U.S. — Iran Relations; A Way Forward.

Introduction.

The Coronavirus imposed a détente in U.S. — Iran relations, as a rising number of cases and deaths kept the saber-rattling to a minimum. However, the end of President Trumps’ presidency is ushering a new era of uncertainty as Iran is poised to increase its enrichment of nuclear-grade Uranium. In 2015, The Joint Comprehensive Plan of Action was signed by the permanent members of the U.N. Security Council and Iran. The agreement enabled Iran to access international capital markets and trade with the rest of the world in exchange for curbing its nuclear program.

However, the U.S. under Donald Trump unilaterally withdrew from the agreement and the P5 — France, Russia, China, and the U.K. — were unable to enforce sanctions at this time. However, France gave a $17 billion credit line to Iran and the EU triggered the dispute resolution mechanism under the agreement. Since then, the U.S. killed Iraqi General Qassem Soleimani by drone strike and Iran has threatened to retaliate. Washington blames repeated attacks on U.S. facilities in Iraq, including near the U.S. embassy. However, Iran’s Foreign minister Mohammad Javad Zarif appears to think Israel is precipitating the U.S. towards a war with it.

There are several reasons why a war with Iran is unwise

1). Iran can slowly stockpile nuclear-grade uranium at a faster rate: It is not until recently that Iran showed that it could enrich uranium to weapons-grade in 3 months. The Iran nuclear deal caused the closure of several nuclear facilities, which can be restarted at any time in the absence of a coherent diplomatic agreement that can be enshrined into U.S. law.

Such outcomes will hold signatories to account and prevent any one country from unilaterally withdrawing. One should note that the Obama Administration was curtailed by congressional demands to renew the Iran nuclear deal every three months. Without an agreement, Iran will simply begin enriching uranium that could embolden its activities across the region. This spans logistical and intelligence support for Hezbollah in Lebanon, Hamas in the Gaza strip, and the Houthis in Yemen. Absent a framework for negotiations and the gradual re-introduction of Iran into global markets, the multilateral framework could be seen as fraying.

2). Iran can attack the U.S. Assets and Allies in the region: Not so long ago, Iran attacked two Saudi oil facilities, in a sign of regional defiance against U.S. missile defense systems and Saudi foreign policy exuberance. It is clear that any such repeated attacked will force the U.S; to react in the most brutal and militaristic manner, causing unprecedented civilian loss and all the ills that follow from war. In a region where over three countries are sanctioned in some form or the other, another war will further restrain any development impulse that was poised to reach the region.

Other reasons include the fact that Iran’s foreign minister has been quite clear. Any such attacks on Iran will see that has been described as the Mother of all wars. The liberal world order has always operated on a set of rules that have guided global diplomacy and economic policy. One should equally note that Article 2 of the U.S; constitution notes that U.S. policy must align and operate under the norms dictated by international law. It is, therefore, imperative that any future agreements between U.N. Security Council members and Iran be applied in a manner that prevents deterioration in security outcomes in the region, whilst enabling diplomatic outcomes for other issues spanning Yemen, Syria, and the Gaza strip. In the absence of a global rules-book, carnage, saber-rattling and an unraveling of another World War awaits. This is far from being hyperbole and only denotes the backlash from faltering diplomacy in the region.

On the one hand, one could argue that the EU and other signatories to the agreement support the terms and ensure Iran continues to get vital access to the international trading system. While such level-headed positions have been reiterated across the world, it is impossible to by-pass the Swift trading systems, which form the backbone of the global trading system. However, Europe employed a special purpose vehicle to ensure that Iran can trade with the rest of the world even as the impact on overall trade and economic activity is muted.

Conversely, some have argued that the nuclear agreement was not comprehensive enough and have decried the sunset clauses that will enable Iran to restart some nuclear activities. Last year, I opined on the sunset clauses and showed why the U.S. must disentangle Iran’s nuclear activities with other goals in the region. However, most hawks in the U.S. administration note that Iran’s activities in the region are a leading cause of terrorism and instability; while there is some merit to his argument, one need not forget that the global economy has chosen to ignore the issues facing the Palestinian people.

The moral high ground is lost when Israel can be allowed to disregard international law with no consequences. Rather than reprimand its actions, the liberal world has been vocal about their dissatisfaction at the matter but has not moved to impose any sanctions whatsoever; instead, the Israeli people continue to blatantly disregard international law and encroach further into Palestinian territory. Where the right to self-determination is absent it is difficult to tell the Iranians to abide by a global rules book that is unenforceable in the absence of the U.S. By no means does this absolve Hezbollah and Hamas that are wreaking havoc in the region, but countries must be held to similar standards in the interest of the fraying global world order. On the one hand, the global rules-based order will remain an anchor for global peace and security if it is reformed to include the interest of non-Christian states. There have been several challenges labeled against the liberal world order due to its racist characteristics and tendencies.

This has spanned the U.S. and Europe to encroach on global diplomacy and the implementation of international law. One should equally note that the legitimacy of a system hinges on the quality of support its garners. Not the quantity. The sheer military, economic, diplomatic might of the liberal world order suggests it will remain an important anchor for global stability. But outcomes across the Middle East have prompted a rethink of the legitimacy of such a system. At present, China is being chastised for its treatment of the Uighurs and the Rohingya Muslims are being punished by Ang Sang Su-Ki in Myanmar. These have caused global consternation and unprecedented concern from global actors, even as little can be done to attenuate the matter. How then can we claim to reprimand China and Myanmar if the moral scruples of the renaissance and the era of the post-Bretton wood do little to hold Israel to account it is unimaginable that one country — the U.S. — dictates global rules and norms to the detriment of a system that it portends?

