Deviating From the Plan in Iran

8 MINS READNov 16, 2016 | 09:15 GMT
On the campaign trail, U.S. President-elect Donald Trump vowed to dismantle the Joint Comprehensive Plan of Action (JCPOA), a deal to limit Iran's nuclear weapons program. But once in office, Trump may opt to take a more measured approach.

On the campaign trail, U.S. President-elect Donald Trump vowed to dismantle the Joint Comprehensive Plan of Action (JCPOA), a deal to limit Iran's nuclear weapons program. But once in office, Trump may opt to take a more measured approach.

Forecast Highlights

  • Though the United States is legally permitted to pull out of the Joint Comprehensive Plan of Action (JCPOA), it is unlikely to do so because of the other countries and considerations involved in the deal.
  • Iran and the European signatories will hold fast to the deal as written and will exhort the incoming U.S. administration to keep it intact.
  • Even if the U.S. Congress were to pass additional sanctions, they would not deter Iran from expanding its military or pursuing greater influence in the Middle East through proxy groups.

After years of negotiation brought the Joint Comprehensive Plan of Action (JCPOA) into being, the results of the U.S. presidential election threw its future into question overnight. Throughout his campaign, President-elect Donald Trump declared his intent to dismantle the "disastrous" and "catastrophic" deal, which limits Iran's nuclear weapons program, for the greater good of the United States. Regional allies — including a Saudi prince — have urged caution. Iranians, meanwhile, are waiting to see how the next U.S. administration will change relations between Washington and Tehran. Though Trump's aides have since clarified that the president-elect will not necessarily follow through on his campaign promises exactly, it remains unclear what actions he will take. Legally, the president has the authority to pull the United States out of the framework; the U.S. Congress did not have to approve the executive order that put the deal in place, nor would it have to approve a decision to withdraw from it. But any change to the deal would directly affect the countries with which Iran does business, including traditional U.S. allies in Europe, and could jeopardize the delicate security situation in the Middle East. With these factors in mind, the next administration will probably take a more measured approach to the deal.

What Europe Has at Stake

The JCPOA is a 10-year agreement struck in 2015 between Iran and six other countries — the United Kingdom, the United States, Russia, Germany, France and China. The deal is intended primarily to keep Iran from developing nuclear weapons by limiting its production of fissile material, whether plutonium or uranium. Iran, in exchange for breaking down portions of its nuclear program and allowing monitors from the International Atomic Energy Agency (IAEA) to ensure its compliance through regular inspections, receives relief from some of the economic sanctions against it. When the agreement was implemented on Jan. 16, the United States suspended nuclear-related secondary sanctions on Iran's commercial activity.

To a great extent, the freedom that European countries and companies have to invest in and trade with Iran remains at the whim of the U.S. president, who can reinstate or change sanctions by executive order.

Multilateral though it is, the accord hinged on negotiations between the United States and Iran, and its future depends in large part on Washington's course of action. Though the JCPOA did not lift or alter sanctions on individuals in the United States doing business with Iran, it lifted secondary sanctions against non-U.S. entities, enabling European businesses, for instance, to resume trade with Iran. To a great extent, the freedom that European countries and companies have to invest in and trade with Iran remains at the whim of the U.S. president, who can reinstate or change sanctions by executive order. (By contrast, the European Union could amend its sanctions regime only through a unanimous vote.) Nevertheless, EU officials such as Federica Mogherini, the high representative for foreign affairs and security policy, have repeatedly denied that the United States could single-handedly dismantle the JCPOA.

The deal's European signatories, Germany and France, have no desire to adjust or rescind the JCPOA, a stance that will complicate any U.S. effort to dismantle it. Many European companies, such as France's Total, are eager to invest in Iran's newly opened economy, particularly in its oil and natural gas sectors, and have insisted that the next U.S. administration's actions will not diminish their interest in the country. Even so, these companies would be taking a gamble by investing in Iran, which remains subject to numerous sanctions beyond those addressed in the JCPOA. And until the next U.S. administration clarifies its plans for the agreement, Trump's election will exacerbate fears in Europe that the United States could suddenly penalize a company for doing business with Iran, as it has in the past. In the meantime, as Iran works to keep its oil exports flowing to Europe, it will likely try to appeal to its allies on the Continent — Germany, France, Italy, Austria and Greece (which vetoed an EU sanctions measure on an Iranian bank in October).

