Ann Arbor (Informed Comment) – Late in 2022, the Biden administration announced that it had given upon on negotiating a restoration of the 2015 Iran nuclear deal (the Joint Comprehensive Plan of Action or JCPOA), which Donald Trump destroyed in May 2018 by ripping it up and slapping what amounts to a financial and trade embargo on Iran.
Precisely because of the incredible severity of US sanctions on Iran, which went so far as to prevent the country from freely selling its own petroleum on the world market, however, the US and Iran still have a relationship. It is just a very tense and a very bad one. And they continue to have bilateral issues that need resolving.
As the Soufan Center rightly says, these include Iran’s alleged provision to Russia of drones for use against Ukraine and the possibility that it will supply Moscow with missiles, as well. Iran-backed militias have sent rockets onto the US base in Syria at Tanf, and the US has bombarded them in return. Iran holds three Iranian-American dual citizens and a green card holder in unfair detention. Iran has also been acting out, angry at being subjected to severe sanctions even though it had mothballed 80% of its civilian nuclear enrichment program in return for sanctions relief. It has enriched small amounts of uranium to 60%. You need 95% or so to have fissile material for a bomb.
The vise-like grip to which Washington has been subjecting the Iranian economy is extremely dangerous, because it puts the two countries on a war footing. No country is going to quietly accept being treated like that. Iran has acted out through stealth attacks on oil shipping in the Gulf and even by a drone attack in 2019 on Saudi Arabia’s key Abqaiq refinery. During Trump’s roller coaster ride of a presidency, the two countries more than once came close to open hostilities, which could have spiraled down into a shooting war. Then chairman of the Joint Chiefs of Staff Mark Milley expressed concerns about this situation.
The problem is that the situation has not improved under Biden, who has kept all of Trump’s “maximum pressure” sanctions in place. It is even to the extent that the Iranian national bank was designated a terrorist organization, which discourages charitable organizations from trying to send money and supplies, since they could be charged for material support of terrorism just by dealing in the Iranian currency, the riyal.
The Biden administration also seems worried about being slammed as Iran-lovers in the 2024 election cycle by the increasingly fascist Republicans, most of whom say they will brook no compromise.
The administration’s response has therefore been to engage in low-key talks with Iran at out-of-the-way sites such as Muscat in Oman and Doha in Qatar, where there isn’t much press attention. The hope appears to be to achieve some informal understandings that will reduce tensions, rather than a full-fledged treaty on the JCPOA model. As I noted last month, Iran admits that these talks are taking place.
This development is taking place in tandem with an easing of Iran-Saudi tensions, brokered by China, which is also worried about war breaking out in the Gulf, given its dependence on Middle East petroleum.
One carrot the US can offer in these talks is Treasury Department waivers on sanctions imposed by its Office of Foreign Asset Control (OFAC). To show that the administration is talking in earnest, in June it issued a waiver to Iran allowing Baghdad to transfer to Iran the nearly $3 billion it owed its neighbor for fuel, electricity and other items of bilateral trade. This waiver, which protected Iran from Treasury Department sanctions for trading with Iran, appears to have been issued as a confidence-building step on the part of the US.
Another $7 billion or so is sequestered in banks in countries such as South Korea, Japan and India, who purchased petroleum from Iran before the May 2018 sanctions were suddenly imposed, but who have never been able to pay for it for fear of OFAC.That money, too, could be released to Iran through a waiver.
Reining in the Shiite militia attacks on the some 900 US troops in Syria could be one quid pro quo. Another may be a pledge to cease supplying drones to Moscow, and to refrain from giving Russia any missiles. Yet another could be to destroy its tiny stock of uranium enriched to 60% and to cease enriching to that level. Releasing the four Iranian-American hostages is another. These are relatively small asks, but have the advantage that Tehran could easily deliver on them. Given the state of the Iranian economy under sanctions, another $7 billion in waivers, on top of the $3 billion already issued, for a total of $10 bn. could well serve as sufficient motivation to coming to these understandings.
Moreover, any understandings at all are preferable to the war footing on which Trump placed the US regarding Iran. In the current situation, with hard liners on both sides eager to act as spoilers, such quiet, small steps may be the best that can be hoped for. With the Ukraine War sucking all the air out of the room for any other focus of US diplomacy, moreover, they are probably all Washington has the attention span for.