Nov 27th 2014

Time Is Running Out for Iran

by Daniel Wagner

 

Daniel Wagner is the founder and CEO of Country Risk Solutions and a widely published author on current affairs and risk management.

Daniel Wagner began his career at AIG in New York and subsequently spent five years as Guarantee Officer for the Asia Region at the World Bank Group's Multilateral Investment Guarantee Agency in Washington, D.C. After then serving as Regional Manager for Political Risks for Southeast Asia and Greater China for AIG in Singapore, Daniel moved to Manila, Philippines where he held several positions - including as Senior Guarantees and Syndications Specialist - for the Asian Development Bank's Office of Co-financing Operations. Prior to forming CRS he was Senior Vice President of Country Risk at GE Energy Financial Services. He also served as senior consultant for the African Development Bank on institutional investment.

Daniel Wagner is the author of seven books: The America-China Divide, China Vision, AI Supremacy, Virtual Terror, Global Risk Agility and Decision Making, Managing Country Risk, and Political Risk Insurance Guide. He has also published more than 700 articles on risk management and current affairs and is a regular contributor to the South China Morning Post, Sunday Guardian, and The National Interest, among many others. (For a full listing of his publications  and media interviews please see www.countryrisksolutions.com).

Daniel Wagner holds master's degrees in International Relations from the University of Chicago and in International Management from the Thunderbird School of Global Management in Phoenix. He received his bachelor's degree in Political Science from Richmond College in London.

Daniel Wagner can be reached at: daniel.wagner@countryrisksolutions.com.

Just as has been the case every time nuclear negotiations between Iran and the West break down without agreement on fundamental issues, Supreme Iranian leader Khameini resumes lambasting the U.S. and Israel, and conservatives in the Iranian government rejoice. It is a well-rehearsed diatribe. Many of those conservatives control a significant portion of the Iranian economy, and stand to lose if the sanctions currently in place against Iran are lifted. For at least the next seven months, they can relax.

Those Iranians conservatives oppose any deal that would restrict the country's ability to continue its nuclear program as it currently exists. They understand that, as a result of the imposition of the June 2015 extended deadline, the chance that an agreement will be reached is virtually nil, as a Republican controlled Congress will almost certainly actively oppose it. As the U.S. government has for many years said that a nuclear armed Iran is unacceptable, either an agreement will be reached or the U.S. will have no choice but to bomb Iran. The Republican hawks in Congress would be pleased with that outcome.

What the Obama Administration has been negotiating with the Iranians is that Iran must:

• Halt all enrichment above 5% and dismantle the technical connections required to enrich above 5%.
• Dilute below 5% or convert to a form not suitable for further enrichment its entire stockpile of near-20% enriched uranium before the end of the initial phase.
• Halt progress on its enrichment capacity by not installing additional centrifuges of any type or installing or using any next-generation centrifuges to enrich uranium.
• Leave inoperable about half of installed centrifuges at Natanz and three-quarters of installed centrifuges at Fordow, so they cannot be used to enrich uranium.
• Limit centrifuge production to those needed to replace damaged machines, so Iran cannot use the six months to stockpile centrifuges.
• Not construct additional enrichment facilities.
• Not increase its stockpile of 3.5% low enriched uranium, so that the amount is not greater at the end of the six months than it is at the beginning, and any newly enriched 3.5% enriched uranium is converted into oxide.
• Not commission or fuel the Arak reactor, halt the production of fuel for Arak, halt additional testing of fuel for Arak, not install any additional reactor components at Arak, and not transfer fuel and heavy water to the reactor site.
• Not construct a facility capable of reprocessing.

By getting to keep what it has, and not adding to it, Iran is in essence being rewarded for resisting Western economic and political concessions, clandestinely building up its nuclear program, and lying about the nature and scope of its nuclear program. In 2003, Iran had fewer than 200 centrifuges; today it has more than 19,000. Under the current framework, they get to keep their ability to process uranium and plutonium, they get to keep Arak in place, and they get to keep most of their existing centrifuges.

Israeli Prime Minister Netanyahu is exactly right: any agreement, as currently envisioned, does very little to prevent Iran from retaining the ability to build its nuclear program. Should Iran be found non-compliant, the West has the ability to re-implement the sanctions it has lifted in return for this agreement, but Iran is positioned to simply carry on where it left off. It similarly retains the ability to continue to engage in clandestine activity in those facilities and areas not included in the agreement -- and Iran has proven masterful at deception in that regard.

"Israeli Prime Minister Netanyahu is exactly right: any agreement, as currently envisioned, does very little to prevent Iran from retaining the ability to build its nuclear program."

I find myself wondering why, after all this time, there seemed to be such urgency to arrive at a deal with Iran. And, in doing so, why did the West agree to something that merely stops further progress, rather than either ratcheting down the program or removing key components? Is the West so desperate to halt Iran's march to the finish line that it was happy to settle for something that, for the time being at least, stops Iran's program where it is?

And why does the West continue to be so enamored with 'moderate' Iranian president Rouhani? According to the Washington Post, which reviewed Rouhani's memoirs during his time as the country's chief negotiator on nuclear policy between 2003 and 2005, "...The man is an establishment figure with a deep commitment to the Islamic republic and its nuclear aspirations, a man who will beguile the West and preserve as much advantage as possible for Iran." To borrow Netanyahu's phrase, he really does seem to be a wolf in sheep's clothing.

The ongoing state of affairs shows that for all its collective effort, short of military action, the West remains powerless to eliminate Iran's nuclear program, and that Iran remains in the driver's seat. The P5+1 appears to have jumped through Iran's hoops, rather than demanding truly substantive and meaningful concessions from Iran. Iran has proven capable of building a nuclear program with all the world against it. Continuing to do so clandestinely while complying with an agreement that leaves its infrastructure in place should be no problem at all.

So where does that leave us? Given that the latest failure to achieve an agreement will result in a coalescing of conservative forces in both Iran and the U.S., and given that the Obama Administration is now a lame duck for the remainder of its time in office, there appears to be less likelihood than ever that an agreement will be reached - in June or following the next deadline extension.

Some believe that Netanyahu's ongoing threat to bomb Iranian nuclear facilities is little more than diplomatic bluster, and that, in any event, Israel is not capable of doing the job alone. If that is true, each subsequent failure to reach an agreement with Iran makes it likelier that the U.S. will finally run out of patience and come the realization that Iran has no intention of reaching an agreement. A lame duck Obama presidency, combined with a Republican controlled Congress whose hawks run the foreign policy show, may prove to be the ideal mix of ingredients to make the idea of bombing Iran's nuclear facilities closer to reality. Time is running out for Iran.



Daniel Wagner is CEO of Country Risk Solutions and author of "Managing Country Risk". For Country Risk Solutions, please click here.

You can follow Daniel Wagner on Twitter: www.twitter.com/countryriskmgmt




 


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