August 30, 2022

Combatting Misinformation on JCPOA Negotiations

With the U.S. and Iran continuing to exchange proposals on reviving the Joint Comprehensive Plan of Action, one indication that a restored nuclear deal with Iran may be close is increasing misinformation about the negotiations and what a final deal might look like. While it is difficult to know what an agreement looks like when it has not yet been finalized, several apparently disingenuous lines of attack have already materialized. Here are some important facts to keep in mind:

IRGC Will Remain Directly Sanctioned

The U.S. Foreign Terrorist Organization (FTO) designation of the Islamic Revolutionary Guard Corps (IRGC) emerged as a sticking point in negotiations in March. Despite it being largely symbolic and deliberately imposed by the previous administration to tie Biden’s hands, the Biden administration took it off the table after exploring whether it could be part of a deal to halt alleged Iranian reprisal threats targeting former U.S. officials. This move was at least partially in response to Israel’s specific concern and request. As a result, no sanctions involving the IRGC are believed to be on the table.

This has not stopped opponents of the nuclear deal from asserting otherwise, including via claims that Biden is preparing to “demolish indirect sanctions on the IRGC.” There is no evidence to suggest this is the case, as the IRGC itself will remain one of the most heavily sanctioned entities on the planet and the only foreign military designated as a terrorist. Business involving the IRGC and designated affiliates will remain radioactive. 

The origins of these allegations center around reporting alleging the deal will protect non-US persons doing business with Iranian persons that are not designated under sanctions. As numerous sanctions experts have pointed out, this is how secondary sanctions work – otherwise, they might be called tertiary sanctions. Regardless, claims that the U.S. is willing to include carveouts for sanctioned entities have been robustly denied by the Biden administration, so the allegations appear wholly bogus.

The Amount of Relief Will be Chilled by the Experience of U.S. Withdrawal

In 2015, a four-pinocchio lie was spread that the deal would give Iran $150 billion, which was repeated by Donald Trump on the campaign trail. Of course, the actual total of funds that Iran was permitted access to – which was Iran’s own money from oil sales, frozen in foreign bank accounts – was far less and offset by Iran’s various and extensive debts. Now, before the terms of the deal are even known, deal opponents are throwing around a $1 trillion line that they hope will stick.

What is clear is not the amount of sanctions relief on the table, but the experience of sanctions relief between 2016-2017 when the deal was being implemented. Then, the Iranian economy did rebound in significant ways that made a difference to the impoverished people of Iran. After years of recession, the economy experienced a single year of GDP growth at 8.8% and an inflation rate drop to the single digits for the first time in years. While many European firms dipped their toes into the opening Iranian market, few jumped in given the looming threats of U.S. sanctions reimposition under a Trump administration, and none stayed after Trump followed through on his threats to snap back sanctions. The experience of Trump’s withdrawal will further temper Iran’s benefit under a resumed agreement, and is the current subject of negotiation as Iran seeks more lasting certainty that the economy will improve in spite of political winds in Washington. Fevered dreams about how Iran could benefit under ideal market forces and rigorous implementation is not the same as how Iran would benefit in reality.

Hawks also miss the forest for the trees with their hyping of the threat of dollars in the Iranian economy. While Trump’s sanctions did impose a steep economic cost on Iran, they also spurred a major cost on U.S. interests by increasing threats to U.S. troops and persons. As the State Department has noted, after Trump imposed “maximum pressure” sanctions on Iran, “(a)ttacks from Iran-backed groups went up 400 percent.” By contrast, “from 2012 to 2018, there were no significant attacks, there were no attacks against U.S. service members, diplomatic facilities in Iraq.” 

Russia-Iran Trade Is Unlikely to Increase Significantly

Iran deal opponents have increasingly claimed, with scant evidence, that lifting sanctions on Iran would give Vladimir Putin’s Russia an end run around sanctions imposed over its invasion of Ukraine. However, such claims don’t appear to pass the smell test.

First, Iran would be running significant sanctions risk if it were to seek to bust sanctions on Russia. As Brian O’Toole, former OFAC adviser on sanctions noted, if future sanctions target Russian crude it would be easy to detect and disrupt the operations with sanctions. It would be quite the gamble for Iran to risk its newfound – but still limited – economic access by smuggling for a competitor in energy markets.

Likewise, existing Russia-Iran trade is actually quite modest and largely limited to foodstuffs, while the countries compete in oil and non-oil exports. While Russia and Iran do coordinate extensively militarily in the Middle East, the countries’ lack of tight economic ties limits the possibilities for deeper economic engagement in any resumption of the nuclear deal. Granting sanctions relief to Iran in exchange for concrete limits on Iran’s nuclear program is unlikely to have any sizable impact on the effectiveness of sanctions on Russia.

Finally, if the U.S. is to keep Iran out of the Russian and Chinese orbit, it needs to provide an alternative. When the JCPOA was inked, Iran was eager to ink deals with European firms – irking China and Russia which had expected to reap the benefits of years of better diplomatic ties. But the U.S. withdrawal from the deal has underscored the importance to conservative hawks of not relying on Europe or the United States. This runs against Iran’s long-standing mantra of “neither East nor West,” and broader distrust of Russia given its imperialist treatment of Iran in the 19th and early 20th century. 


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