US, Iran Let Hopes Shape Their Future — Not Hurts

There could be a feeling of déjà vu over the news that indirect talks began between the United States and Iran under the mediation of the European Union (EU) in the Qatari capital Doha on Tuesday. Is any positive outcome to be expected in terms of reviving the 2015 Iran nuclear deal (JCPOA)? Quite likely. The reason for saying so is that there is a confluence of circumstances today, internal and external, that gives hope.

Various compulsions are working on Washington and Tehran — and Brussels — which lend an acute sense of urgency on the part of these main protagonists in the nuclear talks to look for light at the end of what has been a long and winding tunnel. One may call it the ‘TINA’ factor, the acronym that stands for There Is No Alternative.

To take Iran first, the regime in Tehran is desperately seeking the lifting of the US sanctions and economic blockade that has limited the country’s oil exports, decimated the value of its currency against the dollar—now worth one tenth of its value at the time of the 2015 nuclear deal—and deepened the poverty of the people, all snowballing into much social unrest eroding political stability.

In the last few months, there have been almost weekly anti-government protests over poverty, unaffordable housing costs, cascading inflation (touching 40%), massive jump in food prices (over 80%), very high unemployment (over 20% of all 15–24-year-olds per official figures), and so on.  

Of late, ominously enough, the Bazaar has begun joining the protests and strikes by the other organised sections of society, which signals a paradigm shift in Iran’s politics. Of course, the regime’s social and political base is substantial and its control of the state apparatus should not be underestimated, but the fact of the matter is that the country is performing far, far below its potential, reaching a cul-de-sac, which doesn’t have to be the case really for the clergy-led bourgeois nationalist regime, given the country’s vast untapped resources for accelerating its growth and development. 

As for the Joe Biden administration, the present stalemate is fraught with great danger as Iran’s nuclear programme is steadily advancing and in a near future it may already have outgrown the confines of the JCPOA, at which point Washington may have to resort of coercive means to cap and roll back the dangerous slide that would surely trigger Iranian retaliation against the US and its regional allies with disastrous consequences all around. That this may happen against the backdrop of the heightened tensions in the US’ relations with Russia and China and an economic crisis at home complicates matter further, even possibly endangering Biden’s bid for a second term as president. 

On the other hand, a deal at this point with Iran will most certainly improve the prospects for a historic thaw in the relations between the two countries, which would create a ‘win-win’ situation with seamless business possibilities in trade, economic ties, stimulating in turn the latent forces of moderation within Iran that always sought balanced external relationships between the West and the East — something that can transform the geopolitics of the region and a tipping point in the emerging world order. 

For both the US and the EU, there is great urgency to restore the Iran nuclear deal so that sanctions can be removed and Iran’s vast oil reserves can enter the market. For Washington, given the co-relation between the price elasticities of oil supply and oil demand as well as the two-way interaction between the US oil market and the global economy, advantage clearly lies in an oil market with a downward-sloping demand curve and an upward-sloping supply curve. There are limits to the US’ key allies Saudi Arabia and the UAE stepping up oil production in the short term, where Iranian oil can make a significant difference.

Moreover, the moment the sanctions get lifted and Iran’s compliance with any deal is certified, Tehran would not need to wait to boost output from oilfields to export more, as it could release crude in storage and forthwith help offset some of the pressure on oil prices caused by the slowdown in Russian supplies due to sanctions on Moscow. Data firm Kpler estimates that Iran had 100 million barrels in floating storage as of mid-February, meaning it could add 1 million barrels per day (bpd), or 1% of global supply, for about three months. 

A Reuters report in February said: “Iran is expected to ramp up its output following a deal too… to raise exports by 1 million to 1.3 million bpd… Still, Iran’s crude in floating storage could hit the market quickly and Tehran has been moving it into place… Iran has also moved some of its floating stocks of condensate from anchorage to its oil terminal on Kharg Island, in anticipation of imminent export… Iran sits on the world’s fourth-largest oil reserves.” 

The EU foreign policy chief Josep Borell’s journey to Tehran last week to meet and exchange notes confidentially with Iran’s foreign minister Hossein Amirabdollahian regarding the fresh inputs from the US to break the logjam and kick-start the stalled nuclear talks testifies to the great anxiety in Europe to restore the JCPOA and access Iran’s oil as the best way to reduce its heavy dependence on Russian energy. Clearly, there are profound implications for international security.

According to reports, Tehran may no longer consider the removal of the Islamic Revolutionary Guard Corps from Washington’s list of Foreign Terrorist Organisations as central to the talks. If so, a potential deal breaker is removed. Equally, a close reading of the statement on Iran in the G7 Leaders’ Communiqué issued on Tuesday after the group’s summit meeting (June 26-28) in Germany shows the Western powers’ dexterity to sidestep tendentious arguments and strike a conciliatory attitude on the whole — the statement’s moderate language, accent on diplomacy, absence of allegations of linking Iran with terrorism, encouragement of Iran’s normalisation with the Arab neighbours, and so on. 

Most important, Tehran has disclosed that the understanding with EU foreign policy chief Borrell is that the negotiations in Doha will not be “about the nuclear aspect of the talks, because the nuclear issues have been closed once,” but will only pertain to the disputes that still remain, including the lifting of sanctions. To quote Iran’s Foreign Ministry spokesman Saeed Khatibzadeh, “What is going to be negotiated in one of the Persian Gulf countries (read Qatar) is only about a few remaining issues in the field of lifting sanctions, so nothing will be added to the agreements reached in Vienna and nothing will be omitted.” 

Khatibzadeh concluded, “These talks are a continuation of the format that was in Vienna; that is, it will be conducted indirectly, and it is only about the quarrelsome issues that have remained since the last meeting in Vienna. We hope to see positive results. The ball is in Washington’s court. If it comes with an answer, be sure that the agreement can be reached quickly.”

MK Bhadrakumar is a former diplomat. He was India’s ambassador to Uzbekistan and Turkey. The views are personal.