Starting next Monday, Iran will formally implement an interim agreement with the West. President Rohani has described the accord as the world “bowing to Iran’s might, power and resistance.” The Islamic Republic has agreed to limit certain aspects of its nuclear activities for six months in return for what has been called “modest” relief from the crippling international sanctions imposed for most of the last decade. But the West, by rolling back the sanctions regime, has given Tehran an opportunity to reinvigorate its economic and diplomatic ties with the rest of the world, and Western countries have eagerly exploited the opening to do business with Iran. Re-legitimizing business as usual before Iran makes any significant concessions on its nuclear program not only sends the wrong message, but impairs the West’s ability to negotiate effectively.
Iran has made a full court press to rehabilitate its economy following the relaxing of sanctions. In the last six weeks, Tehran has been working its charm offensive, principally with Europe, but also with Japan, Turkey and Azerbaijan. In addition, it has begun rebuilding the critical infrastructure necessary to transact global business, including in the banking and energy sectors.
According to the White House briefing on the agreement, Iran will be offered about $7 billion in sanctions relief, including access to $4.2 billion in frozen oil revenue. But while most policymakers have focused on the relatively small amount of money this supposedly represents, it is actually the renewed banking and business infrastructure that requires attention. It took years to implement an effective sanctions regime, and that effort is now eroding quickly – despite U.S. claims to the contrary. Should Iran decide to drag out the negotiations or leave them all together, it would be extremely challenging to reinstitute the sanctions because of the length of time required.
Iran was forced to negotiate largely because of the sanctions, as over 80 financial institutions around the globe cut off ties or significantly reduced their relationship with it. Major international banks stopped supplying financial services to Iran, which significantly curtailed its ability to transact global business. According to Ali Majedi, Iran’s deputy oil minister for international and commercial affairs, as a result of the agreement, the Islamic Republic will regain access to several global banks to handle payments for its crude exports and other commodities. Undoubtedly, other financial institutions will wish to follow suit.
Until recently, oil companies were forced to turn their backs on Iran’s energy giant, largely due to U.S. policy and Congressional legislation. But Bijan Namdar Zanganeh, Iran’s oil minister, met this month with the heads of European companies like Vitol Group, Eni SpA, OMV AG and Royal Dutch Shell PLC. Furthermore, accordingto Daniel Bernbeck, head of the German-Iranian Chamber of Industry and Commerce, ExxonMobil, Chevron and other U.S. companies have already come to Tehran to explore business opportunities.
For years, European and Asian legislators treated Iran as a pariah and attempted to isolate the regime. Yet a European Parliament delegation arrived in Tehran in December, the first EU legislative institution to visit the country in over six years. Just last week, a four-member parliamentary delegation from the UK, led by former foreign secretary Jack Straw and former chancellor of the exchequer Lord Lamont, traveled to Iran to meet with members of the Majlis and invite them to the UK. Italian Foreign Minister Emma Bonino visited Tehran last month to work on a “plan of exchanges and cooperation,” and not just in the energy sector.
Hiroyuki Ishige, chairman of Japan’s External Trade Organization, visited Tehran in December to discuss expanding bilateral ties and floated a plan to form a joint committee to promote trade. In addition, Turkey and Iran are now expected to significantly ramp up their bilateral ties through a high-level Cooperation Council, intended to “fast track cooperation and cut the red tape in bureaucracies.” The two are also considering a joint cabinet meeting.
Predictably, negotiations until now stalled because of problems over Iran’s advanced centrifuge research. Policymakers should pay very close attention to these devices that purify uranium: at low levels, they can create fuel in atomic power plants, but at high levels, they can be turned into nuclear weapons. According to diplomatic insiders, Iran is pressing ahead with development of very advanced centrifuges, a worrisome sign indeed.
In the 1960s, a new term came into the American lexicon following U.S.-Japanese negotiations that lasted over 25 years: the Kabuki dance, now synonymous with political posturing. The international community should cut the disco party short and determine whether Iran plans to shut down its nuclear program or continue marching towards the bomb. To prove it has truly dropped its nuclear ambitions, Iran must stop its centrifuges, shut down the Arak plutonium reactor and transfer its uranium and plutonium stockpiles out of the country.
U.S. and international lawmakers should continue promoting legislative efforts such as the Nuclear Weapons Free Iran Act, currently being considered by Congress, which would place sanctions on Iran if it does not agree to a comprehensive deal later this year or next. The intelligence community should use signal and human intelligence and satellite imagery to verify Iranian claims, which will likely become more challenging because of political interests if the negotiations drag out.
The international community must take decisive steps to ensure Iran does not get the bomb. Only by keeping sanctions and a credible military threat on the table will the West show Iran that its actions have consequences.