, we are now expected to believe that Iran is going to voluntarily "freeze" (not dismantle, mind you!) its nuclear development actions in return for the bribe of loosened economic sanctions? Why do we believe this? Sounds frighteningly similar to the on again, off again, actions of North Korea, doesn’t it? America has come a long way from the days of "Millions for defense, not one cent for tribute!" Talk about "low T"!

  • John S

    The only winner is the terrorist regime in Iran.
    How do we really win? Except to give Obama a quick fix. No. Like healthcare, the gun issue, Benghazi, gun runner, etc, etc, this admin finds sound bites more desirable than an actual solution.
    The danger is to Israel and the rest of that region.

  • E benAbuya

    Everybody is talking as if the "preliminary deal" is actually in effect.
    "A preliminary deal has been reached between the P5+1 parties and Iran,. . ."
    "The Geneva deal is only a temporary agreement which is set to expire in six months. Talks will continue over this period in the hope of hammering out a permanent deal."
    In fact, although the US has already released some of Iran’s frozen assets, THERE IS AS YET NO DEAL.
    http://freebeacon.com/deal-or-no-deal/
    The triumph of wishful thinking over reality.

  • Harry Davis

    Sounds like a good deal to me, a leap along the way. Next thing would be to get a similar agreement of the other nuclear powers, including UK, US and Israel, to do the same with their stockpiles of weapons grade uranium

  • Frank Aguilera

    This preliminary agreement brings some hope for world peace, but it is anybody’s guess whether it marks the beginning of a permanent solution to the simmering conflict in the Middle East. Iran seems to have an endless ability to procrastinate, and to get the best out of any situation.
    While the West follows a script of talking peace, while preparing for war, Iran puts out signals for war, and hopes for peace and supremacy in the Middle East.

    Iran is aware that an all-out confrontation with the U.S. and its allies, would be a total disaster for them, but also an unpredictable, near-total catastrophe for its rivals
    That is one of the cards up the sleeve for Iran.

    By accepting limits to its military nuclear development,
    Iran stands to gain economic prosperity and world prestige
    That is why both Israel and Saudi Arabia are so unhappy with this new deal. That is Iran’s second card up the sleeve.

    By opening up to Iran, the U.S. hopes to curb its emergence as a great power in the region. This objective is attainable, but only for a brief period, let us say, between now and the next presidential election in the U.S.

    The Iranians are using to their full advantage the recent economic troubles in the U.S., and the ill-advised wars
    it chose to start. They also benefit from the rise of China as a world power, the return of Russia to international prominence, and the hardline taken by of some anti U.S.
    nations in South America.

    The all-or-nothing stance of key allies of the U.S., Israel and Saudi Arabia, is grounded in their conviction that peace with Iran means defeat for them in the long-run. They do not fear all-out war because they seem over-confident about the West and their own military and economic superiority. They may well be right in this assumption, but they stand to lose much less than the Western powers if they prove to be wrong. There is a strong element of uncertainty on the part of the U.S. and other Western nations not felt by Israel and Saudi Arabia. They seem to fear that the West and Iran could well live on as rival powers within their own spheres of influence. They sense defenestration as the two most important regional allies of the West in the region. Therefore, war is their only option.

    Under the prevailing circumstances, either war or peace with Iran, for the U.S. is a lose-lose situation. This is the unwanted effect created by the uncertainty factor mentioned above.

  • Jaime Einstein

    This "deal" will bring "pace" and be a "game changer" the same way as Chamberlain´s magnificent "deal" with Hitler in 1938. It seems nobody has learned anything from history. Kerry and Obama both live out of range of Iranian missiles (for now, that is). Iran had a terrible hand in this game of Poker, but they played it brilliantly. Kerry is an arrogant fool, but he will not be the one to pay the immediate consequences of his folly. Israel will be forced to act alone, and Saudi Arabia and Turkey will be forced to go nuclear… This is the new version of "peace in our time".

  • Shep Fargotstein

    Did Obama’s advisor write this pieice? There is NO DEAL. It was announced as a "done deal" but the State department has already said it is only a 6 month talk ssession with nothing mmore than an additional year of talks.
    This is simply smoke and mirrors to preemkpt israel from striking Iran.

    What is missing from this rosey analysis is that there will be repercussions from the USA outreach to Iran and throwing allies under the bus. Others will – out of neccessity have to fill the void left in the wake of Obama’s surrender of USA influence in the Mideast to Iran.

    I am almost 60 years old and this is – without a doubt – the most distubing US foriegn policy development since Jimmy Carter (which not surprisingly also included the Iranians.

  • Johnmac

    This is not good news. Israel will not commit suicide. N.Korea felt the earth move. China is more confident that our primary reaction to their aggressiveness will be bluster. Can anybody help Obama understand most conflicts began because one side underestimated the other. The next move is up our Senate. They must begin to earn their pay and stop this tragedy before we have to go to war again.

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