Geopolitical Analysis
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Client - Company based in GCC looking to understand the future of Iranian-US relations in regard to energy/nuclear security
RFI - Will the Iran-Nuclear deal resume?
This report will outline prospects for the revival of the Joint Comprehensive Plan of Action (JCPOA) and three possible scenarios for how the JCPOA developments will impact the US-Iran tensions and security in the broader region.
Background. The Joint Comprehensive Plan of Action (JCPOA), colloquially known as the Iran Nuclear Deal, was a landmark accord reached between Iran and several world powers, including the United States (US), in July 2015. It signified the improving relations between Iran and the US. The JCPOA was to see Iran begin to dismantle its nuclear program in exchange for billions of dollars worth of sanctions relief. This deal was intended to reduce instability in the Persian-Mid East region, much of which is linked to the conflict between Saudi Arabia and Iran: Yemen, Iraq, the Syrian Civil War, Israel-Palestine, and Afghanistan are all affected by US-Saudi-Iran relations. This deal, therefore, was pivotal to increasing security, and stability in much of the region.
In 2018, President Donald Trump withdrew the US from the deal and imposed a series of new sanctions. This was a result of ongoing clashes in the region, including the attack on Saudi Aramco oil tankers in the Gulf of Oman [1]. This break in the deal led to increased tensions, violence, and turmoil – this is known as the ongoing 2019 Persian Gulf crisis. In 2021, President Joe Biden said the US would return to the deal if Iran came back into compliance.
Fig 1 - Visualisation of the JCPOA negotiation’s primary and secondary effects.
Current Situation. In late 2021, Iran, the UK, EU, China, Russia and the US continued talks moving towards the resumption of the JCPOA, however, this has not progressed positively. As of May 2022, internal US politics are creating a barrier to Biden moving forwards [2]. On 16 Jun, new US sanctions have been raised against Iran [3] and on 21 Jun, a US Naval vessel fired warning shots at an Iranian Navy catamaran in the Straits of Hurmuz [4]. This naval shooting could escalate into retaliatory attacks such as the 2019 UK tanker seizure [5] or the 2020 assassination of General Qasem Soleimani [6]. Any such similar events may deeply scar the JCPOA negotiation.
There are several international actors who are key to the JCPOA, however, the primary drivers are the US and Iran. Currently, it appears that both sides are willing to continue negotiations but are currently blocked on several issues – one of which is the designation of the Islamic Revolutionary Guard Corps (IRGC) as a terrorist organisation. Biden is facing a bi-partisan senate majority, which has ensured that no US-Iran deal can be made without addressing the issue of the IRGC and the wider issue of Iranian support of terrorism [7]. These issues have become a major stumbling block for the negotiation and have kept Iran from any concession. In May, Biden decided to keep the IRGC on the terrorist list, which is a signal to Iran that there will be no breakthrough in the near future.[8]
Outlook. The relations between the US and Iran have numerous significant first and second-order effects, some analyses can be seen in Fig 1 and are referenced below in the scenarios.
Scenario 1. Continuing stagnation and tit-for-tat military exchanges on the fringes of peace talks. This is the most likely scenario as it is a continuation of the current situation. All sides are attempting to move toward the agreement, but various internal and external factors prevent such concessions. The risk with this scenario is that if the JCPOA is unable to move forwards, Iran is highly likely to continue working towards nuclear armament, the success of which may have cataclysmic results. It is likely that other nations would intervene to prevent Iran’s success, however, this may lead to greater regional divide and instability.
Scenario 2. Considerable hostilities from the breakdown of peace talks. This is the most dangerous scenario, and it would have the most impact on regional and global security. This could see a resurgence of Shia militias in Syria, Iraq, Yemen and Palestine, each conflict alone could have significant negative consequences. Not only is increasing support for Shia militia groups a likely primary effect of a US-Iran breakdown, but it is also a factor that may snowball to further hostilities. The secondary effects of Shia militia support from Iran will be felt primarily in Iraq. For example, a renewed Iranian determination could see increased supplies to combatants in Iraq, which could destabilise the already fractured government.
Scenario 3. The success of the negotiation leads to the resumption of the 2015/2016 JCPOA trajectory. Iran recommences the dismantling of its nuclear program, and the US reduces sanctions. A clear consequence of JCPOA's success is the effect on bilateral US-Iran relations. US sanctions prevent Iranian integration into the world economy and global order, meanwhile, continued Iranian paramilitary activity aggravates fragile tensions. The immediate result of the reduced volatility would likely be economic optimism, and the longer-term results would certainly be positive. It is realistically possible that Iran would even be open to foreign investment in the long term.
Each scenario could also be compounded by several external factors.
A strongly anti-Iranian political switch in the US could increase the likelihood of Scenario 2 generating. Key indicators of this would be monitoring the US 2022 mid-term elections that indicate a return to a 2018 Trump administration position [9].
Consumer price index increases, particularly the price of staple foods can add to Iranian (regional) instability. Key indicators for this would be public/social sentiment analysis and ongoing economic assessments.
Summary. Despite the international agreement that the JCPOA negotiations will resume and many efforts to do so, politically, it seems unpassable for the Biden administration in the current climate. The earliest direct change to this will be the next US elections in 2022/4. It remains highly unlikely that the JCPOA will move forwards in a positive manner and the situation is likely to remain unchanged or deteriorate. Given current tensions around the Straits of Hurmuz, a military clash may pave the way for escalating violence, the results of which can unravel into the entire region. Operations in the Persian Gulf and Iran may wish to re-evaluate their necessity and security posture until the fallout from the most recent naval stand-off has subsided.
[1] BBC, 13 May 2019 - Four ships 'sabotaged' in the Gulf of Oman amid tensions
[2] Politico, 5 May 2022 - Congress fires its first warning shot on Biden’s Iran deal
[3] Al Jazeera, 16 June 2022 - US targets Chinese, UAE companies in new Iran sanctions
[4] Independent, 21 June 2022 - US warship fires warning shot at Iranian speedboat in Strait of Hormuz
[5] CNN, 21 July 2019 - 'Alter your course,' Iranians warned before seizing UK-flagged ship
[6] US DOD, 2 January 2020 - Statement by the Department of Defense
[7] Politico, 5 May 2022 - Congress fires its first warning shot on Biden’s Iran deal
[8] Politico, 24 May 2022 - Biden made final decision to keep Iran’s IRGC on terrorist list
[9] NY Times, 8 May 2018 - Trump Abandons Iran Nuclear Deal He Long Scorned