The Debate

An Offer the U.S. Can’t Refuse?

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The Debate

An Offer the U.S. Can’t Refuse?

A P5+1-Iran agreement seems imminent. If reports are accurate, the U.S. cannot afford to reject it.

Although details remain scarce, it appears that Iran may have made the U.S. a deal it can’t refuse, paving the way for an interim deal on its nuclear program that could be announced as early as today.

After the first day of P5+1-Iran talks it is not clear what precisely is transpiring, but it is clear that something important is afoot. The talks in Geneva began Thursday morning amid unusually optimism from both sides.  The first real sign that something important might be happening though came when the Iranian delegation announced that Foreign Minister Javad Zarif was cancelling his planned trip to Italy in order to continue personally overseeing the negotiations. This strongly suggested the Iranian side believed there was a good chance an agreement could be hammered out during this round of talks.

This impression was all but confirmed later on Thursday when it was announced that U.S. Secretary of State John Kerry had decided to fly into Geneva on Friday for talks. Given the domestic blowback that would ensue, it seems virtually inconceivable that the Obama administration would send Kerry to Geneva unless it was almost certain he would have a big deliverable to announce at the end.

More evidence that a deal is imminent comes from the reactions of other parties not at the talks, particularly Israel and the U.S. Congress. Indeed, despite the lack of (at least public) details about the deal, Israeli Prime Minister Benjamin Netanyahu decided to go public with his opposition to it, calling the hypothetical a “historic mistake” and claiming it was the “deal of the century” for Iran.

A number of members of the U.S. Congress joined Netanyahu in denouncing the notion of a deal. Sen. Bob Corker (R-TN), the top Republican on the Senate Foreign Relations Committee, went furthest, announcing he would introduce an amendment that would remove the administration’s power to offer a waiver on any sanctions in exchange for Iranian concessions.  

While a deal seems almost certain, then, what its contents are is not entirely clear. In an interview with The Back Channel on Thursday, Iran’s FM Zarif said that the parties would draft a framework agreement on Friday, but that “we know the ingredients,” of what the framework would include, “and the right amount of each ingredient in the recipe.” Zarif did not share the details of the recipe.

In an article yesterday, I analyzed the U.S. position going into the talks, based on the statements a senior U.S. official gave during a background briefing ahead of the talks. While the official had been vague on certain points, particularly the amount and type of sanctions relief that the U.S. might offer Iran, I argued that from what could be discerned from the briefing, the P5+1 proposal appeared to ask Iran to meet most of its major demands during the first phase of a two-step process, while only offering marginal sanctions relief in return. I argued that there was almost no conceivable way Iran would accept such a deal, given the difficulty the President Rouhani would have selling it at home.

Initial media reports ahead of the second day of talks suggest that contrary to my argument, Iran may be preparing to do just that. The Wall Street Journal reported, citing unnamed officials involved with the talks, that the deal would, “would freeze the most advanced aspects of its [Iran’s] nuclear program, including its production of near-weapons-grade fuel.” It also suggested it may “constrain the numbers and capacity of the centrifuge machines Iran uses to enrich uranium and to prevent Tehran from commissioning a heavy water nuclear reactor.” Other reports contained similar details, with some suggesting Iran would also ship its stockpiles of 20 percent enriched uranium out of the country, or convert it to forms less suitable for nuclear weapons.

As for sanctions relief, the Obama administration is reportedly proposing a one-time relief that would unfreeze as much as US$50 billion Iran has stored in foreign banks from oil sales, but which it can’t access due to sanctions. This would be supplemented with the removal of some marginal sanctions on Iran’s precious metals and petrochemical trade. Overall, however, the unprecedented sanctions on Iran’s banking system and oil exports would remain in place during what would be a 6-8 month nuclear freeze. According to the Wall Street Journal, over the last 18 months Iran has been losing US$5 billion a month from lost oil sales alone because of these sanctions. Thus, over the course of the nuclear freeze Iran would lose between US$30 billion and US$40 billion of the US$50 billion it would receive from agreeing to the freeze. Thus, it is essentially offering a 6-8 month freeze for US$10 billion to US$20 billion.

