One step back, two steps forward: a new beginning in the Iran-U.S. relations
One of the main goals that Joe Biden set for his presidency in 2021 was to revise the U.S. Middle East policy, particularly to improve relations and reduce tensions between Iran and the United States. Biden’s plan was to return to the policy adopted by the Obama administration, which brokered a 2015 agreement on curbing Tehran's nuclear and missile programs, as well as to bring about a change in Iran’s behavior in the region. Three years later, Washington and Tehran are officially discussing the possibility of reviving the JCPOA. This was preceded by the United States’ planned effort to strengthen its position in the Middle East, establish diplomatic contacts with Iran's "allies", undermine its domestic political situation by imposing sanctions, and much more.
U.S.-Iran rapprochement
Back in 2021, the Joe Biden administration officially announced its intention to strengthen relations with Iran and reactivate the JCPOA. For three years Washington has been attempting to create a favorable geopolitical basis for making Iran accept its terms of rapprochement. This became possible largely due to the diplomatic rapprochement of Iran with Saudi Arabia and a parallel change in the rhetoric between Saudi Arabia and the USA. With the mediation of China, Iran and Saudi Arabia managed to overcome the humanitarian crisis and conclude an agreement on the restoration of diplomatic relations. Overall, against the backdrop of external assistance and the entry of both countries into the BRICS, the conflict between Iran and Saudi Arabia appears to be “frozen”. However, in the event of Iran developing nuclear weapons, Saudi Arabia also intends to enter the arms race "for security reasons and the balance of power." That is why Saudi Arabia is simultaneously discussing a major agreement with the United States to normalize relations with Israel in exchange for a U.S. defense pact and assistance in developing its own civilian nuclear program. The pact is scheduled to be finalized by the spring of 2024. It will allow the United States to establish an economic corridor between Asia, the Middle East and Europe.
It is also worth mentioning that the Iranian economy, which has been suffering from sanctions for a long time, is in a critical situation, which, in turn, causes discontent among the population and reflects directly on the popularity of the current government. The history of the past protests (in September 2022 following the news of the death of the Iranian girl Mahsa Amini and in early 2023 after the poisoning of children in schools) demonstrates that protesters grow progressively concerned with larger-scale problems — poverty, unemployment, overall dissatisfaction with government policy, etc. Meanwhile, representatives from Western countries actively supported these protests in the media and even held rallies in other countries, broadcasting the "humanitarian agenda" of the rapprochement between Iran and the United States.
One of the potential scenarios could be a change in the ruling elites, namely the return of the Pahlavi monarchy. This dynasty emigrated after the 1979 Islamic Revolution and currently resides in the United States. Reza Pahlavi is the founder of the "government-in-exile" — the National Council of Iran — which has representative offices in Canada and the United States. The main objective of this organization is to overthrow the government in power in Iran and bring about democratic reforms in the country. Pahlavi himself has repeatedly stated that he would like Iran to consider establishing an elective monarchy, where the monarch would be elected by the people.
In addition, although economic sanctions imposed by European countries expire in October 2023, it has been announced that they might get extended, which will no doubt once again provoke the local Iranian population to protest in case a consensus is not reached between the United States and Iran regarding the JCPOA.
The U.S. opposition is largely due to the growing influence of Russia and Iran in the Global South. Iran is asserting itself as an African leader, while Moscow is also strengthening its position in the region, including in the Sahel countries, which happen to be major repositories of gold, uranium, lithium, manganese, phosphates, limestone, zinc, bauxite, salt, granite and other valuable natural resources.
Iran's own take on the current situation is also changing. While earlier the government stated that it was impossible to resume dialogue with the United States until the sanctions were completely revoked, in late September, the Supreme Leader (Rahbar) Ali Khamenei authorized Iranian diplomats to enter into direct negotiations with the United States on the nuclear issue. This decision signifies the "final word" of the clergy.
Nuclear program in exchange for the revocation of sanctions
In January 2023, it was reported that the United States had informed Israel, France, Germany and the United Kingdom about a new "approach" to Iran-U.S. relations that postulated a possibility of sanctions relief in return for Iran's partial curtailment of its nuclear program. This was preceded by the publication of a report in February by the International Atomic Energy Agency, which stated that Iran has accumulated 87.5 kilograms of uranium enriched to 60%. According to experts, if the enrichment of uranium reaches 90%, then its amount will be sufficient to build at least one nuclear bomb. Israeli officials have already informed the Biden administration and a number of European countries that if Iran continues to enrich its uranium above the 60% level it could provoke an Israeli military attack.
In order to curb Iran's nuclear activities, the U.S. has embarked on a course of rapprochement. In September, a deal was announced to exchange American prisoners in return for the Biden administration's “unfreezing” of $6 billion held in South Korea since 2018. And three months before that, during informal negotiations in Oman, Washington agreed to broker a €2.5 billion payment from the Iraqi government to Iran for electricity and gas imports that had been frozen as part of the U.S. economic sanctions. In response to the U.S. president's actions, Republicans accused him of making a deal with the "number one terrorist state."
