Iranians Will Tolerate Hardship but Not Capitulation

On the one-year anniversary of the U.S. withdrawal from the landmark nuclear deal, Iran announced that it would cease to implement some of its commitments under the accord. Because the United States has banned Iran from exporting heavy water and low enriched uranium (LEU), Iran will henceforth stop adhering to the accord’s limits on accumulating these materials: 130 metric tons in the case of heavy water and 300 kilograms of LEU (202.8 kg of uranium content). In addition, unless the other parties to the deal restore Iran’s lost oil sales and access to the international banking system, after 60 days it will cease implementing other provisions, by exceeding the 3.67 percent limit on uranium enrichment and returning to the pre-deal design of its mothballed Arak heavy water reactor.

In reaction to a series of escalatory measures by the U.S. government, Iranian leaders faced tough choices: how to most effectively respond to increasing “maximum pressure” from Washington. But the question is why now and in these specific ways?

There is an argument floating around among supporters of the deal in the United States and Europe that Iran should continue its strategic patience and practice restraint and compliance with the deal. The underlying rationale is twofold: first, to basically wait out the Trump administration in hopes that if a Democrat wins in 2020, the United States could rejoin the nuclear deal. Second, despite the fact that Iran is not reaping economic windfalls, there are some diplomatic benefits in remaining in the agreement. But if Iran violates the deal, Europeans would have to impose further sanctions, and diplomatic relations would deteriorate. This argument fails to appreciate the domestic pressure the Iranian government is facing. In reality, Tehran’s calculations do not revolve around U.S. politics. These days, domestic political considerations are paramount.

Since the Trump administration withdrew from the deal last year, there has been an intense political debate in Tehran regarding compliance with the deal. The remaining parties to the agreement—the Europeans, Russia, and China—have repeatedly emphasized their commitment to the agreement, and according to reports by the International Atomic Energy Agency, Tehran has adhered to the deal.

As reimposed sanctions intensified, and hopes faded away that the remaining parties could help make up the losses, Iran’s government has been pushed not only by the hard-line voices but more recently even by the reformists to take action and break the stalemate. In addition to abandoning certain nuclear constraints, options have included taking measures to disrupt oil shipments in the Strait of Hormuz or utilizing proxy forces to threaten U.S. forces or allies in Iraq and Syria.

Even within the nuclear realm, Iranian officials have debated several options, including a full withdrawal from the deal and even leaving the Nuclear Nonproliferation Treaty, mainly advocated by the more hard-line voices but also raised as policy options for debate in Supreme National Security Council.

But to keep the diplomatic door open, Iran chose to act without immediately violating the nuclear deal, a move that would have angered the European Union and most likely led to reinstating European sanctions. At current rates of accumulation, the LEU and heavy water stockpiles will not exceed the limits for at least a couple of months. This way the Iranian government has displayed strength without burning bridges.

In broad terms, it is, on the one hand, a reaction to the failure of the remaining parties to the deal to uphold legitimate trade with Iran. A year after the U.S. withdrawal from the deal, major European companies have abandoned the country physically and financially while the EU has in effect reinstituted an undeclared oil embargo, leading to a more than 90 percent plunge in imports from Iran.

A year after the U.S. withdrawal from the deal, major European companies have abandoned the country physically and financially.

This time though—unlike in 2012, when Iran was under multilateral sanctions from the United States, the EU, Russia, and China—European companies acted out of fear of U.S. secondary sanctions, even while European states proclaimed their fidelity to trade with Iran.

Perhaps more importantly, efforts to set up INSTEX, a so-called special purpose vehicle, continue to lag, with INSTEX having yet to become operational because EU companies are wary of using it and with the scope of its activities at least so far envisioned to merely encompass nonsanctionable humanitarian trade. Iran’s supreme leader has repeatedly criticized Europe for failing to uphold the economic commitments and even calling INSTEX a “joke.” As a result, there is a genuine Iranian interest in putting pressure on Europe to uphold its end of the bargain.

