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Iran: nuclear talks extended
 
On 18 July Iran and the P5 +1 (US, UK, France, Russia, China, Germany) decided to extend the deadline for an agreement on Iran’s nuclear programme by four months, to 24 November. A report in the Economist dated tomorrow 26 July comments that the extension makes sense for all the negotiating parties and was widely expected. It quotes Robert Einhorn, an arms-control expert at the Brookings Institution in Washington who argues that Iran “fails the realism test at several levels”, but who sees a way through the technical complications towards a possible compromise. The Economist concludes that four months is not long to find out whether such a compromise is acceptable "above all to the enigmatic Mr Khamenei".
 
According to a BBC report quoting the International Atomic Energy Agency Iran has turned all its stock of 20%-enriched uranium (closest to the level needed to make nuclear arms) into more harmless forms. The US said last week it would unblock $2.8bn in frozen Iranian funds in return for Iran's compliance.
 
Reuters reported on 24 July that India, which owes Iran $4.6 billion for oil imports, has paid an instalment of $550 million, part of the frozen funds released by the interim deal. India is Iran's top oil client after China, and its oil imports which had fallen sharply in 2013 due to lack of insurance have largely recovered.
 
According to another Reuters report also of 24 July Boeing have disclosed an agreement to provide Iran with aeroplane parts, the first acknowledged dealings between US aerospace companies and Iran since the 1979 U.S. hostage crisis.
 
Five US Republican senators have immediately introduced a bill aimed at forcing President Obama to submit any comprehensive nuclear agreement with Iran to Congress. Yet another Reuters report of 24 July comments that the bill is unlikely to come to a vote, but is "a clear indication of wariness from the Republicans, who many analysts say stand a good chance of taking control of the Senate in early November elections."
 
We thank Bill Morrison for the "Strategic Comment" below circulated on 23 July by the London-based International Institute for Strategic Studies which considers the technical aspects of the problem in some detail. The last paragraph considers the political problem, arguing that the extension is for four months only, so that if there is an agreement it can be implemented before the new US Senate takes office in January. "That is a big ‘if’, however."
 
Iran nuclear talks extended for four more months
The latest round of negotiations over Iran's nuclear programme failed to meet a 20 July deadline to reach a comprehensive solution. While progress was made on several areas of contention, deep differences over the allowable size of an Iran's enrichment programme and how long restrictions should remain in place proved insurmountable. During the four-month extension of the interim deal that was agreed, Iran and the six powers known as the 'E3+3' (France, Germany, the United Kingdom, China, Russia and United States) led by the European Union must determine if they can summon the political will to bridge the gap. For now, diplomacy survives, but the prognosis remains uncertain.
 
Progress to date
The July deadline had been set by the Joint Plan of Action (JPOA), which was formulated in Geneva in November 2013 and came into force on 20 January 2014. Over the past six months, both sides  met the terms of the JPOA. Tehran neutralised its stockpile of 20% enriched uranium, diluting half of it and converting the rest to oxide form that is less readily usable for weapons. It also allowed more robust inspections, kept its stockpile of 5% enriched uranium capped and installed no new centrifuges and no new equipment or fuel rods at the Arak research reactor. Washington, meanwhile, released $4.2 billion of frozen Iranian oil sales and granted other sanctions relief worth about $2–3bn.
 
The formal negotiations between Iran and the six powers were characterised by a positive atmosphere and fruitful exploration of various options. After the announcement of the extension, US Secretary of State John Kerry spoke of 'tangible progress' in the talks but 'very real gaps'. Iranian Foreign Minister Mohammad Javad Zarif said negotiators had made enough headway to ensure that the talks were 'worth continuing'.
 
Among the key areas of reported progress, Iran offered to convert the Fordow enrichment plant into a research facility, or a physics and space radiation laboratory. Revealed in 2009, Fordow is buried up to 80 metres underground, and was where Iran produced most of its 20% enriched uranium, amounting to 221.4kg by November 2013. Iran may be willing to remove the 3,000 centrifuges installed there.
 
Iran also agreed to redesign the Arak reactor so that it would produce only 1kg a year of weapons-grade plutonium rather than the 8–12kg that it could have produced as originally designed. As long as the redesign cannot be easily reversed, the six powers reportedly withdrew their insistence that the reactor be converted to use light water rather than heavy water as a moderator. They still want to ensure, however, that the reactor core will not allow for additional plutonium production by the covert positioning of additional fuel assemblies.
 
Kerry noted that the negotiators had also agreed that 'any long-term, comprehensive solution will involve enhanced monitoring and verification measures that go well beyond the status quo.' Iran emphasised that it was prepared to accept intrusive verification measures to prove the 'peacefulness' of its programme. In addition to measures agreed under the JPOA, the E3+3 want Iran to adhere to the International Atomic Energy Agency (IAEA) safeguards Additional Protocol (AP), which allows for so-called 'snap inspections'. The Iranian parliament has rejected the implementation of the AP. As an alternative, Iranian negotiators indicated their willingness to implement AP measures and in some cases go beyond the requirements of the AP, as long as they are not branded as such. But Iran is adamant that the scope and duration of these measures must be clearly defined. Potentially overcoming another hurdle, Iran acknowledged that sanctions relief could not come immediately, but would have to come in stages.
 
Differences over allowable enrichment
The main difference between Iran and the E3+3 is over the size and scope of Iran's enrichment programme. In the interim agreement, the E3+3 recognised that Iran could not forgo enrichment entirely after years of political and economic investment in it. In exchange, they have sought to impose strict limits. The JPOA called for a 'mutually defined enrichment programme with mutually agreed parameters consistent with practical needs'.
 
