Diplomacy Heats Up as Iran Awaits US Response

Copyright © 2023 Energy Intelligence Group All rights reserved. Unauthorized access or electronic forwarding, even for internal use, is prohibited.

Diplomacy around the Iran nuclear deal gained momentum over the weekend, although the US has yet to formally respond to the "final text" for an agreement that the EU tabled two weeks ago and Tehran's reaction to it.

US President Joe Biden held talks on Saturday with the leaders of France, Germany and the UK, the three European countries that were signatories to the original 2015 agreement, or Joint Comprehensive Plan of Action (JCPOA).

"Ongoing negotiations over Iran's nuclear program" were discussed, as well as "the need to strengthen support for partners in the Middle East region and joint efforts to deter and constrain Iran's destabilizing regional activities," the White House said.

A day earlier, South Korea's vice foreign minister Cho Hyun-dong held separate phone calls with the chief negotiators of the US and the EU, the Yonhap news agency reported, with Cho reaffirming Seoul's support for restoration of the JCPOA.

Doing so would enable $7 billion of Iranian funds locked in two South Korean banks to be released and allow South Korea to resume imports of Iranian condensate, of which it was the largest buyer before sanctions were reimposed in 2018.

Despite the gathering diplomatic momentum — Mohammad Marandi, who has worked with Iran's negotiating team, talked about a "real chance" of a deal — there remains deep mistrust between the US and Iran.

And there is strong opposition in both countries to reviving the JCPOA, which could yet hamper efforts to close the remaining gaps.

Delivering on the Deal

Iran's biggest concern, Marandi told Energy Intelligence, is not that the next administration might pull the US out of the deal again — as former President Donald Trump did in 2018 — but whether the Biden administration would deliver on the deal.

"The Iranians don't want to be exposed to legal mistakes and shortcomings in the text [as they were last time]. So, the open issues are still significant in their own way," he said.

When the 2015 agreement was implemented, Iranian officials repeatedly said that sanctions relief was more limited than they had expected.

The proposed EU text that is now being discussed is substantially similar to the March version of the deal that Washington was prepared to sign on to, US officials have said.

US officials are currently working on a response to concerns raised by Iran that were sent via the EU last week, State Department spokesperson Ned Price said on Monday.

"Had there been a clean Iranian response, a clear 'yes' answer, I'm not sure that we would be in a back and forth the way we are now," Price said.

Unconfirmed reports indicate that any deal would be implemented over a four-month period, with the US providing some sanctions relief early in the process — unlike the original JCPOA — in a nod to Tehran's insistence on sanctions relief being "verified."

This could involve Iran exporting up to 50 million barrels of oil during the implementation period — just over half of the estimated 90 million bbl of crude that the country holds in storage.

In return, Iran would have to take initial steps to curb its nuclear program, such as removing advanced centrifuges or exporting stockpiles of highly enriched uranium.

Iran's foreign ministry spokesman Nasser Kanaani insisted on Monday that the West needed a deal more than Iran, and that however the negotiations play out, Tehran would "pursue the expansion of ties with neighboring states and other nations."

Kanaani also said Iran was willing to discuss prisoner swaps with the US outside of the nuclear talks. Others have indicated that this issue, while technically separate from the implementation of any deal, would likely be integral to it in practice.

Regional Diplomacy

Meanwhile, there are signs of mounting frustration in Israel at the growing prospects of a deal that would be an economic boon for its archenemy.

Prime Minister Yair Lapid has urged European leaders to resist an agreement that he says would "pave the way for significant investment to flow into Iran's terrorist network" and strengthen its military.

Lapid told German Chancellor Olaf Scholz last week that Europe must oppose efforts by Iran to buy time in the negotiations. And in a call with French President Emmanuel Macron on Monday, he said Israel would not be obligated by a revived JCPOA.

Price said Israel and the US share "deep concerns about the state of Iran's nuclear program."

"We continue to believe that a mutual return to compliance with the JCPOA is the most effective means by which to address those concerns," he added.

For its part, Iran has succeeded in tightening ties with some of its Mideast Gulf neighbors lately, in ways that could be seen as countering Israel's own efforts to strengthen its presence in the region.

Over the past week, Kuwait and the United Arab Emirates (UAE) both appointed ambassadors to Tehran for the first time since 2016, with the UAE saying its move would help further "the common interests of the two countries and the wider region."

"The UAE, across a number of issues, has demonstrated time and again that it can play a constructive role in resolving and de-escalating sources of regional tension, including by enhancing its diplomatic ties," Price said.

"There is a broader trend towards de-escalation in the region. It's a trend we fully support," he added.

The UAE, and its port of Fujairah, in particular, have long been a vital conduit for Iran's clandestine oil exports, and last year the UAE became the biggest exporter to the Islamic republic.

"Improved relations between the UAE and Iran are obviously good for both countries. It does provide a new opportunity, especially since talks are moving towards a deal," said Marandi.

Nuclear Policy, Security Risk , Sanctions, Opec/Opec-Plus, Opec-Plus Supply
Wanda Ad #2 (article footer)
The bill would jumpstart a comprehensive study on lifecycle emissions of key goods, laying the groundwork for a future tax mechanism that would favor lower-emissions products.
Wed, Jun 7, 2023
Grossi steps up IAEA role at Zaporizhzhia; Japan extends reactor operating limit; Constellation acquires minority stake in South Texas Project for $1.75 billion.
Fri, Jun 2, 2023