From the look of it, the US-Iran rapprochement is getting on to a bumpy start. The usage ‘rapprochement’ is deliberate – and will be disputed – because in the near term at least, what can be expected if an agreement is indeed reached in Vienna, which is an open question, can only be a state of cordial relations between the two countries, no longer hostile but not yet friendly either.
In an insightful interview with the PBS recently, the US Special Representative for Iran Robert Malley, the chief negotiator at the talks in Vienna, eschewed any form of threats against Iran even while projecting that the Biden administration has driven a hard bargain at Vienna.
The fact that Malley sounded bullish even before an agreement has been reached comes as surprise. Perhaps, Malley needed to hang tough, as the optics have a bearing on the national mood in the US and Israel.
Malley skillfully messaged that the Biden administration did not make any compromises and the agreement, if at all, will be strictly in accordance with the basic US stance that “We’re prepared to come back into into compliance with the nuclear deal if Iran does the same.” Nothing more, nothing less.
However, Malley underscored that the IAEA file on Iran will not be closed unless Tehran provided “credible answers” to the IAEA on the vexed question of the unwarranted presence of uranium particles to the full satisfaction of the latter. He insisted that a “prehistorical or historical exploration” by Iran won’t suffice, because the issue today is, “where’s that uranium today, and make sure that it’s accounted for and that it’s under what is called safeguards.”
It seems a tough call. Equally, Malley was asked directly whether the US would “allow non-Americans (read Europeans) to do business with the Islamic Revolutionary Guard Corps and get around essentially US sanctions.” Malley’s answer was a masterstroke in evasion. He said, “We would not and have not and will not negotiate any lowering of our standards about what European or other companies need to do if they want to do business with Iran. They have to respect our sanctions.
“The sanctions are very well-defined. The Treasury Department puts out very clear standards for what companies need to do, what kind of due diligence they need to do. And any report to the contrary that is claiming that we will lower those standards, that we will negotiate those standards are just flat-out wrong.”
Prima facie, what this means is that Iran can expect “sanctions relief” in terms of gaining access to its blocked funds in foreign countries and, crucially, “they would be able to sell oil, which they are not able to do now, and to get the proceeds from the sale of oil.” But the sanctions against IRGC may continue.
Plainly put, the European Union can now buy Iran’s oil to replace Russian oil. Indeed, the extra oil that enters the market will also drive down the prices (and reduce the income for Russia.) Both these serve the US interests.
The US expectation is that Iran’s and Russia’s interests as oil-exporting countries will inevitably collide as they scramble for markets. Russia has already replaced Iran’s oil in the Asian market through discounted sales. The US hopes that Iran will now pay back in the same coin in Russia’s principal market, which is Europe. This has nothing to do with Iran. It’s Russia, stupid!
And, of course, the US estimates that Iran’s desperate need for cash would eventually moderate its overall behavior as an outlier. In anticipation of proper behavior by the regime in Tehran, the US State Department has threatened last week that in the event of Iran selling drones to Russia, it will attract severe sanctions!
So long as US sanctions remain in place, the European companies are unlikely to be confident enough to do business with Iran full throttle. At least, that was the experience even after the signing of the 2015 agreement. Today, the transatlantic solidarity is much stronger than seven years ago and there’s no way Europeans will discard the guard-rails that the US puts.
Conceivably, in the event of an agreement coming through, the pathway may open for non-European countries also to return to the Iranian economy. Advantage goes to China, whose eagerness for the early conclusion of a JCPOA deal at the Vienna negotiations is self-evident. China has already put in place an ambitious $400 billion road map for economic collaboration with Iran, including a payment mechanism in local currency.
The big question is about the future trajectory of Iran-Russia relations. Precisely put, will Iran ties help Russia in the economic sphere in the current geopolitical conditions? There are no easy answers. Make no mistake, the Western partners will work hard on Iran’s middle class.
Such a tactic succeeded in the case of India, as the atrophying of its relations with Russia through the past three decades testify. Curiously, Iran and India have strong similarities. In the economic sphere, in both India and Iran, bazari (market) instincts prevail and crony capitalism is rampant. Over time, therefore, Iran’s trajectory may follow India’s trajectory.
Much depends on the resilience of the US regional strategy. Things began looking up for US-Indian relations after Bill Clinton careered away to a new attitude toward India in the mid-1990s as the country’s economic prospects began looking up and American companies sensed market opportunities.
A similar rethink in America toward Iran is not to be entirely ruled out but it is not easy to bring about. On Iran’s part too, the ideology of resistance is a legacy of the Iranian Revolution and is entrenched in the Shia psyche. Nationalism was an anchor sheet of the 1979 revolution.
In the final analysis, therefore, Tehran needs to agree to the “final text” proposed by the EU on behalf of the US. The point is, Malley’s remarks suggest that Tehran did not receive what it had demanded in terms of the IRGC being removed from the US terror list, and second, the IAEA file still remains open. It is a bitter pill for Tehran to swallow.
The influential Nour News has noted that “the expert process is still ongoing and no negative or positive decision has been made.” Indeed, Iran’s Supreme Leader Ali Khamenei will need to give the final approval.