Russia obstructs Iran nuclear deal as the Kremlin
frets over its oil income
Moscow makes last-minute demands as Tehran promises to
boost oil production and market shuns Russian crude.
BY
STEPHANIE LIECHTENSTEIN
March 5,
2022 11:36 pm
VIENNA —
Moscow is throwing up last-minute demands that could scupper an international
nuclear deal with Iran — and the timing is unlikely to be coincidental as the
Kremlin frets about the growing threat to its critical oil revenue after its
invasion of Ukraine.
Hopes had
been high that international negotiators from the permanent five members of the
U.N. Security Council, Germany and the EU would be able to secure a deal with
Tehran on Saturday to put strict limits on Iran’s atomic work in exchange for
sanctions relief for the Islamic Republic.
Such a deal
would bring significant volumes of Iranian crude oil back to global energy
markets in the months ahead, and that could spell trouble for Russian President
Vladimir Putin. The return of Iranian supplies would help offset market turmoil
and price spikes if the West were to ramp up its sanctions against Moscow over
the war in Ukraine and ban Russian crude sales.
Oil sales
are critical to Russia’s budget. Although Western countries have not yet
directly targeted oil and gas, they have said they are prepared to do so and
many oil traders have already started imposing an effective embargo.
At the Iran
talks, Russia is demanding guarantees from the U.S. that the sanctions
targeting the Kremlin over its invasion of Ukraine would not hinder its trade
with Iran.
This fresh
demand, which one Western senior official called a potential “trap,” could
up-end negotiations aimed at securing a return to a 2015 accord on Iran’s
atomic work. It has created yet another twist in a long-running saga that has
seen the nuclear talks nearly fall apart over and over.
Russia
would play an important role in implementing a renewed Iran agreement, which
negotiators say they are close to achieving after 11 months of talks. The plan
would be for Moscow to ship excess enriched uranium out of Iran to Russia and
support the conversion of Iran’s Fordow nuclear plant into a research facility,
among other things.
But with
the international community moving to economically sever ties with Russia
following its assault on Ukraine, Moscow says it wants assurances that it will
still be able to benefit from a revived Iran accord. “We have asked for a
written guarantee … that the current process triggered by the United States
does not in any way damage our right to free and full trade, economic and
investment cooperation and military-technical cooperation with the Islamic
Republic,” Russian Foreign Minister Sergey Lavrov said on Saturday.
Key role
The
question is whether Moscow is actually demanding protection from sanctions in
order to fulfill its key role in implementing a restored nuclear deal, or if
it’s a ploy to demand broader sanctions relief, officials said. Western
officials appeared to still be scrambling to understand which one of the two
scenarios was at play.
“If they
stretch the domain of sanctions exceptions, we will get a political and not a
technical problem, and that could be lethal for the agreement,” the senior
official said.
Another
senior Western official said that if Russia’s demands went beyond sanctions
waivers to fulfill the role in implementing a restored nuclear deal, they could
potentially “take hostage the entire agreement and put at risk their
relationship with China.” Beijing is already importing significant amounts of
Iranian oil and will do even more so under a restored nuclear accord.
The U.S.
State Department said sanctions over Ukraine are “unrelated” to the Joint
Comprehensive Plan of Action (JCPOA), as the Iran deal is formally known. “The
new Russia-related sanctions are unrelated to the JCPOA and should not have any
impact on its potential implementation,” a U.S. State Department spokesperson
said. “We continue to engage with Russia on a return to full implementation of
the JCPOA. Russia shares a common interest in ensuring Iran never acquires a
nuclear weapon. ”
The threat
of additional Ukraine-related sanctions already is having an impact on
Russian’s oil revenue. Almost three-quarters of Russian crude trade is frozen
in the wake of the Ukraine invasion, Bloomberg reported, citing consultant
Energy Aspects. Russia has been exporting about 5 million barrels a day, equal
to about 5 percent of global consumption, it said. Iran, meanwhile, has
ambitions of supplying well over 2 million barrels per day.
“It’s hard
to say whether this is a technical hiccup or a political pivot,” said Ali Vaez,
Iran Project Director at the International Crisis Group. “The JCPOA’s collapse
is not in Russia’s medium to long-term interest, even if in the short-run it
might help keep the global energy prices up as a means of imposing pressure on
the West,” Vaez said.
“As soon as
nuclear negotiations in Vienna are concluded, we can reach our maximum oil
production capacity in less than one or two months,” Iran’s oil minister, Javad
Owji, said on Thursday, according to a Reuters report citing SHANA, the
official oil ministry news agency. Iran produced 2.4 million barrels per day on
average in 2021, and plans to increase that to 3.8 million barrels if
restrictions are lifted.
