For the U.S., the Iran nuclear deal could provide a boost in the fight against ISIS. For Russia, the agreement could lead to a new bargaining chip in the debate over a European missile defense shield.
A staff member removes the Iranian flag after the conclusion of the nuclear talks in Vienna, July 14, 2015. Photo: AP
The historic nuclear deal that was signed between Iran and the P5+1 (the permanent members of the UN Security Council plus Germany) had already become one of the most anticipated diplomatic developments in the world in 2015. The deadline for the deal had been extended four times, including twice in the last two weeks, underlining its importance.
On July 14, the agreement on Iran’s nuclear program was finalized. It states that the UN arms embargo against Iran will remain in place for five more years. Iran agreed to possess no more than 300 kilograms of up to 3.67 percent enriched uranium over the next 15 years, while all uranium-related enrichment activities will have to be limited to the Natanz Enrichment facility.
Read the full text of the nuclear deal with Iran here.
One of the main points of contention, a verification mechanism that would allow experts to monitor the development of Iran’s nuclear program, has also been overcome. A joint commission from the P5+1, Iran and the EU will be formed to control the fulfillment of the agreement. Tehran has also agreed to provide conditions for undisrupted access for the International Atomic Energy Agency (IAEA) to its nuclear and military sites.
It is expected that the nuclear agreement will be presented to the UN Security Council for approval immediately after the talks and will come into force 90 days after a UN Security Council resolution confirms it. The deal will result in the gradual lifting of international sanctions against Iran as soon as the first half of 2016.
What does the nuclear deal mean for the US?
The negotiations between the P5+1 and Iran have been ongoing since 2006 with parties trading accusations of each other trying to undermine the process. The agreement is a major foreign policy victory for Barack Obama and John Kerry, who have long maintained that Iran would not get a nuclear bomb.
Obama’s Middle East policy has been marked by a string of failures, including a failure to contain the spread of the Islamic State (ISIS) and the cooling of ties with Egypt, but the nuclear deal is likely to offset at least some of these drawbacks.
The nuclear deal is crucial for the United States in that it may help enlist Tehran’s support in the fight against the Islamic State. The fact that Washington intensified talks with Iran this year and was willing to ignore self-imposed deadlines may as well be interpreted in the context of U.S.-led efforts to contain the spread of ISIS.
Recent airstrikes against the Islamic State yielded limited results, as both U.S. and the Gulf Cooperation Council (GCC) air power predictably turned out to be of little use when dealing with extremists now scattered all around Syria and Iraq. Iran’s support is paramount in both countries.
In Iraq, with which Iran shares a border, key military figures are Shia, not Sunni, meaning that Iranian military advisors are influential among them and may help mobilize Shia militias.
In Syria, Iran is considered the main ally of Bashar al-Assad. For Tehran, the stakes are high in Syria where it doesn’t want a GCC-backed Sunni regime to replace the existing Shia-leaning government.
Even though Israel rushed to condemn the deal, dismissing it as a “bad mistake” even before the details of the agreement emerged, Netanyahu’s reaction was relatively calm. The reason for that could be Israel’s understanding that it will be impossible to defeat the Islamic State without Iran.
This tacit consent does not mean, however, that we will see any active diplomacy between the two in the near future.
It is not a coincidence that in spring numerous reports emerged allegedly showing that Iranian forces are operating in Iraq. There even were images of the commander of the Qods Force, the external operations wing of the Iranian Revolutionary Guards Corps, Qassem Soleimani, allegedly visiting Shia militias at the forefront of Iraq’s offensive to retake Tikrit.
These reports and images may have been “leaked”intentionally to demonstrate to the P5+1, and specifically to the United States, that Iran enjoys great support in Iraq and may be a great partner in the fight against the Islamic State.
What does the nuclear deal mean for Russia?
There has been a lot of speculation as to how Russia may be affected by the nuclear deal with Iran and the country’s growing role in the global energy market as a result. Immediately after the deal was announced, Russia made it clear that it refuses to be considered a losing side in these talks.
In fact, it seems that Russia has discovered some unexpected gains in the current situation. Following the announcement of the agreement, Russian Foreign Minister Sergey Lavrov reminded the world that U.S. President Barack Obama had promised to drop the European missile defense plan if a deal on Iran is reached.
“We all probably remember that in April 2009 in Prague [U.S.] President [Barack] Obama said that if the Iran nuclear program issue is sorted out, then the task of creating the European segment of the missile defense system will disappear,” he said in Vienna.
Russia is likely to use this newly emerged lever against the United States while the issue of European security tops the agenda in bilateral talks.
Immediately after the agreement with Iran was announced, both oil and the Russian ruble dropped, but not noticeably. It is unlikely that the nuclear deal will result in any dramatic changes in the oil market overnight. Sanctions will remain intact for three more months at the very least, meaning that whatever changes are expected markets including the Russian market, will have time to adjust to them.
Iran has stated that it may increase its oil output by one million barrels a day within six months of sanctions being lifted, which is a mere 1 percent of global production. It's likely that short-term effects of the nuclear deal on the oil market will be muted.
Iran has accumulated 10 million barrels of crude in stored inventory, which it will try to sell once the sanctions are lifted. It will also try to divert some of the oil sold domestically at subsidized prices to international customers. The market, however, expects this, so changes in global oil prices shouldn’t be significant.
Read also: RD Explainer: Oil prices and Russia.
The next stage for Iran would be to reach the pre-sanctions production level of 3.5 million barrels a day, which is likely to take several years, significant capital as well as international expertise. It is not in Iran’s interest to crash global oil prices at a time when it needs them at pre-sanctions levels.
Iran’s main rival in the oil war is not Russia but other OPEC members who decided not to cut their oil output despite low oil prices. Instead some of its member states, such as Saudi Arabia and Iraq, increased their crude production to record levels.
Since it is estimated that the market is already producing around 2.5 million barrels per day above demand, it may be in Tehran’s best interest to team up with Moscow to try and negotiate a coordinated cut in oil output with Saudi Arabia.
Strategically Iran is unlikely to abandon Russia as a partner and to start aligning itself with the West. The text of the nuclear agreement says that sanctions against Iran may be re-imposed in 65 days in case of the country’s non-compliance. Russia is a member of the P5+1 and has proven its position as a reliable partner for Iran.
If Tehran chooses to change its foreign policy course and Russia feels betrayed, it may easily take a harsh stance on Iran’s monitoring process. Just like Moscow has been advocating Iran’s interests during the last rounds of talks, it may start pushing for a stricter UN approach towards Iran, especially considering the fact that P5+1 will continue discussing possible military dimension of Iran’s past nuclear activity till the end of 2015.
But it doesn’t look like Iran is willing to depart the Russian “orbit” just yet.
Iran’s President Hassan Rouhani made an appearance at the joint summits of the BRICS and the Shanghai Cooperation Organization (SCO) in Russia’s Ufa. A flurry of meetings that Rouhani had with Russian and Chinese officials tell volumes about Iran’s foreign policy priorities. Even though Iran has so far been unable to join the SCO due to UN sanctions, the nuclear agreement not only opens a door for Iran to the West, but also likely opens up untapped opportunities in the East.