Iran's Priorities

For Tehran, preserving the JCPOA is paramount to continuing its economic revival. The promise of relief from economic sanctions fueled President Hassan Rouhani's winning campaign in the 2013 election and guided him through negotiations over the JCPOA. Free of the secondary sanctions that the JCPOA suspended, Iran's economy has begun to recover after years of isolationist and populist policies under former President Mahmoud Ahmadinejad. The country's oil exports reached pre-sanctions levels in October. What's more, Iran's economic minister predicts that non-oil exports will hit $68 billion by the end of this budget year, up $10 billion from the previous year. Although unemployment continues to pose a problem in the country, Rouhani insists that the numbers are improving, and young Iranians are hopeful that they will begin to experience the benefits of the economic opening.

Since the Joint Comprehensive Plan of Action took effect in January 2016, Iran's oil production and export activities have increased.

In light of these gains, Iran's leaders across the political spectrum are united in their commitment to protect Iran's economy by avoiding new sanctions or the reinstatement of suspended ones. Iran has largely observed the deal's nuclear regulations over the past year, according to the IAEA, and the promise of further economic recovery will compel continued compliance. (The country has twice exceeded prescribed limits for heavy water, but immediately after its latest violation Nov. 8, Tehran publicly ordered that the 0.1 metric ton of excess be removed.) Even the hard-line factions in Iran's political system want to preserve the JCPOA, though that will not keep them from spouting more of the same anti-U.S. rhetoric over the next four years.

With Iran's next presidential election set for May, hard-line politicians will seize on any changes to the agreement to discredit their rivals in the current administration. But because of his role in negotiating the deal and his relatively pro-Western policies, Rouhani is the ideal politician to keep the agreement intact. The president's reforms, moreover, have made Iran more attractive to European investors, who want to keep working with the country, especially since Supreme Leader Ayatollah Ali Khamenei accepts the collaboration.

Securing the Middle East

Apart from Europe and Iran's interests in maintaining the JCPOA, the United States has its own reasons to uphold the agreement. The security concerns that prompted Washington to push for a rapprochement with Tehran in the first place have not entirely subsided. Alarmed by Iran's aggression toward Israel and Saudi Arabia, the United States offered sanctions relief to keep Iran from becoming a nuclear power and to establish a balance, however tenuous, in the Middle East. So far, the strategy has been effective in that Iran has slowed the development of its nuclear program. Tehran, however, has not given up on developing other aspects of its military apparatus and capabilities, such as its extensive missile program, and it will continue to cultivate them with or without the JCPOA. At the same time, there is no indication that economic sanctions ever prevented Tehran from trying to spread its political influence in the region by training and funding foreign militia groups, such as Hezbollah and the Iraqi Popular Mobilization Forces. Iran will be fixated on maintaining its hold in Iraq through political and military means in the years to come, perhaps inciting conflict with Turkey — which hopes to do the same — in the process.

Tehran regards all sanctions with equal indignation, condemning the punitive measures and portraying their primary author, the United States, as the Islamic republic's perennial foe. But, in fact, the sanctions that the United States, European Union and United Nations have imposed on the country all fall into different categories. The JCPOA notwithstanding, the United States maintains a host of sanctions on Iran for its ballistic missile program and its human rights violations — sanctions that were never up for negotiation. During the Trump administration, the Republican-majority Congress may advocate additional sanctions against Iran for any perceived violation of the JCPOA or for unusual ballistic missile activity. Though Iran would prefer to avoid such an outcome, it has weathered economic isolation before, and its leaders are proud of their country's resilience. Washington's allies in Europe, on the other hand, may be less amenable to giving up their economic prospects in Iran under a tightened sanctions regime.

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