The E3+3 believe that most of Iran's enrichment needs for a civilian nuclear programme can be met through foreign supply, as is the case with smaller-scale programmes elsewhere. They initially demanded a reduction in Iran's enrichment capacity to about 2,000 first-generation (IR-1) centrifuges or a smaller number of more efficient machines. They were reportedly ready to accept around 4,000 IR-1 centrifuges. This number equates to a theoretical 'break-out' time of six months: with a programme limited to that size Iran could not break out of its Nuclear Non-Proliferation Treaty constraints and produce a weapon's worth of highly enriched uranium (HEU) in fewer than six months. In practice – especially for a country that has never before produced weapons-grade HEU – it would take longer, but the theoretical break-out period has become a standard metric for conceptualising the allowable enrichment programme.
 
While Iran offered a multi-year freeze on the number of centrifuges, it apparently could not accept any cutbacks. The number of centrifuges now operating – about 9,400 – could not be reduced. Nor would it dismantle any of the additional 10,000 installed centrifuges. Iran also contended that after a few years, the enrichment programme would have to expand dramatically.
 
In a key speech delivered on 7 July, Supreme Leader Ayatollah Khamenei stated that Iran would have an 'absolute need' for the equivalent of 190,000 IR-1 centrifuges. Interestingly, he put the number in terms of separative work units (SWUs), the measurement of centrifuge output. This suggested flexibility in centrifuge numbers. As explained by Iranian Atomic Energy Organization head Ali Akbar Salehi the following day, the same output could be achieved with fewer than 10,000 of the latest models under development by Iran. But the E3+3 were reluctant to entertain the idea of Iran having such a large capacity with significantly more efficient machines, because a clandestine plant using a smaller number of such centrifuges could be more easily hidden. Iran's negotiators sought to put a positive spin on the statement, emphasising how the timeframe had yet to be determined: 'Maybe this need will not be for this year, or two years, or five years, but this is the final need of the country.' But Khamenei's statement made a solution difficult for the time being. Salehi said the new centrifuge model would have to be tested and mass produced to meet the 190,000-SWU goal by 2021.
 
Iran's position is based on its declared need for a self-sufficient civilian nuclear programme in the future. Claiming that past fuel-supply agreements were broken, in particular the Eurodif enrichment consortium after the 1979 revolution, Tehran does not want to rely on Russia for the operation of its nuclear-power plants once the current fuel contract for Bushehr expires in 2021. Russia is willing, however, to continue to sell fuel for the lifetime of the Bushehr reactor, and there are other ways Iran could be guaranteed a fuel supply. In any case, it is doubtful that Iran could safely or legally produce indigenous fuel for the Soviet-designed VVER-model reactor at Bushehr. As noted by nuclear expert Mark Hibbs, 'Iran has no experience and no infrastructure for making commercially significant quantities of VVER fuel and no intellectual property agreement with Russia giving Iran access to design data for core internals including fuel, which it would need to make the fuel by itself.' Even the experienced US nuclear-fuel firm Westinghouse has had immense technical and legal difficulties producing fuel for VVER reactors in the Czech Republic and Ukraine.
 
Negotiators also disagreed over the duration of a comprehensive deal on the Iranian nuclear programme. While Iran believed that it could prove the peacefulness of its programme in five to eight years, the E3+3 reportedly insisted that limits on Iran's programme would have to be in place for 20 years or more.
 
Looking ahead
The extension of the negotiations for a further four months keeps Iran's nuclear programme capped at its current capabilities. The E3+3 had wanted the extension provisions to include a reduction in the size of the stockpile of uranium that is enriched up to 5%. At 8,475kg, this stockpile is enough for up to five or six bombs if further enriched. Iran wanted to keep this stockpile as leverage for a comprehensive deal, however, so instead offered less significant reductions. One quarter of its stockpile of oxidised 20% enriched uranium will be converted into fuel plates in the next four months, moving it yet further away from any potential weapons use, and Tehran committed to eventually making all of it into fuel plates. It will also dilute a stock of 2% enriched 'tails' – the waste product from the previous 20% enrichment. Transparency will be further improved, with the IAEA being granted additional oversight over the production of centrifuge rotors.
 
In return, Iran will receive $700 million a month of its frozen assets, a total of $2.8bn by 24 November. At the same time, however, about $3.5bn of Iran's monthly revenue from new oil sales will be frozen or restricted to purchases of commodities in the country of sale. The aggregate amount of frozen funds is over $100bn and growing. Meanwhile, all other sanctions – other than the minor measures lifted by the JPOA – remain in place. Even in areas where trade is allowed, international financial institutions are wary of dealing with Iranian banks because of the large fines that the US Treasury recently imposed on Royal Bank of Scotland of the UK, BNP Paribas of France and Luxembourg-based Clearstream.
 
Negotiators must now return to their capitals and consider what compromises to explore when talks resume at the end of summer. In Iran, there is growing frustration with what it views as unreasonable Western demands. The Iranian public is tired of discussing the nuclear issue and would rather focus on other more pressing domestic problems. Most Iranians appear to have counted on the negotiations producing an agreement. A deal would slowly alleviate the sanctions pressure and allow the new administration to focus on reviving the Iranian economy. If such hopes are dashed there could be a backlash against the West, against President Hassan Rouhani and possibly even Khamenei. In the US, a renewed push to impose additional sanctions in the past few weeks demonstrates the frustration felt by many members of Congress. If the mid-term congressional elections in November flip the Senate to Republican Party control, new sanctions will be all the more likely. This possibility is why the extension runs for four months and not the six months allowed for in the JPOA. If an agreement is reached, it can be implemented before the new Senate takes office in January. That is a big 'if', however, given the gap over enrichment size that still divides Iran and its negotiating partners.
 

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