Middle East Roundup: Israel and Iran Attack Each Other’s Ships & Grandstanding Between US-Iran Continues

This week, reports suggested that Israel has been attacking Iranian ships since 2019. And, U.S. and Iranian officials continue to trade escalating barbs over the JCPOA and questions remain over frozen Iranian funds in South Korean banks. Please see our breakdown below: 

Israel and Iran Attack Each Others’ Commercial Vessels in Persian Gulf

• Tit for Tat Explosions Open New Front in Conflict Between the Two Countries
  

• • According to the Wall Street Journal, citing U.S. government officials, Israel has targeted up to a dozen vessels bound for Syria and mostly carrying Iranian oil since late 2019. These attacks by Israel were less widely reported than similar attacks reportedly conducted by Iran in the Gulf during the same period.

  • The attacks by Israel on the tankers carrying Iranian oil haven’t been previously disclosed. Iranian officials over the last year have at times referenced the attacks but have generally kept quiet on them. According to one Iranian source, “We are trying to keep a low profile…It would look like a sign of weakness” if Iran complained and failed to react with a military response.

  • The report comes after a more high profile incident between the two countries at sea. Israel accused Iran of attacking an Israeli flagged ship in the Gulf of Oman on Feb. 26th. Iran denied involvement in the attack.

  • On March 11th, the U.S. and Israel held their first virtual U.S.-Israel Strategic Consultative Group meeting, where according to a readout of the meeting by the NSC, they discussed “regional issues, building on the close consultations between the two sides over the past several months.” The meeting was also reportedly meant to better align U.S. and Israeli intelligence assessments of Iran’s nuclear program.
    

Iran Continues to Suggest Step By Step Sequencing of JCPOA Return

• Impasse Over Who Goes First Remains
  

• • President Biden’s National Security Advisor, Jake Sullivan, said in a press conference on Friday, March 12th, that “diplomacy with Iran is ongoing, just not in a direct fashion at the moment.” He mentioned that “there are communications through the Europeans and through others” and that “we believe that we are in a diplomatic process now that we can move forward on and ultimately secure our objective, which is to prevent Iran from getting a nuclear weapon and to do so through diplomacy.”

  • In his first public comments as the State Department’s envoy on Iran, Rob Malley said, “We don’t intend to base the pace of our discussions on the Iranian elections — the pace will be determined by how far we can get consistent with defending U.S. national security interests.”

• • Iran recently rejected an offer from the U.S. for diplomatic discussions over how the two parties can return to compliance with the nuclear deal. Iran is insisting that the U.S. make the first move since it initially withdrew from the deal. Mr. Malley said the preference was for a meeting first before any moves are made, stating that, “Our view is that direct talks are more effective and less prone to misunderstanding, but for us the substance is more important than the format.”

  • Concerning U.S. steps on sanctions relief, another State Department official said it is “possible U.S. steps with regard to sanctions can be on the table but we need to get into a conversation with Iran, whether direct or indirect.”

  • Former U.S. Energy Secretary Ernest Moniz, who was a key player in the JCPOA negotiations, said, “There’s probably just about 10 weeks left for some serious diplomacy…There’s a pretty short fuse here to get something done before the Iranian elections will naturally call for a bit of a reset.”

  • Despite the impasse, American and European diplomats said informal talks could begin in the coming weeks. When they do, it is possible that the United States and Iran could agree to take simultaneous steps toward coming back into compliance with the 2015 accord.

  • Rouhani said at a televised cabinet meeting on Wednesday, March 10th, that Iran is open to either the US & Iran returning to full compliance with the JCPOA or each taking a step to returning to partial compliance. “America should know that we are ready to implement the agreement. We are ready to implement it full in return for full and parts in return for parts. We are ready to return to our full commitments for their full return or part of our commitments for their partial return.”

  • The offer was swiftly denounced in reports by Iran’s state broadcaster and semi-official news agencies closely aligned with conservative factions and the Islamic Revolutionary Guard Corps. Their opposition signaled the uphill battle Rouhani faces at home leading up to a presidential election in June 2021. While Rouhani cannot run again, his moderate faction was battered in the parliamentary elections in 2020, and prospects for his allies look bleak.
    

• Iranian Funds in South Korea Still in Limbo
  

• • On Tuesday, March 9th, reports from Iran suggested that some of Iran’s assets frozen in South Korean bank accounts were close to being freed. This comes after South Korea said a few weeks ago that the assets would only be released after “consultations with the United States.” 

  • According to reports, the South Korean government and Iran have been seeking to free the funds for use in the Swiss Humanitarian Trade Arrangement (SHTA), which was established in consultation with the U.S. to support humanitarian trade..

  • The efficacy of the Swiss channel has been poor, however, with Iran complaining it has not had enough foreign exchange reserves to facilitate significant transactions. Only one significant transaction has been reported amid the pandemic.

  • In a hearing at the House Foreign Affairs Subcommittee, Secretary of State Antony Blinken was asked to comment on the report from South Korea’s Foreign Ministry and said, “the report is incorrect…until Iran comes back into compliance they won’t be getting that relief and the report that you referred to was simply incorrect.”

  • Iranian Foreign Minister Javad Zarif sent a letter to European Union High Representative for Foreign Affairs and Security Policy Josep Borrel lambasting the Secretary’s comments. He said that the U.S. is “boxing itself into a position that can make it impossible to make progress,” arguing that “statements such as the one made by Secretary Blinken in Congress this week makes any future progress more difficult.” 

Dueling Congressional Approaches

• • In Congress, 140 members of the House also signed a letter at odds with the Biden administration’s stated policy of returning to the JCPOA on a “compliance-for-compliance” basis and using the deal as a platform to address other issues. The letter states that the Biden administration should pursue a comprehensive agreement, where “three core tenets – their nuclear program, their ballistic missile program, and their funding of terrorism – must be addressed from the outset.” 

• • While the administration downplayed divisions with the thrust of the letter, its recommendations would be dead on arrival. The U.S. would fail in an effort to leverage Trump’s violations of the agreement to get more from Iran up front. Iran has explicitly rejected renegotiating the agreement or negotiating issues outside of the terms of the JCPOA unless and until the U.S. returns to compliance. Rather than box the administration in, and risk Biden inheriting Trump’s approach, Members of Congress would be well served by providing the administration maximum flexibility.

• • 150 House Democrats struck the right frame in December, urging Biden to swiftly return to the nuclear deal in order to bring Iran back into compliance as well, saying that it should serve as “a starting point for further negotiations.” The sequencing of negotiations is important, and the first step of any credible approach is a return to the JCPOA.