Alternatives to Failed Nuclear Diplomacy with Iran

Three months have passed since the last round of talks in Vienna over the future of the Joint Comprehensive Plan of Action (JCPOA). A breakthrough seemed imminent in June; yet, since then, discussions between Iran and the US, China, Russia, France, Germany and the UK have been on ice.

In the meantime, elections in Iran have brought a new, conservative administration into office, which is expected to take a more hard-line stance on issues of foreign policy, including the nuclear negotiations. President Ebrahim Raisi has repeatedly communicated his support for a return to the JCPOA talks in principle, but no date for a resumption of negotiations has been set. In Washington, the nuclear deal remains deeply unpopular among Republicans and some Democrats, while the ignominious US withdrawal from Afghanistan calls into question how much political capital the Biden administration has left to expend on foreign policy.

At the same time, Washington has made it clear that the negotiation process ‘cannot go on indefinitely’ and that Iranian progress on its nuclear programme may soon reach a point where a return to the JCPOA would not be sufficient to roll it back. In fact, the significant advances in Iran’s nuclear programme over the last two years and the shortcomings of the agreement that have come to light since its conclusion and slow unravelling likely mean that a return to the JCPOA at this point would need to be followed by further diplomacy to ensure that constraints on Iran’s nuclear programme meet US and European expectations.

In light of these challenges, and as the weeks since the last set of talks drag on, a return to the JCPOA appears increasingly uncertain. While it is still worth pursuing nuclear diplomacy with Iran, it is also worthwhile to consider what happens if the JCPOA and nuclear diplomacy collapse completely. While prediction is difficult and will depend on multiple factors, some outcomes are more likely than others.

In the scenario where efforts to revive the JCPOA – or replace it with an alternative agreement – fail, international sanctions on Iran will likely be reimposed. However, their impact on Iranian decision-making would probably be limited. Iran can be expected to further advance its nuclear programme, pushing the envelope of what it can credibly justify as civilian activity. Advancements in Iranian nuclear activities will in turn fuel regional tensions and risk military escalation between Iran and Israel, as the latter will look for other ways to curtail Iran’s nuclear advances. Should the JCPOA and nuclear diplomacy with Iran collapse, identifying ways to manage regional threat perceptions, as well as possible points of leverage to encourage Iranian cooperation, may help manage some of these risks in the short-term.

Sanctions Implications

A full collapse of the JCPOA would almost certainly result in the reimposition of UN Security Council (UNSC) and EU sanctions on Iran, most of which had been lifted under the 2015 agreement. London would likely follow suit – matching, if not exceeding EU measures. Existing US sanctions would remain in place and it would be reasonable to expect that Washington would re-double its efforts to economically isolate the Islamic Republic. US special envoy to Iran Rob Malley recently noted the possibility of imposing a suite of punitive responses on Iran – which are likely to include sanctions – should there be a failure to reach an agreement.

However, while the prospect of easing US sanctions may be a strong motivator for Iranian cooperation, reimposed European and international sanctions, as well as expanded American restrictions, are likely to have only limited practical impact on the already beleaguered Iranian economy. The expansive scope of existing US sanctions and other economic measures on Iran has meant that many businesses worldwide – including those that would provide the necessary financial infrastructure for trade with the Islamic Republic – already forego any engagement with Iran, making any further sanctions measures largely redundant. Reimposed UNSC sanctions may further discourage economic engagement with Iran by the few countries that have continued to trade with the country despite US sanctions – namely, China, but also others. However, it is far from certain that Beijing – or Moscow for that matter – would fully comply with a reimposed UNSC sanctions regime, particularly if they perceive it to be a mostly US-led effort to punish Iran.

A re-imposition of UNSC and EU sanctions is more likely to have political, rather than practical economic, implications. Such a reaction would signify a major step back in international efforts at cooperation with Iran and would isolate the country diplomatically. As such, while the possibility of some US sanctions removal can serve as important economic leverage in negotiations with Iran moving forward – either as part of efforts to return to the JCPOA or after the agreement’s collapse – UNSC and EU sanctions are likely to be most salient as a source of political, rather than economic, leverage.

Iranian Nuclear Activities

In the instance of a JCPOA collapse, it is reasonable to expect that Iran would continue to ramp up its nuclear activities – either to advance its nuclear capabilities for deterrent or prestige purposes, or to create additional leverage for future negotiations. In fact, even if talks resume, such activity will likely continue until a return to the JCPOA – or an alternative – is agreed upon, potentially to build up pressure and force concessions from the P5. Such a ramp-up may involve accumulation of greater stockpiles of enriched uranium and heavy water, the installation of greater numbers of centrifuges and more advanced models, the construction of new nuclear facilities, and R&D across the nuclear fuel cycle. The exact nature and extent of further nuclear activity will depend on Iran’s strategic objectives vis-à-vis the programme, over which there is still some debate in the expert community.

