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Iran - JCPOA Strategy - How Should Iran Respond?
#1
Following US violation/withdrawal of/from JCPOA, sanctions have been reimposed to highest levels yet and most European countries - despite the EU saying they still support the deal - have complied with the US sanctions.

The EU and Iran have tried to establish INSTEX SPV to facilitate humanitarian trade (at first, and eventually oil trade), but this is still not in operation. As a result, Iran announced a partial reduction in compliance and gave the EU a 60 days deadline to start the operation of INSTEX or it will increase enrichment levels. This deadline expires in early July. The EU has warned that if Iran increases its enrichment levels it will be deemed a breach of JCPOA and the EU will impose consequences. But the EU already complies with the US sanctions in reality, so I am not sure what leverage the EU has to threaten these consequences...

Regardless, sanctions have driven Iran oil exports to record lows (<500,000 bpd) and the economy is in recession. Last year GDP fell by 3.9%, and this year GDP is projected to fall by at least 6%. Oil exports have fallen from >2.3million bpd in 2018 to <500,000 bpd in 2019 (and likely to continue to fall). As for currency, when Rouhani was elected 1USD = 3000T, but now it is >13000T. Inflation fell to single digits (approx. 9%) in early months/years of Rouhani but now it is >40%+. 

Clearly, the sanctions are having a terrible effect on the economy and they are not sustainable forever. So the question becomes - what should be Iran's strategy to remove the sanctions? I see two main options:

1) Democratic (Biden/Bernie) wins in 2020 US election and re-enters JCPOA. No new negotiations. Best case scenario.
2) Trump wins in 2020 - new negotiations with US are inevitable. 

To the 2020 election, currently Biden and Bernie both lead against Trump by around +10% in the polls, but there is a long way to go. Historically, the incumbent President has a very good chance of re-election, especially when the economy is booming (which it is). The Democratic Committee accepted a resolution to re-enter the JCPOA if they win in 2020, so Bernie and Biden are both likely to do this if they win. I think Iran can survive until 2020.

But the problem is if Trump wins again. Then I believe the economy cannot survive 4 more years of peak sanctions. We can talk about how Iran resists sanctions etc and it's true but let's not pretend Iran did not have negotiations before because sanctions were really hurting the economy. Especially after 2012 when EU banned oil imports from Iran. Now we are seeing similar oil export numbers and GDP contractions as then. Then it took 1 year for Iran to start negotiations, how long can Iran survive before accepting negotiations this time? Doesn't matter how long - the point is that we accept new negotiations are inevitable. 

So, what can we do until 2020 new negotiations? If Trump wins again he will have strong leverage (4 more years of peak sanctions + military option), so Iran must find some leverage to prepare for these negotiations if they must happen. 

So now the question is - how can Iran boost its leverage for these negotiations? 

Pompeo has said what the US demands will be - ballistic missiles, no enrichment (+ no heavy water at all), stop weapon proliferation, stop supporting militias across the ME (including Hezbollah, Hamas, Houthis, PMF), release all US citizens and withdraw from Syria. These are obviously maximalist demands and the US should know they will never get these.

I believe some options would be: further work on IR-6 and IR-8 centrifuges, install much more IR-2M centrifuges, test 4000km+ BM (Khorramshahr with lighter warhead would work already, or even better a new solid fuel missile). 

- Iran cannot accept zero enrichment, otherwise it has been fighting all these decades for nothing. 
- No heavy water can be accepted. 
- Ballistic missiles range cap can be acceptable - hence why I believe Iran should launch much longer range BM so that coming down to 2000km is a compromise (otherwise if we start from 2000km the compromise amount becomes much lower). The US demands no BM launches, but look at North Korea - they ignore their shorter-range BM launches now. 
- Release all US citizens can be accepted. 
- Withdraw from Syria can be accepted (in exchange for US withdrawal for example). 
- Stop support for Hamas/Houthis maybe possible, but Hezbollah impossible. 

In exchange, Iran must demand:
- Full sanctions relief
- Heavy US investment
- Full payment of all international awards that Israel/US/UK refuse to pay
- End to all domestic US litigation court claims against Iran
- Ratify agreement in Congress as official Treaty so it cannot be breached again

What does everyone else think about what I wrote - and any more ideas for how Iran can boost its position for future negotiations?   Smile
  


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