It’s difficult to determine how much of the reports are based on what has been agreed upon and how much of them are just based on what the U.S. is seeking. It remains hard for me to imagine Iran agreeing to such large concessions while receiving so little in return. Assuming that the reported details are accurate or close to it, however, Iran would in essence be making the U.S. an offer it couldn’t refuse.

For one thing, the deal would be so one-sided in favor of the P5+1 that it shouldn’t be difficult for the Obama administration to sell at home. Moreover, as reported yesterday, U.S. legislation allows the president to use a national security wavier to unfreeze funds for up to 180 days without congressional approval. Congress could, in line with Sen. Corker’s proposal, try to remove this waiver authority before the U.S. was able to unfreeze the funds for Iran to transfer back to Tehran.

For this plan to succeed, a lot would have to happen in the time that the Treasury Department would need to unfreeze the funds. Both Houses of Congress would have to introduce, debate and pass bills. If they weren’t the same bills, they ‘d have to go to conference, reconcile the bills, then pass them again. This could theoretically be done quickly with enough Congressional support. However, the White House would have at least some allies on the Hill who could use any number of tactics to help drag this process out. Notably, even members of Congress publicly supporting the removal of the waiver could secretly cooperate with the White House in delaying the process.

Once both Houses passed the same bill it would be sent to the president who would have to decide whether to sign or veto it. The president would likely take his sweet time in trying to determine whether to sign the bill or not. While he was “weighing this decision,” the Treasury Department could go into overdrive in unfreezing the funds for Iran. In all likelihood, then, even if things went this far the president could likely unfreeze the funds without having to veto the bill Congress sends him.

In the worst case scenario, the president may have to invest some political capital in the deal. He would have little choice but to do so, however, given the repercussions of failing to honor America’s commitments.

The biggest success of Obama’s Iran policy to date has been to turn world opinion against Iran on the nuclear issue. When Obama took office most states viewed the U.S. as the more unreasonable party in the U.S.-Iran dispute. Obama sought to reverse this through his outreach to Iran in his first year in office, which culminated with the nuclear fuel swap agreement in late 2009. Although then-Iranian President Mahmoud Ahmadinejad verbally agreed to the deal, the intense infighting between Iran’s elites following the disputed 2009 election prevented him from gaining Supreme Leader Khamenei’s approval. Thus, Iran had to backtrack on its initial acceptance of the deal.

Iran’s inability to accept what was seen as a reasonable offer by the United States was an important turning point in Iranian nuclear saga. China and Russia were said to be especially enraged at Iran for turning down the deal, but this general sentiment was felt throughout many capitals around the world. Along with Obama making concessions to Russia and China on other issues, it was Iran’s failure to accept the fuel swap agreement that allowed the U.S. to get the most strident UN Security Council sanctions against Iran passed. This rejection also helped the U.S. and EU justify the subsequent unilateral sanctions they enacted against Iran’s financial system and oil exports.

Undoubtedly, the worst outcome for the U.S. in all this would be to reject an offer in which Iran had agreed to make major concessions and asked for almost nothing in return. World opinion would immediately and perhaps irreversibly shift back to Iran as the rejection would be interpreted worldwide as vindicating Iran’s longstanding argument that the U.S. is exploiting the nuclear program to galvanize the international community against Iran.

The inevitable aftermath of the U.S. rejection would be the unraveling of the sanctions against Iran as world powers refused to forgo lucrative relationships with Iran in order to advance U.S. geopolitical interests in the Middle East. Iran would thus get faster and more extensive sanctions relief than the deal would call for, and it wouldn’t have to freeze its nuclear program in return.

To conclude, I remain skeptical Iran would agree to anything like the deal that is being reported. But if it did accept such a deal, Iran would be making the U.S. an offer it couldn’t refuse, although many in Tehran would be secretly hoping America did just that.