Borrell in Tehran: How to overcome three obstacles to the Iran nuclear deal

EU High Representative Josep Borrell is on his way to Tehran to make an eleventh-hour attempt to salvage the Iran nuclear deal. At talks in Vienna in March this year, negotiators made substantial progress towards bringing Iran and the United States back into compliance with the agreement. But the deal is now at grave risk of unravelling. The talks have stalled, tensions between Iran and the West over nuclear issues have sharply increased, and there has been dangerous escalation between Israel and Iran. The growing distrust between the West and Iran could lead them both to miscalculate.

In recent days, the Iranian foreign minister has held high-level discussions with his Russian and Chinese counterparts on the fate of the Joint Comprehensive Plan of Action (JCPOA). Borrell’s visit could create the diplomatic momentum needed to end the current deadlock and avert further escalation.

So far, despite sustained shuttle diplomacy by the European Union, negotiators have been unable to resolve the thorniest outstanding issue between Tehran and Washington: the United States’ designation of the Islamic Revolutionary Guard Corps (IRGC) as a foreign terrorist organisation. As it stands, the US and Iran are unlikely to reach an agreement on reciprocal steps the Biden administration insists are necessary to remove the designation.

As the impasse continues, Iran has now expanded its nuclear activities far beyond the limits of the 2015 nuclear deal. The country has also impeded inspections and other monitoring that provides crucial oversight of its nuclear activities. In June, 30 of the 35 countries on the board of the International Atomic Energy Agency passed a resolution censuring Iran for its lack of cooperation and credible explanations about the agency’s investigations into past Iranian conduct on nuclear issues. Iran responded by disconnecting some cameras in its facilities, which may have significantly undermined what the agency calls its “continuity of knowledge” about Iranian nuclear activities. In recent days, Iran reported to the agency that it has begun to use advanced centrifuges at its underground nuclear site. These moves make it even more complicated to implement the Vienna agreement.

Despite this dark outlook, there are some signs that the Biden and Raisi administrations could come up with innovative solutions to the stand-off – by moving beyond the IRGC designation issue to consider other gestures that could restore the nuclear deal. To achieve this, they need to clear three major obstacles.

Firstly, the fundamental problem in Tehran with the return of the JCPOA is more political than economic. Iranian leaders have little confidence that a revived nuclear deal would be durable, as they recognise – after the experience of dealing with President Donald Trump – that no one US administration can force its successor to abide by the agreement. Now that conservative factions fully control the government, parliament, and judiciary in Tehran, Iranian leaders have no desire to risk their reputations by sealing another agreement with Washington. More importantly, it would be a political catastrophe for Supreme Leader Ali Khamenei if he was seen to have been cheated by the United States once again, especially at a time when a transition process to choose his successor may be under way.

There is also a growing sense in Tehran that the Democrats are too weak to secure the White House for a second term – raising the prospect that any benefits Iran gains under a new deal will be lost in two years. And the Biden administration’s declared goal of negotiating a “longer and stronger” deal with Iran concerns many Iranian politicians. They fear that, once a deal is struck, the administration will threaten to reimpose sanctions on the country unless it immediately enters follow-up talks on an extended nuclear agreement.

Meanwhile, hard-line factions in Iran argue that it would be unwise to give away nuclear leverage they could use in negotiations with a stronger US president. They claim that the economic shock Iran would suffer from the reimposition of sanctions (following another US exit from the nuclear deal) is not worth the short-term benefits of an agreement with the Biden administration.

For the Raisi government, US sanctions relief could help ease the country’s economic decline and nationwide street protests, which have worsened during his first year in office. Yet his administration has been unable to gain enough domestic support to finalise the deal reached in Vienna for re-implementing the JCPOA. As one interlocutor in Tehran explained to this author, Iran demands the removal of the IRGC designation both because the Rouhani administration was unable to achieve this concession and because obtaining the removal could help create a domestic consensus in support of the deal – including among members of the IRGC.

Therefore, the US and its European allies should now propose a package of economic and political initiatives that can provide the extra incentive for Iran to accept the text reached in Vienna. These measures should be tied to the full implementation of the 2015 agreement and could be designed to protect Western interests, such as by boosting energy security and regional economic cooperation.

The second major obstacle is President Joe Biden’s apparent lack of appetite to take on a costly domestic political fight over the nuclear deal. His hesitance, which will likely increase with the approach of the US mid-term elections in November, has led many European leaders to worry that he is sleepwalking into a major nuclear crisis.

This is why they now need to directly engage with the Biden administration and the Iranian leadership, to push them to implement the measures they agreed to in Vienna. European leaders should appeal to Biden directly as a long-time supporter of the transatlantic alliance, by stressing Europe’s strong interest in the deal.

The third major obstacle is the increasing risk that Iran, the US, and Israel will misjudge one another’s tolerance for escalation. Some leaders in Tehran contend that a calibrated expansion of nuclear activities is the best way to pressure the Biden administration into concessions. And many hard-liners see the current political moment as an opportunity to gain greater political and economic power by blocking a new nuclear deal and seeking confrontation. One could see this in May – when, after Greece detained a tanker carrying Iranian oil and began to transfer its cargo to the US at Washington’s request, Iran seized two Greek tankers in response. There are now reports that Iranian hard-liners are pushing for Iran to increase its uranium enrichment to an unprecedented 90 per cent and to withdraw from the Treaty on the Non-Proliferation of Nuclear Weapons altogether.

Yet such a move is only likely to meet with a harsh response from Israel or the US – perhaps even one involving military action. There is widespread speculation that, since the start of the year, Israel has stepped up its campaign of assassinations linked to the Iranian nuclear programme and has targeted Iranian military facilities. And Israel has accused Iran of targeting Israeli tourists in Turkey. European governments should use their connections to Iran and Israel to try to halt this cycle of escalation.

Meanwhile, Biden now seems to be relaunching his predecessor’s maximum pressure campaign against Iran by piling sanctions on the country and tightening its enforcement of these measures. However, as the Trump administration should have learned, this approach simply undermines US security in return for few diplomatic benefits. Many policymakers in Washington appear to believe that Iran’s leaders are primarily driven by economic imperatives. But they are not paying sufficient attention to the risk that, if the US places further restrictions on Iranian oil exports, there could be a return to the kind of military escalation that occurred in 2019, which disrupted energy flows through the Gulf. This would be especially damaging for Europe and the US as they work to replace energy supplies from Russia.

Europe’s need to revive the Iran nuclear agreement is greater than ever. Neither Iran nor the US has a workable plan to manage the fallout from the deal’s collapse. European leaders are, understandably, preoccupied with Russia’s war on Ukraine. Yet they should recognise that such a collapse could not only lead to military escalation but could also compound their problems in the energy market. To address these threats, they will need to follow Borrell’s lead and immediately intensify their efforts at high-level diplomacy.