However, since Tehran continues to insist that it does not seek to develop nuclear weapons, any expanded nuclear activity will likely fall within the scope of what Tehran thinks it can explain away as being relevant to a civilian nuclear programme – even if not entirely satisfactorily. Iran appears unphased by European and US assertions that the country has no credible civilian need for some of its recent nuclear activity – namely, uranium metal R&D and production. Similarly, Iran is enriching uranium to levels much higher than necessary for civilian energy purposes. All this makes Iranian claims that its nuclear activities are for research and energy purposes increasingly hard to believe.

Additionally, a JCPOA collapse would also mean the termination of the extensive verification and monitoring regime that is built into the nuclear agreement. The JCPOA provides for more extensive monitoring of Iranian facilities, equipment and materials than countries would normally be subject to under the International Atomic Energy Agency’s (IAEA) Comprehensive Safeguards Agreements (CSA) and Additional Protocols (AP). As of February, Tehran has already denied the IAEA access that falls outside the country’s CSA. This includes any access that would have been granted by the AP to facilities which do not host nuclear material but may be used for R&D, as well as the ability of the IAEA to collect environmental samples outside declared locations. Iran has maintained video recordings of some activity, but continues to withhold IAEA access to the recordings until an agreement on a return to the JCPOA is reached. There is also no guarantee on if and for how long Iran will continue to collect and store these recordings.

Extensive IAEA access to the Iranian programme is not in itself sufficient to fully allay concerns over the nature and state of the programme. IAEA inspections cannot always account for undeclared or unexplained activity – as evidenced by the unresolved questions over past activity at a number of undeclared Iranian facilities. Nor will other countries base their threat perceptions and decision-making vis-à-vis the Iranian nuclear programme solely on IAEA reporting. However, curtailed transparency will raise concerns over Iranian intentions, make it more difficult to confirm the stated peaceful nature of the Iranian programme and provide fodder for proponents of military action against the Islamic Republic.

Regional Repercussions

As a result, the collapse of nuclear diplomacy with Iran risks an escalation in regional tensions. Such an escalation would likely be fuelled primarily by Israeli concerns over the country’s nuclear programme and may draw the US in as well. Over the past few years, Iran and Israel have engaged in an intensifying ‘shadow war’, conducting barely concealed covert operations against one another. Israel’s assassination of Iranian nuclear scientists last February, and Iran’s attack on the Israeli-owned Mercer Street tanker in the Gulf of Oman in August are only the most spectacular examples. This tit-for-tat seems likely to continue under any circumstances – perhaps even if the JCPOA is revived. However, there is a risk that this confrontation has already reached such an intensity that the collapse of nuclear diplomacy may be a sufficient trigger to precipitate an escalation into open military conflict, including direct attacks by Iran and Israel on each other’s soil. In fact, Israel’s Chief of General Staff has recently been reported as stating that Israel has ‘greatly accelerated’ its plans to deal with Iran’s nuclear programme. Furthermore, US and European disengagement from efforts to diplomatically resolve concerns over the Iranian nuclear programme and to build better relations with the Islamic Republic more broadly may grant Israel a greater sense of prerogative to take matters into its own hands.

A significant retaliatory attack on Israel would put pressure on Washington to come to the aid of its Israeli ally. There appears to be little appetite in the Biden administration to get involved in yet another conflict in the Middle East. However, for all of Washington’s declared intent to focus on other geopolitical challenges beyond the Middle East, it is difficult to imagine a scenario in which Washington fails to respond to a major Iranian attack on Israel. In fact, the US may seek to take limited military action against Iran even in the absence of a direct attack on Israel. During a recent White House meeting, Biden assured Israeli Prime Minister Neftali Bennet that the US could turn to ‘other options’ to limit the Iranian nuclear programme should nuclear diplomacy collapse.

The collapse of nuclear diplomacy with Iran is less likely to lead to open military conflict between Iran and the Gulf states. While the Gulf monarchies have previously expressed concerns over Iranian nuclear ambitions, their primary security concerns vis-à-vis Iran have always been more focused on Iranian activities in the region, including Tehran’s support for the Houthis in Yemen and destabilising behaviour in the waters of the Gulf and the Strait of Hormuz. It is possible that a collapse in nuclear diplomacy or an expanded Iranian nuclear programme may cause Tehran to become more aggressive in its regional behaviour. However, this is far from certain and would still be unlikely to lead to a full-out military confrontation with the Gulf.

While the monarchies may be able to sustain low-scale exchanges of hostilities with Iran and its allies abroad –in Yemen, Iraq or Syria – they do not appear confident in their ability to defend themselves against direct Iranian attacks on their territories. The drone and missile strikes against Saudi oil facilities in Abqaiq and Khurais in September 2019 – widely attributed to Iran – remain a painful memory. Even Bahrain, Saudi Arabia and the UAE – traditionally the most hawkish of the six members of the Gulf Cooperation Council in their attitudes towards Iran – have no interest in going to war with the Islamic Republic. Gulf leaders equally fear that, in the case of Israeli or US attacks on Iranian territory, Iran would follow through on its threats of retaliatory strikes against targets in the Gulf.