Europe and
the U.S. were beginning to worry about soaring oil prices as a result of
Russia’s incursion against Ukraine. Iran analyst Henry Rome at the Eurasia
Group argues that “the war puts intense pressure on Western policymakers to
secure a deal that brings more Iranian oil onto the market to temper high oil
prices and potential further sanctions and disruptions.” The calculation is
that a revived Iran deal could help to stabilize the energy market, analysts
say.
In recent
days, Western officials have said negotiators were within reach of an
agreement, insisting only a few outstanding issues needed to be resolved. Among
the outstanding issues are the scope of sanctions relief, including Iran’s
demand that the Islamic Revolutionary Guard Corps be taken off Washington’s
terror sanctions list.
“We are
very close to an agreement,” said British chief negotiator Stephanie Al-Qaq on
Twitter before departing to London for what appeared to be final consultations.
“Now we have to take a few final steps.”
Meeting
postponed
Negotiations
had advanced to such a stage that preparations to close the deal were even
visible outside Palais Coburg, the main venue of the talks in Vienna. Police
have begun to erect additional barricades around the luxury hotel in
preparation for a meeting of ministers from Russia, China, Iran, Britain,
Germany and France. Invitations were even sent out more than a week ago in
anticipation of a formal adoption of a restored deal at ministerial level; that
meeting is now postponed.
Western
negotiators have warned over the past few months that Iran was only weeks away
from having enough fissile material for one nuclear weapon. They argued that
time was running out for a successful conclusion of the talks as Iran’s nuclear
advances were eroding the very basis of the JCPOA.
Underscoring
this point, the International Atomic Energy Agency (IAEA) said in its latest
confidential quarterly report circulated on March 3 to member states and seen
by POLITICO, that Iran had doubled its amount of 60 percent enriched material.
That’s “a hair’s breadth away” from weapons grade, Eurasia Group’s Rome wrote
in a note.
The Russian
invasion of Ukraine also loomed large over the final days of the negotiations
with officials emphasizing the need to quickly seal the deal as they were
beginning to scramble with the fallout of this aggression on European
territory.
While
diplomats were able to shield the sensitive talks from global developments
during the past eleven months, the recent scale of the Russian aggression in
Ukraine made close interaction between Russia’s chief negotiator Mikhail
Ulyanov and U.S. Special Envoy for Iran Robert Malley more difficult by the
hour.
Meanwhile,
Iran agreed to provide the IAEA with documents that will answer questions into
its past nuclear weapons program, potentially removing a major hurdle for the
restoration of the nuclear deal. That agreement was reached on Saturday during
a visit by IAEA Director General Rafael Grossi to Tehran.
In a joint
statement, Grossi and Iran’s nuclear chief Mohammad Eslami said they agreed to
“accelerate and strengthen their cooperation and dialogue aimed at the
resolution of the issues” with the aim of concluding the probe by June, when
Grossi will report to the IAEA Board of Governors.
Iran had
demanded that the probe into the past nuclear weapons program be closed once
and for all as a precondition for Tehran returning to the 2015 nuclear deal.
The investigation by the UN nuclear watchdog looks into the origin of
decades-old uranium traces found by IAEA inspectors inside Iran at several
undeclared sites in 2019 and 2020.
Upon his
return from Tehran on Saturday evening, Grossi told reporters at Vienna airport
that “there is no artificial deadline, there is no pre-defined outcome,”
highlighting that the IAEA would continue to press Iran on those questions also
beyond the June deadline should Tehran’s answers be inconclusive.
The IAEA
has thought for some time that the undeclared sites could have been active in
the early 2000s and insisted that it needed credible answers from Iran on the
origin of the traces. The traces were found by inspectors on the ground after
the IAEA reviewed intelligence material stolen by Israeli Mossad agents in a
high-risk operation inside Iran in 2018.
The Joint
Comprehensive Plan of Action was originally agreed upon in Vienna in 2015 by
the five permanent members of the U.N. Security Council – the U.S., Britain,
France, Russia and China – plus Germany. The European Union acted as mediator
and coordinator of the talks.
Former U.S.
President Donald Trump withdrew the U.S. from the agreement in 2018 and
re-imposed nuclear-related sanctions along with new ones related to terrorism
and human-rights abuses. In response, Iran began to incrementally ramp up its
nuclear program beyond the limits of the JCPOA. Iran insists that its nuclear
program is entirely for peaceful purposes.
Nahal Toosi contributed reporting.
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