Opinion | Three Solutions to Biden’s Nuclear Stalemate with Iran

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Joe Biden has promised for months to reverse Donald Trump’s policy on Iran, saying Trump pulled out “recklessly” from the 2015 Joint Comprehensive Plan of Action (JCPOA)—the Iran nuclear deal—and that the rest of Trump’s approach was a “dangerous failure.”

The issue is becoming only more urgent. Three reports from the International Atomic Energy Agency this week highlight dangerous, albeit reversible, advances in Iran’s nuclear program. Iran will continue to roll back its implementation of the deal if it does not see economic benefits of the agreement restored.

But it’s far from obvious how to restart nuclear talks in the current environment, never mind revive the full deal. In his first press conference as U.S. Secretary of State last month, Antony Blinken declared that “if Iran comes back into full compliance with its obligations under the JCPOA, the U.S. will do the same thing.” However, Iranian officials have publicly questioned why they should be the first to move when the U.S. is the country that left. Iran contends that notwithstanding its moves to increase its capabilities and uranium stockpile, it remains in full compliance with the deal, interpreting paragraph 36 of the agreement to mean that Iran can “cease performing its commitments” should another party do the same.

In the current political context, Iranian rejection of Blinken’s proposal is understandable. The Trump administration eroded American diplomatic credibility, not only on the Iran nuclear deal, but across a wide range of international agreements. Even those Iranian leaders who remain strongly in favor of the nuclear deal are concerned that the Biden administration will lack the political will to provide Iran the full range of sanctions relief it was promised. Hardliners in Tehran continue to mock deal supporters for being naive.

Iranian President Hassan Rouhani once stated that the JCPOA would either persist as a “win-win” agreement for all parties or end up as a “lose-lose.” As the U.S. looks toward reviving it, it’s important to remember that Iran’s experience of sanctions relief following implementation of the JCPOA was disappointing. Lifting sanctions proved complex, and Iran’s economy had been thoroughly stigmatized. The Obama administration struggled to deliver Iran the economic benefits it had promised. In a nod to this bitter experience, Iran’s Supreme Leader Ali Khamenei recently stated that “getting sanctions lifted has failed” and that Iran should instead seek to “nullify” sanctions pressure.

But if Iran stands pat, the U.S. is unlikely to be the first to restore its own commitments under the deal. Moving first would go a long way to restoring American credibility with European allies and the wider international community and would be consistent with Biden’s vow to restore multilateral diplomacy. But any such move will worry some U.S. allies and members of Congress about the Biden administration’s willingness to drive a tough bargain with Iran, both on its current nuclear program and on future regional security issues such as ballistic missiles.

With neither Washington nor Tehran aiming to be the first to come back into full compliance with the deal, Biden needs to find a way to do something artful and difficult: Get both sides to restore compliance at the same time. This approach may be the most palatable option, but it will require significant technical discussions between the two sides. Iranian Foreign Minister Javad Zarif has indicated Iran would be open to such an approach, stating that it may be possible to “choreograph” the mutual restoration of commitments with the Biden administration.

But Biden must open the door for these direct talks. His first step must be significant enough to restore belief in the original “win-win” logic of the deal and offer Iranian officials a credible rationale for engagement with the U.S. At the same time, it may be limited enough to keep the U.S. outside of the deal, offering him political cover with critics and underscoring the necessity for Iran to also take reciprocal steps.

Taking this kind of first step could, in its way, be a signal of strength for Biden: He’d be showing domestic opponents of the JCPOA that he will not be bullied into compromising his Iran policy. The fight over the appointment of Robert Malley as Iran envoy showed that hawks will “play dirty” to undermine the credibility of Biden’s outreach to Iran. Biden ought to nip this kind of cynical politics in the bud.

If Biden goes go this route, officials in the U.S., Europe, and Iran are currently deliberating what a reasonable first move could be. Our conversations with officials suggest that there is awareness that breaking out of the political deadlock may require Biden to be bold. He has a few options.

First, the Biden administration could restore temporary waivers that enable Iran to sell oil while U.S. sanctions remain in place. Iran’s oil production and exports are rising faster than projected despite the Covid-19 crisis and U.S. sanctions. This trend has reduced the perceived urgency of restoring the nuclear deal among key political stakeholders in Tehran who may gain more power after the upcoming Iranian presidential election. The Biden administration’s efforts to re-enter the JCPOA would be best served by making already increasing oil sales once again subject to the “win-win” logic of the nuclear deal. Iran’s earnings from these oil sales would be accrued in escrow accounts and subject to strict oversight as per the waiver terms. Revenues would be used by Iran for sanctions-exempt trade with the country in which the funds are held. Such a step would serve to remove a key piece of tension with U.S. allies such as South Korea, Japan, and India whose energy security has been impacted by U.S. sanctions on Iran.

Second, the Biden administration could support Iran’s loan request for funds from the International Monetary Fund. Iran’s request has languished despite the IMF’s technical assessment that Iran qualifies for financial support to address the balance of payments crisis created by the pandemic. Iran has indicated it is ready for these funds to be disbursed to its accounts outside of the country to be used for paying for sanctions-exempt imports. The funds would not flow directly into Iranian government coffers, but rather be used to address trade deficits. The Biden administration should grant this loan as part of its commitment to address the humanitarian impact of sanctions and a wider push to encourage the IMF to use its full financial capacities to address the ongoing economic crisis brought on by the pandemic.

Finally, a third option could be easing Iran’s access to its existing foreign exchange reserves. Presently, Iran has free and ready access to an estimated 10 percent of its reserves, a circumstance that has placed extraordinary pressure on Iran’s currency and generated high levels of inflation that harm ordinary Iranians. Iran has been engaged in fraught negotiations with numerous countries to try and get access to frozen assets, who continue to look to the U.S. Treasury Department for the final say. The Biden administration could give these countries, including allies Germany and South Korea, the approvals and guidance necessary to enable both central and commercial banks to readily execute payments on behalf of Iranian account holders. As with the oil waivers and IMF loan, these payments can be restricted to sanctions-exempt trade, a key outcome of which would be lower rates of inflation.

Should Biden take any of these three steps, Iran can be expected to cease ramping up its nuclear program. Neither country would be fully implementing its commitments under the JCPOA, but an opportunity will have been created for new talks in the spirit of “win-win” diplomacy. There is no guarantee that these talks, and the complicated choreography of JCPOA restoration, will succeed. But Biden needs to give himself a shot. After the last four years, timid gestures will fail to do that. It’s time to be bold.

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