So one must worry about the fraying of the liberal world order, but this perceived decline in its salience is equally rooted in a self-destructive approach to diplomacy, where its allies are favored regardless of the context, crime, or the breach of international law. In other for the U.N. security council to remain the global watchdog, it needs to represent fair and balanced outcomes across the globe, rather than arbitrary decision making that has come to underpin most if not all decision making. In a system where the clout of developing market economies is minute, it is imperative that the global rules-based order be used in a non-partisan manner to adjudicate fair, balanced, and humane outcomes.

It is not until President Donald Trump withdrew from the Iran nuclear accord that a raft of institutions and analysts as the Iran nuclear deal as incomplete and tilted to favor Iran’s nuclear enrichment over the long run. Not only is this view misguided, it equally paints a worrying global picture, one where a set of rich countries can own nuclear weapons and poorer nations are disallowed from any form of militaristic sovereignty.

It is imperative that the global rules-based order begin to reflect the needs of its member countries, especially those that can come to serve its interest over the long run. The worry over here is that no one appeared to spot the Iran Nuclear Accord as incomplete, imbalanced, and littered with sunset clause agreements that will benefit the Iranians. So I find it highly subjective that one disagrees with Donald Trump’s decision to leave the agreement, thereby undermining the global rules-based order, not least the salience of the EU as a global player. Its geopolitical prowess and Europe's ability to impose sanctions have emerged ever more strongly. Even as the biggest client to the U.S. Swift, it was unable to engineer alternative solutions for Iran and the special purpose vehicle has not yielded any significant benefits. So while the EU can disagree with the U.S., it cannot bypass U.S. sanctions.

For a set of battered economies, an all-out war can be viewed as unwise, brash diplomatically recessionary, and economically moot. The U.S. has been badly hit by COVID-19 and so has Iran. However, it is unwise to go to war with a country such as Iran that appears to be cornered by the global economy and despite its best attempts to adhere to the nuclear accord, has once again been punished by U.S. unilateralism. One should note that the International Atomic Energy Agency (IAEA) certified Iran’s compliance with the nuclear agreement over 11 times since the deal’s inception. The decision by the U.S. to unilaterally withdraw — despite best warnings and concerns from its allies — allows an unfortunate questioning of the legitimacy of independent institutions such as the IAEA. While it is easier to get behind the rationale of the Trump administration, I wouldn’t reveal the salience of his approach.

What are the implications for oil prices?

On another note, tensions in the gulf are good for oil prices any event that threatens crude oil supply could boost oil prices. However, I wouldn’t’ read any more into these rallies that tend to be transient in nature and/or short-lived.

However, if this is accompanied by a recovery in global demand, oil prices could see a more lasting rally, causing inflation to rise at a faster pace. The latter will be supported by accommodative monetary policy and a recovery icon domestic demand. However, any form of uncertainty is bad for global economic activity, even for a sanctioned Iran. As such, while one might exude some excitement at the prospect of higher inflation, it is imperative to note that uncertainty in the gulf is a deflator to global economic activity. The U.S. has unnerved Iran by unilaterally withdrawing from the Iran Nuclear Deal and killing one of its top commanders and scientist — although it blames Israel. In other to arrive at some sort of consensus, negotiations for an amended Iran Nuclear Deal should begin as soon as President Joe Biden and Kamala Harris take office.

The amended agreement should include sunset clauses that are limited to nuclear and fissile material for medical use. The use of radioactive Isotopes should be covered at length to reflect Iran’s future needs. Furthermore, rather than reprimand any Iranian behavior regarding its actions in the region, the deal should force a framework to negotiate a two-state solution, with Iran as a guarantor for Hamas. Finally, the dispute resolution mechanisms should be enshrined into la and any country that fails to adhere to the agreement must be met with a comprehensive approach to ensuring that Iran benefits from the agreement and remains a signatory to it.

There are a plethora of ways to go about designing a new agreement, but these should be based on a set of criteria that can ensure the support of all signatories. No one wins a war and it will be unwise to use anything but negotiations out of the diplomatic mess we find ourselves.

Negotiations back-on.

President Joe Biden should agree to recommit the U.S. to the Joint Comprehensive Plan of Action (JCPOA). Rather than take a hawkish stance aimed at drawing concessions from Iran, it should use regular monitoring of its nuclear facilities and a longer extension of the wind-down clause to ensure Iran is fully reintegrated into the global economy. Once Iran begins trading with the rest of the world, there will be less of an incentive to build nuclear weapons as the economic hardship on its citizens will be more noticeable after a period of burgeoning growth and economic inclusivity.

The head of the International Atomic Energy Agency (IAEA), Raphael Grossi, Iran will continue to implement “fully and without limitation” its commitments regarding the work of the UN inspectors in a way the will be “compatible with the law” for another three months. This serves as a backdrop for future negotiations that will prevent further nuclear proliferation and gradually introduce Iran into the global economy. The U.S. Hardliners have cause for concern, but President Biden’s Modus Operandi should be a conflict-free outcome that will enable the emergence of diplomatic consensus.

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