MK Bhadrakumar — Indian Punch-Line April 24, 2017
The signing of the first commercial contract between China and Iran to redesign Iran’s Arak heavy water reactor is a landmark event in the implementation of the Joint Comprehensive Cooperative Plan of Action (JCPOA) of July 2015.
The Arak plant was a major sticking point in the saga of the Iran nuclear issue. Its conversion for purely commercial / civil use is a vital template of the Iran nuclear deal. The US and Iran agreed that China could be entrusted with the sensitive task of converting Arak plant, and China which played a significant role in the negotiation of the JCOPA agreed to undertake that task.
It has taken almost two years to flesh out the commercial contract. The contract was signed in Vienna where the IAEA is headquartered. The timing of the contract is extremely interesting – on the eve of a meeting of the commission on April 25 in Vienna, which is expected to review the progress of implementation of the JCPOA.
Today’s meeting in Vienna, in turn, is invested with high importance as it will be the occasion for the US to formally present its perspective on the JCPOA before the international audience after Donald Trump became president. Does the US intend to stick to the JCPOA or does it have ulterior designs to undermine it? The answer to this big question will emerge at today’s meeting in Vienna.
In the run-up to today’s meeting, top figures in the Trump administration have spoken about the JCPOA. Most notably, US Secretary of State Rex Tillerson reported to the US Congress a week ago that Iran is complying with the terms and conditions of the JCPOA. Trump himself may say Iran is violating the “spirit” of the nuclear deal, but, importantly, Defence Secretary James Mattis underscored on Friday that not only is Iran sticking to the JCPOA but also that the 2015 agreement “still stands”.
Mattis’s remark resonates because he said this while on a visit to Israel and at a joint press conference with Defence Minister Avigdor Liberman. Clearly, despite its virulent opposition to the nuclear deal when it was under negotiation, Israel is now inclined to see the JCPOA as the best guarantee against Iran embarking on a nuclear weapon programme.
Conceivably, Trump who had threatened during the election campaign last year to tear up the Iran nuclear deal also sees things differently today. One principal reason would be that the US simply lacks international support to abandon the nuclear deal, which also carries the sanctity of UN approval. The European powers are pleased with Iran’s implementation of JCPOA. Russia strongly supports the JCPOA and with the signing of the commercial contract on Arak in Vienna yesterday, Beijing asserted that there is no question of going back on the nuclear deal.
However, the clout of the Israeli-Saudi Arabian lobbies in Washington cannot be ignored. These lobbies will do their utmost to cause disruptions in any normalization between US and Iran. They simply dread the prospect of US-Iranian normalization, which of course could phenomenally reset Middle East’s geopolitics.
Tehran has not gone into panic mode that Trump might tear up the JCPOA. It also understands the motivations driving Trump administration’s allegations of Iran’s support of terrorism. Conceivably, if President Hassan Rouhani emerges victorious in the May 19 election, which seems almost certain, Tehran will use diplomacy and ‘soft power’ as its principal tools in turning the hostile external neighbourhood incrementally to its favour. (See my blog Iran’s presidential election takes predictable turn.)
Tehran will count on a savvy, street smart businessman like Trump to begin counting the loss to American interests at some point by continued self-denial of business in the Iranian market, especially when Russia and China are not wasting time to dip their fingers in the honey pot. (By the way, at a meeting yesterday, Chinese Foreign Minister Wang Yi and his Iranian counterpart Mohammad Javad Zarif agreed on stepping up Sino-Iranian ‘comprehensive strategic partnership’ within the framework of One Belt One Road.)
For the present, though, Trump will tap into the Saudi fear of Iran to sell weapons to that country, extract petrodollars as investment in the American economy to create jobs as well as to promote American exports to the Gulf. In particular, Trump (and Wall Street) is besotted with the Saudi Aramco’s IPO, which is likely in 2018. The Saudis have an option to list the IPO in New York or London — or, by Jove, in Hongkong. Trump knows jolly well that the partial privatization could value Aramco at $2 trillion.
Unsurprisingly, therefore, Tillerson and Mattis made a beeline to Riyadh within the first 100 days of the Trump presidency. Don’t be surprised if Trump also packs bags and travels to Riyadh in the coming weeks. All in all, US-Iran normalization lies in the womb of time, but Trump’s advantage in the near term lies in making abrasive noises about Iran, which would play well in the Saudi court (and pacify Israel.) But the JCPOA as such will remain untouched.