Iranian President Hassan Rouhani needs to take into account his legacy, just as U.S. Presidents Barack Obama and Donald Trump have done so. His government is under immense pressure across the political spectrum, even from reformists. The widespread complaint is that the government is not only failing to deliver on its promises but has become inert and indecisive. People wonder why they are under increasing economic hardship while maintaining limits on the nuclear program. During the 2012 sanctions, as Tehran was paying a steep price for building up its enrichment capacity, whether people agreed or disagreed, at least there was a clear-cut argument: Iranians were paying a price for building the country’s nuclear program.

When then-Foreign Minister Zulfikar Ali Bhutto said in 1965 that Pakistan would “eat grass” to build the bomb, there was a clear end goal. Now, although there are benefits, mostly long-term, for Iran in exercising patience, it is not deemed enough to justify the economic suffering. You can ask citizens to eat grass in order to ensure national survival, but you cannot expect them to do so just to uphold their government’s reputation with the international community.

Today’s situation resembles the 2003-2005 period during the last two years of the reformist President Mohammad Khatami’s administration, when Rouhani was leading the Iranian nuclear negotiating team through a fairly similar process with Europe over the nuclear program. Iran had implemented a freeze on uranium enrichment to show good faith in negotiations with France, Germany, and Britain and more importantly to avoid being referred to the U.N. Security Council.

As negotiations continued, frustration was building up over European leaders’ inability to bring Washington on board for a nuclear agreement. The supreme leader, Ayatollah Ali Khamenei, later recounted to the public in a speech that in 2005 he had told officials that if the Europeans continued to ask for more, he would personally interfere and change the strategy to a more assertive approach.

Khatami and Rouhani’s team finally resumed enrichment to build up Iran’s nuclear capacity in order to gain enough leverage to be able to negotiate a deal in the future that allowed enrichment on Iranian soil—but they did so at the end of their tenure. The next Iranian president, Mahmoud Ahmadinejad, and his hard-line faction took the credit for being tough and not compromising key national interests, and it has been a point of political debate ever since. Thus, to avoid going down the same path, it was critical for the current government to show assertiveness midterm in order to protect its legacy.

There is another key factor that explains why Iran has specifically chosen this time to respond in the nuclear realm after a year of patience: blame shifting. Tehran will need to build leverage and create a buffer ahead of a new round of escalation in which Iran will need its non-Western partners.

On May 3, the Trump administration decided to revoke two key sanctions waivers under the nuclear deal. These waivers made possible the storage of excess Iranian heavy water in Oman as well as the export of LEU to Russia in exchange for raw natural uranium in order to cap Iran’s LEU stockpile. (Without a limit on Iran’s LEU stockpile, the so-called nuclear breakout time could be potentially reduced.)

Through the revocation of these waivers, Washington sought to force Iran to either accept yet more limits on its nuclear program or violate the deal by exceeding the limits.

Iran has to cut back production of heavy water and LEU or eliminate the excess by discarding heavy water and down-blending—a reverse of the enrichment process to make the uranium less concentrated. The problem with discarding and down-blending is that it is a nonstarter domestically. Iran would essentially be using scarce government resources to destroy what it has created.

By ceasing to implement the stockpile limits, albeit in an easily reversible manner should Europe step up to the plate, Iran has thus maneuvered to kill three birds with one stone. First and foremost, the goal is to preempt what could become a domestic backlash over even further limits on Iran’s nuclear program while minimizing the risk of exceeding the limits and violating the nuclear deal—which could mean the death of the accord—by taking these fairly modest measures.

Second, the objective was to pin the blame entirely on the United States, given that Washington’s decision to revoke the waivers made keeping these commitments domestically difficult for Tehran.

Third, it avoids a scenario in which Iran would have to put pressure on Oman and Russia in particular to withstand U.S. sanctions threats. When Iranian Foreign Minister Mohammad Javad Zarif visited Moscow recently, Russian officials appreciated this move and also blamed the United States for the breakdown and lambasted Europe for failing to uphold its end of the bargain.

Given the political environment in Tehran, where the Rouhani administration is under attack for keeping the existing limits on Iran’s nuclear program while getting no economic sanctions relief benefits in return, meekly accepting additional limits was simply politically untenable. Iran’s government has chosen another path in the hope that the rest of the world, outside of Washington, will recognize its domestic political constraints and good-faith efforts to abide by what’s left of the nuclear deal.