Iran's Partial Withdrawal from the Nuclear Agreement: What are the Consequences?

On Wednesday, May 8, exactly one year after President Donald Trump announced that the United States was withdrawing from the nuclear agreement with Iran, the country’s president Hassan Rouhani declared that Iran would stop complying with two of its commitments under the agreement, officially known as the Joint Comprehensive Plan of Action (JCPOA).

The decision [Persian link] was made by Iran’s Supreme National Security Council and as such would have been approved by Supreme Leader Ayatollah Ali Khamenei. President Rouhani also notified leaders of the United Kingdom, France, Germany, China and Russia, the other parties signed up to the JCPOA.

What are the Two Commitments?

Unlike the US, Iran has not totally renounced the JCPOA; but starting on May 8, Rouhani said that Iran would begin building stockpiles of low enriched uranium at Natanz enrichment facilities, and storing heavy water used in nuclear reactors, including the Arak reactor, that could give Iran a source of bomb-grade plutonium.

Under the JCPOA, Iran was committed to limiting its stockpile of enriched uranium to a maximum of 300kg of 3.67 percent enriched uranium and to export anything over this limit. Russia was the main customer for the excess production and compensated Iran by providing it with raw materials such as uranium ore.

The International Atomic Energy Agency is responsible for monitoring Iran’s stockpile of enriched uranium on a daily basis and for sending four reports a year to its board of governors and the member-states of the United Nations Security Council.

Iran had also committed to keeping its volume of heavy water below 130 tons. During the two and a half year after the JCPOA went into effect, in an unprecedented move since the 1979 Islamic Revolution, the United States purchased 32 tons of excess heavy water from Iran for $8.6 million — the biggest trade deal between the two countries after diplomatic relations collapsed in 1980.

But after that one trade with the US, Iran could not find another major buyer for its excess heavy water. To keep its commitment under the deal, Iran reached an agreement with the Sultanate of Oman to store its excess heavy water in an Omani port city.

What were the American Commitments?

American laws prohibit commercial transactions with Iran involving nuclear material and equipment. Firms that breach these prohibitions can be fined and its employees can even be jailed. The US has extended the reach of these laws beyond its own borders and prosecutes and/or sanctions violators even if they are citizens of other countries. After the JCPOA, some of these laws were suspended and the US committed to not prosecute buyers of Iran’s enriched uranium and heavy water provided they had been issued waivers by the United States.

The Trump Administration issued such exemptions up until a year before leaving the JCPOA; more recently, however, it has stopped issuing them. Now the US can technically impose new sanctions on Russia or Oman for receiving excess enriched uranium and heavy water from Iran. If this were to happen, Iran had two choices: either stop producing enriched uranium and heavy water, or reject the ceilings set by the JCPOA. Iran has decided to take the second option.

Why these ceilings for enriched uranium and heavy water?

The objective of the JCPOA was to allow Iran to continue peaceful nuclear activities while limiting as much as possible its capability to make nuclear weapons. Restricting uranium supplies to 300kg of 3.67 percent enriched, and capping heavy water supplies at 130 tons, denied Iran the necessary precursors to make an atomic warhead at short notice.

Now what?

In his next report to the 35 member of the International Atomic Energy Agency, including the United States, which is a permanent member, Yukiya Amano, the IAEA’s Director-General, will inform members that Iran has reduced its commitments under the terms of the JCPOA. If the remaining parties to the agreement choose to start the arbitration process, the issue can be placed on the Security Council agenda in less than three months.

Has Iran violated the nuclear agreement?

Withdrawing from any provision of the JCPOA is considered a violation of the agreement. In other words, discarding commitments, whether small like those announced by President Rouhani or total like the US withdrawal, are substantively the same; both mean that the JCPOA has been broken.

Is there a way back?

Iran and all other parties to the JCPOA can stop fulfilling their commitments, in whole or in part, but by doing so they give other parties the right to retaliate. Iran has argued that the US withdrawal from the deal, the re-imposition of American sanctions and the inability of European parties to the agreement to compensate for these sanctions, give the Islamic Republic the right to reciprocate. When announcing Iran’s partial withdrawal, Rouhani gave the remaining parties 60 days to help Iran “reap our benefits,” especially in petroleum exports and banking transactions, hit by American sanctions.

Rouhani threatened that if these demands are not met within 60 days, Iran would go even further and would withdraw from more of its JCPOA commitments. One such action after the 60 day period, Rouhani said, might be to begin enriching uranium to a level higher than 3.67 percent.

In response, France’s Defense Minister Florence Parly told French media that European signatories to the agreement were doing everything possible to keep the deal alive, but that there would be consequences, and possibly sanctions, if Iran failed to adhere to the agreement. China and Russia, meanwhile, both blamed Washington's original withdrawal for the current situation.

Rouhani emphasized that Iran was not pulling out of the JCPOA. "We do not want to leave the agreement. All the peoples of the world should know that today is not the end of the JCPOA; it is a new step within the framework of the JCPOA," he said. However, said Rouhani, the five other parties to the agreement would face a "very decisive reaction" if Iran's nuclear case was referred to the UN Security Council.

 

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Decoding Iran’s Politics: The 12-Point US Ultimatum, July 6, 2018

Can Iran Legally Close the Strait of Hormuz?, July 5, 2018

Khamenei Calls for Immediate Action on Nuclear Enrichment, June 6, 2018

The Nuclear Deal: Will Khamenei Get What he Wants?, May 29, 2018

Khamenei’s Eight Conditions for Talks with Europe, May 25, 2018

The 12 Demands of Pompeo's New Iran Strategy, May 21, 2018

The JCPOA: A Missed Opportunity, May 17, 2018

What are Iran’s Choices as US Abandons the Nuclear Deal?, May 9, 2018

What you Need to Know About Trump and the Nuclear Deal, May 8, 2018