Stay in the Iran nuke deal to keep America's seat at the negotiating table

Stay in the Iran nuke deal to keep America's seat at the negotiating table
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Earlier this week, Israeli Prime Minister Benjamin Netanyahu released thousands of intelligence documents showing that Iran had an extensive nuclear program leading up to the 2015 JCPOA. These documents purportedly demonstrate that Iran had lied in claiming that in 2003 it had not been developing nuclear weapons. Netanyahu claimed the documents showed Iran could not be trusted now or in the future. This revelation should come as a surprise to no-one, and it makes clear the Iran nuclear agreement should not be abandoned.

The Israeli disclosures, in fact, emphasize the need to continue the agreement, while at the same time working with allies and partners to strengthen it. This is not a perfect agreement, but it is premised on the assumption that Iran’s compliance with the deal should not be taken at face value. The JCPOA provides for an extensive inspection regime that lessens the likelihood of Iran working on nuclear weapons during the course of the agreement.

The IAEA, which is responsible for inspections, asserts that Iran is fully compliant with its terms. To walk away from the Agreement increases the chance that Iran will return to its nuclear ambitions and keep its efforts hidden from the international community.

A second compelling reason to remain in the agreement is that there is no reasonable Plan B. If Iran were to restart its nuclear program, the ultimate alternative would be to attack Iran’s nuclear facilities with limited chances of success. Such an action would risk another U.S. war in the region with few allies and would create even greater chaos in the Middle East.

Perhaps the administration believes that renewed U.S. sanctions could both keep Iran in the deal and force it to curb its other nefarious activities. However, it’s just not as simple as turning on the sanctions and turning off global trade with Iran.

Since the nineties, sanctions have generally prohibited U.S. companies from doing business with Iran, and those sanctions remain largely in place today in response to Iran’s support for international terrorism and other ongoing bad behavior. The sanctions developed during the course of the Obama administration sought to keep foreign companies out of Iran by threatening their access to the U.S. market if they engaged in specified activities in Iran.

It is these latter, “secondary” sanctions that Trump is threatening to reactivate by failing to issue waivers. That threat was effective when accompanied by broad international consensus over Iran’s nuclear program, a massive diplomatic effort by the United States, and encouragement from other governments, albeit sometimes begrudgingly, that their companies should toe the line and follow U.S. sanctions.

If the United States were to reimpose secondary oil and financial sanctions, it would face huge resistance from other countries that remain supportive of the JCPOA and hope to keep Iran in the deal. We would find ourselves isolated from the other signatories to the agreement, while at the same time trying to compel their companies to terminate business in Iran.

It’s likely the renewed sanctions would have a dampening effect, particularly on investment in Iran, but also could lead to a total break with the EU, China, Russia, and other countries. Foreign governments and companies could simply ignore the risk of U.S. sanctions given the lack of international consensus and hostility to the U.S. approach. The United States would be left with an ugly choice between sanctioning our allies or doing nothing and rendering U.S. sanctions an empty threat.

Most significantly, the U.S. would lose the cooperation of the EU. Some in the administration may believe that it could bull its way through, because of the threat of secondary financial sanctions. Nonetheless, the EU appears firm in its resolve to keep Iran in the deal, and therefore maintain the economic benefits of Iran’s ongoing compliance.

A likely European response therefore would be to expand blocking legislation that was enacted in the nineties to counter sanctions provided for in the Iran-Libya Sanctions Act and the Helms-Burton Act. That legislation prohibited European companies from complying with those U.S. statutes. While the blocking statute was primarily a political statement and never enforced, the unified European response forced the United States to compromise and allow European investment in Iran while precluding American companies from doing business there. This avoided a major trade conflict with the EU, which could have resulted, among other things, in a WTO dispute and unwanted litigation over the WTO national security exception. It is questionable whether such compromises could be reached in today’s zero-sum world.

More importantly, the United States could find itself with no place at the negotiating table, isolated and ignored at a time when its leadership is essential for a unified response to Iran regarding ballistic missiles, Iranian involvement in conflicts throughout the Middle East, and loose ends in the nuclear agreement.

The cow is out of the barn. The agreement is in place. For now Iran is in compliance. Billions of dollars have gone back to Iran, oil exports from Iran have significantly increased. Leaving the agreement creates major risks, including to American credibility throughout the world. There is no upside to pulling out of the agreement, only significant downside.

Ambassador Richard Morningstar is the founding chairman of the Atlantic Council’s Global Energy Center. He also served as the U.S. ambassador to Azerbaijan, US ambassador to the European Union, special adviser to the president and secretary of State for Caspian Basin energy diplomacy, and special envoy for Eurasian Energy.

David Mortlock is a partner and the chair of the Global Trade and Investment Group at Willkie Farr & Gallagher in Washington, D.C., and a senior fellow at the Atlantic Council’s Global Energy Center. He previously served as the director for international economic affairs at the White House National Security Council.