In addition, the non-profit organization "United Against Nuclear Iran" has proved using satellite images that dozens of tankers carrying Iranian oil have been found at sea, and that for some reason they remain untouched by the U.S. sanctions or prosecution. This means that, as part of the deal to reduce the pace of uranium enrichment, the U.S. could have promised not to confiscate Iranian oil cargoes in return for Iran ending the persecution of foreign tankers in the Persian Gulf.
In September 2023, the International Atomic Energy Agency confirmed that Iran had slowed down the pace of uranium enrichment to weapons-grade level.
Thus, the sanctions relief in regard to Iran, first of all, may affect the Iranian oil. The export of Iranian oil, which accounts for more than 4% of the total world production, may significantly affect the global market. On the one hand, it is obvious that with the official appearance of Iranian oil on the market, the country will increase both its own and total world production volumes. However, on the other hand, the cost of oil will decrease. In April 2023, oil exporting countries agreed to reduce their daily production by 1 million barrels per day, while Iran is capable of producing from 3 million barrels per day (oil production can only be increased by 0.3 - 0.5 barrels per day). At this stage, the cooperation between the United States and Iran is of paramount importance, since Iran is a member of OPEC, and it would be extremely advantageous for the United States to have "its" partner in this organization, which will enable it to lobby its own interests on the energy market, especially considering Washington's unstable relations with the leading OPEC member country — Saudi Arabia.
It is also very important that Iran ranks second in the world in terms of natural gas reserves, so a similar situation may arise on the global gas market. In the event of strengthening friendly ties between the U.S. and Iran and taking into account the already existing relations between the U.S. and the EU countries, there may be expected a complete or at least partial sanctions relief on behalf of the EU. Europe already has experience of using Iranian oil for its own purposes: in 2011 the EU countries accounted for 25% of regional oil. All of this combined could lead to Iran becoming a major supplier of oil and gas to the U.S., the EU and other countries of the “collective West”, which will reduce their energy dependence on other countries, especially Russia.
However, an obstacle to the lifting of sanctions may be Iran's condition that the United States is supposed to compensate for the economic losses caused by the long-term practice of imposing sanctions, which as of 2021 were estimated at $200 billion. It is noteworthy that this condition is considered "mandatory" not only by the official authorities, but also by the population, which demands justice.
We should also not forget that an important component of Russian-Iranian relations is the construction of the Bushehr NPP. In 2013, Russia already handed over the first 1000 MW power unit to Iran, and in 2016 the construction of the second stage (power units II and III) began. Work on the power unit II is scheduled to be completed in 2024, on the power unit III — in 2026. The total capacity of the two power units will be 2.1 thousand MW. At the same time, Russia is also involved in other projects in Iran. For example, an interstate loan of €1.3 billion was allocated for the construction of the Rasht– Astara railroad section in Iran. The total cost of the project is €1.6 billion, meaning that the Russian share in the interstate loan is 85%.
Accordingly, the United States will want to take advantage of Iran's resources, and one of the conditions for lifting sanctions and unfreezing Iran's assets could be the conclusion of a contract for a long-term (possibly exclusive) supply of energy resources to the United States. Subsequently, the United States will be able to resell (for example, to European countries) Iranian energy resources at an inflated price.
In addition, the United States will try to replace Russia as a supplier of uranium to Iran. It should be taken into account that the U.S. buys uranium from Russia (mainly uranium fluorides and uranium-235 in the form of nuclear fuel with enrichment below 20%), as well as uranium concentrate from Australia for further processing, meaning it can export enriched uranium itself. However, the main issue will be the status of the U.S. within the framework of agreements with Iran, namely whether Washington will supervise Tehran's nuclear activities. Presumably, the U.S. can supply enriched uranium (more than 20%) under the guise of "civilian" uranium with 3-5% enrichment or supply civilian uranium with a mandatory condition of enriching it to the "military" level of 90%. In addition, in early 2023, some media outlets (including Russian ones) stated that Iran was developing a uranium deposit in the Bafq region, which contained about 650 tons of metallic uranium. At the same time, since Iran claims that it can enrich its uranium to 60%, it means that it has enough capacity to enrich its resources. In the future, the U.S. may try to participate in the further development of this deposit in exchange for exclusive rights to extract some of the resources. Thus, if Iran and the U.S. cooperate closely in this respect, a real regional and global security threat will be created.
Overall, it is safe to say that the U.S. policy is aimed at progressively strengthening its position in the Middle East. The breakthrough between Saudi Arabia and the U.S., as well as the rapprochement between the U.S. and Iran set a "diplomatic" example for other countries in the region and lay an important foundation for the formation of a regional security system led by the United States.
The rhetoric of economic relations is changing, and the emergence of Iranian oil and gas on global markets is consistent with Washington's goals of containing Russia. The resumption of the “nuclear deal” is likely to transpire under the U.S. supervision, which will significantly empower Washington through the emergence of uranium trade flows from Iran. Iran is now working closely with Russia and China on economic cooperation, but the rapprochement between the United States and Iran calls into question the expediency of such cooperation and weakens the positions of Russia and China in the region.
