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Iran Nuclear Talks Could Be Headed For Another Breakdown

The ongoing JCPOA agreement negotiations with Iran are not going as smooth as some media seem to suggest. In stark remarks, several European and U.S. diplomats have stated that the discussions are very difficult, and that Iran’s current position is not flexible. The position taken by newly elected Iranian president Raisi is confronting the mainly European negotiators with a clear but non-constructive position by Tehran with regards to a possible deal.

Iran’s main demands are lifting of the current (oil) sanctions, which were put in place after the U.S. left the JCPOA agreement under the Presidency of Donald Trump. The negotiations have once again headed for a breaking point, with the participating parties looking at the option of a re-start of the JCPOA 2015 agreement. After the first days of the last negotiation round, all sides were relatively optimistic, but firm demands put on the table by Iran have once again created an impasse. French, German and British negotiators have stated clearly that Tehran’s demands are unrealistic, and are a clear break with former agreed-upon compromises.

In a reaction, U.S. secretary of State Blinken stated his disappointment. According to Blinken, Iran seems not to be willing to find a compromise or a solution to the current deadlock. Blinken also stated that if Plan A (JCPOA 2.0) is not realistic, then a Plan B will be on the table too. At the moment, several Arab Gulf states are already assessing internally what a Plan B option could be. Israeli politicians and military advisors have made abundantly clear that they are not going to wait until the Raisi government achieves full-scale nuclear capabilities

It seems that Iran is playing both sides. Officially, the country is heading for a renewal of the JCPOA deal, which should include the USA, and result in the lifting of sanctions. At the same time, Iranian news sites report that Iran is selling its oil at attractive prices to Asian buyers, mainly China, which are willing to circumvent U.S. sanctions.

Tehran’s main mouthpiece Iran Daily reported that the country is selling oil at such low price levels that foreign buyers are willing skirt US sanctions. The daily indicated that Iranian oil sales to China in November increased by 40% in comparison to October, reaching a level of around 600,000 bpd. Bloomberg had already reported that China’s government allowed small teapot refineries to import more oil in October, mainly Iranian crude.

However, official data, according to Kpler, shows no Iranian oil imports since December 2020. Kpler indicated that Iran’s oil exports had been rebranded to be originating from Malaysia or Oman.

A breakthrough in the negotiations is not expected very soon. Iran’s new government has not been willing to set in place the right framework to not only support confidence but also show a leniency for less extremism overall. The first months of the Raisi government will not be known for a more liberal line of government, but more as a re-emergence of the ultra-orthodox clerics and growing importance for IRGC adepts. The Raisi government is made up of hardliners and former extremists, of which some are even on the wanted list of Interpol.

At the same time, Raisi, in a possible move to quell opposition internally, is promoting IRGC commanders and adepts to key positions in government and local provinces. Last week, Raisi appointed two active-duty Revolutionary Guard commanders as governors in two key provinces. Another recent development was the appointment by the Iranian Cabinet of Abedin Khorram, Islamic Revolution Guard Corps (IRGC) commander in Eastern Azerbaijan as governor, while Yaghubali Nazari, IRGC commander in the Khorasan-Razavi province also became governor.  In reality, this move means that both provinces are now effectively under military governorship. In contrast, former governments have only appointed ex-IRGC commanders and not active-duty commanders. Related: Guyana Votes To Set Up Oil Wealth Fund

Since 2020 a number of (former)IRGC leaders have been elected into parliament. With the appointment of another row of IRGC commanders as governors, the influence of the IRGC has become extremely strong. The increasing influence Islamic Revolution Guard Corps is also notable in the ongoing JCPOA discussions. Analysts have warned that the dream of a democratic revival under Raisi is unlikely. Iran’s Supreme Leader Ali Khamenei seems to be slowly turning the federal government into an IRGC controlled body, removing possible opposition from the sidelines. The IRGC is also regarded as one of the biggest economic players in the country, with hundreds of companies in all sectors under its control.

With time running out for the JCPOA, Iran is cozying up to Russia. Moscow’s current official view is that the negotiations are going very well. Iran’s Foreign Minister Hossein Amir-Abdollahian stated the last days that “the Vienna talks are headed in a good direction”. While Iran has been pushing for the removal of Trump-era oil sanctions, it is proceeding with growing its own enriched uranium stockpile, enhancing its enriching capabilities, processing uranium to near weapons-grade quality.

The nuclear developments have already led to direct and indirect discussions between Israel, UAE, Bahrain and Saudi Arabia (at least indirect) about a Plan B scenario. Israeli Foreign Minister Yair Lapid stated already that “Israel will not allow Iran to become a nuclear threshold country."  To put even more immediate pressure on the JCPOA meeting, Iran has launched a so-called Simorgh (Phoenix) satellite rocket into space. Iranian sources stated that the rocket has brought three devices into orbit for Iran’s civilian space program. Western, Israeli and Arab analysts are concerned that the rocket will not be used for peaceful purposes. According to Iran’s defense spokesman Ahmad Hosseini the carrier was a Simorgh (Phoenix) rocket. He said the three devices were sent to an altitude of 470 kilometers and into the Earth's thermosphere. The IRGC also has a parallel military program that put a satellite into orbit last year. Most Western analysts agree that launching such as missile during the Vienna talks shows the growing confidence of the hardliners in Tehran.

Another breakdown of the JCPOA discussions in Vienna is on the cards, even if most European governments don’t want it to happen. With Russia supporting Iran officially, and China staying on the sidelines, Iran will not be incentivized to change its attitude.

As long as Asian oil buyers continue to buy discounted Iranian crude, Western or Israeli threats are being dismissed by Tehran. The oil market should, however, take into account that Israel doesn’t always bark before biting, and that a military surgical strike on Iran becomes more likely as time goes by.

By Cyril Widdershoven for Oilprice.com

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  • Mamdouh Salameh on January 03 2022 said:
    Since the start of the JCPOA agreement negotiations (nuclear talks) with Iran in Geneva last year, I have been consistently saying that a lifting of US sanctions against Iran will never see the light of day now or ever because the positions of the United States and Iran are irreconcilable. In my view, the only deal Iran will accept is one on its own terms meaning a lifting of sanctions against it and a new nuclear deal with no limitations on its nuclear and ballistic missile development programmes.

    I also kept saying that Iran isn’t in a hurry to reach a deal having virtually managed successfully to evade US sanctions to the point of virtually nullifying them altogether and has also won the geopolitical war with the United States thus emerging as the major regional power in the Gulf region and working slowly but diligently to eject the American military presence from Iraq and the whole Middle East. One has only to look at the growing influence of the Islamic Guard Corps (IRGC) in Iran to realize that the IRGC is running the show in Iran behind the facade of a liberal or a hardline government endorsed by the Supreme leader Ali Khamenei.

    Moreover, the United States knows full well that war against Iran isn’t an option. The United States can neither prevent Iran from acquiring nuclear weapons if it wanted nor wants to risk a war with it because that would be the end of US interests in the Middle East. Furthermore, China and Russia won’t allow Iran to collapse either militarily or economically in the event of war.

    An attack by Israel on Iran’s nuclear installations could mean thousands of Iranian missiles showering Israel from Iran, from Hizbullah in Lebanon and from Hamas in Gaza. This could overwhelm Israeli defences, inflict serious damage on Israel and lead to a full scale war in the Middle East.

    Walking away from the nuclear deal in 2018 egged by Israel, former President Trump committed one of the greatest strategic blunders and the worst foreign policy folly. It will continue to haunt both the United States and Israel well into the future.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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