Verification and the Credibility of Sanctions Relief for Iran
Following a week of speculation about the Biden administration’s foreign policy priorities, Iran’s Supreme Leader, Ali Khamanei, gave an important speech today in which he outlined Tehran’s “final” stance on US re-entry into the nuclear deal. Khamenei kept the door open for the US to rejoin the Joint Comprehensive Plan of Action (JCPOA), while declaring that the Biden administration must “completely lift” US sanctions before Iran returns to its nuclear deal commitments in full.
Despite this stance, it appears likely that the US and Iran can find a way to “choreograph” a mutual restoration of their obligations under the nuclear deal. What was significant about Khamenei’s speech was not his declaration on sequencing, but rather the introduction of a new requirement for any choreography that would enable the US to re-enter the agreement.
While the sequencing tango was a major part of the negotiations that led to the JCPOA and of Iranian concerns over the optics of that sequencing, Khamenei’s specific concern over the verifiability of sanctions relief is new. To understand the context of this concern speech, it is useful to refer back to a speech made by then Treasury Secretary Jacob Lew five years ago, just a few months after the implementation of the JCPOA.
Taken together, these two speeches point to a fundamental—if overlooked—asymmetry within the JCPOA. Iran’s commitments under the nuclear deal are subject to extensive verification. The International Atomic Energy Agency (IAEA) has in place the world’s most extensive inspection regime to keep tabs on Iran’s nuclear program. In return for compliance with limitations on its nuclear program, the JCPOA parties committed to the lifting of a wide range of UN, EU, and US sanctions. But there is no verification mechanism in place to ensure that sanctions relief has been implemented “in practice,” and not just “on paper”—a distinction Khamenei highlighted today.
Iran’s experience with sanctions relief under the JCPOA has been bitter. Even prior to the Trump administration's reimposition of secondary sanctions in May 2018, Iran had felt that it was not receiving the full benefits of sanctions relief. There were a number of reasons for this, but the primary barrier to increased trade and investment was the reluctance of major banks to facilitate transactions or provide financing for Iran-linked projects. As a result, most of the milestone deals signed around the time the JCPOA was implemented—including orders for Boeing and Airbus aircraft, joint ventures with automakers Renault, Peugeot, and Daimler, energy deals with Total and CNPC, and rail projects with Siemens and Alstom—hit a roadblock even before Trump was elected to office and the future of the nuclear deal was thrown in doubt. Obama administration officials acknowledged these challenges at the time. Lew and Secretary of State John Kerry were even drafted in to provide reassurances to global banks and economic actors about the reliability of US sanctions relief commitments. But their efforts largely failed.
In March 2016, just a few months after the implementation of the JCPOA, Lew gave a major speech on the future of US sanctions policy—sanctions lifting was a key focus. He noted how the “experience with Iran demonstrates how difficult [sanctions lifting] can be, essential as it is.” Commenting on the quid-pro-quo of the nuclear deal, Lew noted that “since Iran has kept its end of the deal, it is our responsibility to uphold ours, in both letter and spirit.” He cited the “global outreach” that the Treasury Department was undertaking to provide guidance to foreign business and governments on how to conduct compliant trade with Iran. But reading Lew’s remarks today, it’s clear that he knew at the time that this guidance would prove insufficient and that a dilemma had presented itself for US foreign policy. “Since the goal of sanctions is to pressure bad actors to change their policy, we must be prepared to provide relief from sanctions when we succeed. If we fail to follow through, we undermine our own credibility and damage our ability to use sanctions to drive policy change,” he warned. Not only would the Obama administration fail to deliver sanctions relief in the manner envisioned, but the Trump administration would take the betrayal one step further, reimposing secondary sanctions despite Iran’s verified compliance with its commitments under the deal.
It is the Biden administration’s undermined credibility, five years in the making, that led the Supreme Leader to insist that the US must lift sanctions “in practice, not verbally or on paper” and that Iran would seek to “verify” the implementation of sanctions lifting before fulfilling its own commitments. Importantly, the Supreme Leader believes that verification is possible, stating that if the international community wants “Iran to return to its obligations under the JCPOA,” it will do so after the US verifiably lifts sanctions.
The focus on verification suggests that Iranian leaders see dealing with the United States as a technical challenge. Iran is not going to take it on faith that the Biden administration will make good on its obligations—it will seek to ascertain that obligations have been met. This is an interesting echo of how President Obama justified the nuclear deal to the American public in July 2015, insisting that the deal was built “not on trust, but on verification.” The key difference, of course, is that the US had the means by which to perform its verification—the authority and access afforded to IAEA inspectors put American stakeholders at ease that Iran was making good on its commitments. It would seem that some effort needs to be made to give Iran similar tools of verification, both for its own sake, but also for the sake of Europe, Russia, and China, whose economic relations with Iran so vastly outweigh those of the United States. It is through these relations that the economic benefits of the deal must flow.
The Biden administration should work closely with the other JCPOA parties to devise new mechanisms to verify that sanctions relief is being successfully implemented and identify where relief may be following short. One option might be to establish a new panel of experts or special rapporteur at the United Nations responsible for gathering, interpreting, and assessing evidence on the implementation of sanctions relief.
There are several reasons why the United Nations may be the ideal organisation to establish such a verification mechanism. First, the nuclear deal is enshrined as a matter of international law in United Nations Security Council Resolution 2231, establishing an obligation for “promoting and facilitating the development of normal economic and trade contacts and cooperation with Iran.” Second, a United Nations agency, the IAEA, is already involved in verifying half of the nuclear deal’s quid-pro-quo. Third, Iran has itself turned to United Nations bodies to seek recourse for the failure of the United States to hold up its end of the nuclear deal, for example by filing suit at the International Court of Justice against the US. Fourth, the issue of sanctions relief impacts Iran’s relationships with the wider international community, and not just its relations with the United States or the other parties to the JCPOA. Countries which are not parties to the deal may not wish to raise politically sensitive concerns over the impact of sanctions on their bilateral economic relations with Iran in a forum that will be dominated by the United States. The UN offers as much impartiality as is possible in the international system. Finally, the issue of credible sanctions relief is not relevant to the Iran nuclear deal alone, but will be of concern for the growing number of economies subject to restrictive measures. A UN verification capacity could prove important for countries such as Venezuela, Cuba, Syria, and North Korea should a political breakthrough lead to the prospect of sanctions relief in any of those cases.
Of course, setting up a new verification mechanism for sanctions relief won’t be possible in the short period of time that Tehran and Washington have to save the nuclear deal. But should the Biden administration acknowledge this concern and set in motion steps to create a verification mechanism, it may reassure stakeholders in Tehran that the bitter experience of the JCPOA is not bound to be repeated. This would also be consistent with the interim step of “freezing” Iran’s moves away from the nuclear deal—an approach that is reportedly being considered by the Biden administration. The provision of economic relief, whether in the form of oil waivers or eased access to foreign exchange reserves, would offer an instance where Iran could “verify” that the US has made good on a promise of sanctions relief prior to the delicate choreography of mutual restoration of the nuclear deal. Such a step would enable Khamenei and other voices in Iran to suggest that a new condition of JCPOA re-entry, set by Iran, had been provisionally met, opening the door to talks around fuller sanctions relief.
What’s clear is that Iran to wishes to build a deal not on trust, but on verification. The international community ought to afford Iran the means to do so.
Photo: IRNA