Managing the Fallout

To try to minimise the likelihood of military escalation in the region in the scenario of collapsed nuclear diplomacy, efforts should be directed towards managing regional security perceptions and identifying effective points of leverage to influence Iranian cooperation. A sustainable regional security framework is still a long way off. However, the establishment and expansion of bilateral communication channels, as well as cooperation on issues of mutual concern between Iran and other countries in the region may help to prevent miscalculation and create opportunities for some limited trust-building. This may include dialogue on matters such as managing the Afghan refugee crisis, the pandemic response, or climate change.

As noted above, the Gulf states have a particular interest in preventing an escalation of tensions, while also ensuring that Iranian nuclear and regional activity is checked. As such, they may be able to drive diplomatic efforts to strengthen regional trust and communication, while also deterring Iranian aggression. Recent Gulf initiatives at rapprochement with Israel may help secure Israeli support in case of an escalation in Iranian aggression and act as a deterrent against destabilising Iranian behaviour. At the same time, such initiatives may also help create communication channels between Israel and the Gulf states and give the former a stake in the latter’s security. This may help dampen any Israeli eagerness to resort to overt military force against Iran. For instance, this dual-objective seems to have been behind Abu Dhabi considerations in signing the Abraham Accords.

External powers, including Europe and the UK, can also play a role in managing regional escalations in the instance of a breakdown of nuclear diplomacy with Iran. Berlin, London and Paris have long emphasised that they want to see the JCPOA revived and to subsequently encourage a wider dialogue on regional security. This second objective remains relevant even if nuclear diplomacy collapses and, depending on the strategic objectives driving Iranian nuclear activity, may help temper Tehran’s perceived need to ramp-up its nuclear capabilities.

To make a meaningful contribution to regional security, however, Europe and the UK should sharpen their understanding of the various overlapping and diverging security perceptions of their regional partners vis-à-vis Iran. Some policymakers in Berlin, London and Paris were surprised by Riyadh, Abu Dhabi and Manama’s enthusiasm for Trump’s withdrawal from the JCPOA, failing to grasp that the Gulf states were less worried about a nuclear Iran, than one whose position in the region was boosted by sanctions relief and the diplomatic recognition the agreement implied. Encouraging partners in the region to engage in dialogue with Iran requires developing a more comprehensive grasp of what Saudi Arabia and the other Gulf states each see as the main issues to be resolved.

Threat perceptions over Iranian nuclear activities could be managed in the short term by making sure the programme stays transparent. Namely, Iran could be encouraged to return to a provisional implementation of the AP. While not as extensive as the JCPOA’s verification mechanisms, increased transparency under the AP may help dispel some concerns over Iranian capabilities and intentions while demonstrating sustained Iranian willingness to cooperate with the international community. An Iranian decision to turn over to the IAEA the tapes of its nuclear facilities collected since February would serve a similar purpose. However, even a transparent nuclear programme will provide cold comfort if Iran continues to significantly advance its nuclear activities and expertise.

Furthermore, securing concessions from Iran will surely become more difficult following a collapse of nuclear negotiations. However, some points of leverage will still exist. The negotiating parties can offer to defer or limit the reimposition of UNSC and EU sanctions if Iran agrees to provisionally implement the AP and deliver tapes of its facilities to the IAEA. As mentioned earlier, a snapback of UNSC and EU sanctions will provide limited leverage from an economic perspective, but the political implications of such a move may be sufficient to motivate some Iranian cooperation. Should Washington be feeling particularly generous, it could provide letters of comfort or waivers to businesses and financial institutions in Central Asia in exchange for continued Iranian application of the AP. The Raisi administration is expected to make strengthening regional trade a key component of its economic strategy; however, its ability to do so successfully will still depend to a degree on regional businesses’ perception of, and appetite for, US sanctions risk.

Iranian cooperation will ultimately depend on the role that the nuclear programme plays in Iran’s domestic, foreign and security policies – which is still not entirely clear. For instance, if the nuclear programme is meant to serve as a source of leverage on other foreign and security matters, transparency and limits on nuclear activities may be secured in exchange for meaningful concessions on these other issues. At the same time, cooperation may be rolled back in advance of key moments in negotiations to generate pressure – as some believe may be the case currently. Alternatively, if the intention is to clandestinely develop a nuclear weapons capability, or close to it, concessions may be more difficult to secure or may be superficial and short-lived. Iran may concede just enough to keep the international community engaged in diplomacy while continuing to advance its capabilities. As such, it will be important for the US and Europe to make clear that other options may be considered should diplomacy fail to yield meaningful progress.

In the meantime, the revival of the JCPOA, followed by additional nuclear and regional diplomacy with Iran, should remain a priority. The agreement is no panacea. It will not fully address concerns over the Iranian nuclear programme, nor will it significantly constrain Iran’s behaviour in the region or reassure the Gulf states and Israel over Iranian designs to undermine their national security. The agreement was not designed with these objectives in mind; it is even less likely to achieve them after three years of unravelling. However, the alternatives are not great – an almost certain ramp-up in the Iranian nuclear programme followed by an escalation in regional tensions. Using a mutual return to the JCPOA as a starting point – however imperfect – to walk back from these scenarios may be the best that Iran and the international community can currently hope for.