JCPOA: Evaluating Issues Since Implementation

Since the Joint Comprehensive Plan of Action (JCPOA) was implemented on January 16, 2016, numerous issues emerged which bear watching. We review major concerns surrounding the deal that have arisen since the agreement went into effect, starting with the most recent.

Donald Trump’s Misinformed Critique of the Deal

During the first presidential debate on September 26th, Donald Trump criticized the JCPOA, arguing the deal should have also addressed North Korea’s nuclear ambitions, the situation in Yemen, “and all these other places.”¹ On its face, Trump seems to allow that the Iran deal is effectively limiting Iran’s nuclear program and the U.S. can do more. Trump’s critique, however, is misguided in assuming one agreement could solve all the world’s problems. He also ignores the different dynamics at play in different parts of the world, including North Korea, with which the U.S. has previously attempted to broker an agreement in order to curb its nuclear program. A nuclear-armed Iran presented a serious threat to U.S. allies in the Middle East and it’s one that world powers were able to agree on and come together to address.

Secret “Exemptions” to the Nuclear Deal

On September 1st, noted nuclear expert David Albright issued a report claiming secret exemptions were made to allow Iran to exceed some of the nuclear deal’s required limitations. The exemptions seem to be narrow, technical deviations from the language of the deal. The administration would not publicly comment other than to say Iran had completed all of its required steps as verified by the IAEA.

The report raised legitimate concerns but it doesn’t indicate Iranian cheating or a decreased breakout time to a nuclear weapon. Vigilant Congressional oversight of the nuclear deal, including briefings of Joint Commission meetings, will be necessary to verifying Iranian compliance. While the public is not aware of the details, members of Congress should confirm the administration’s claims that these exemptions do not give Iran any additional latitude or change its nuclear breakout timeline.

Missile Defense System

On August 28th, Iranian state television reported that Iran had deployed a mobile missile defense system around its underground nuclear facility, Fordow. The contract for the S-300 system was signed in 2007 with Russia but was delivered this year after nuclear-related sanctions were lifted on Iran. Under the nuclear agreement, Fordow is no longer enriching uranium. The site was converted into a medical isotope research center for the first 15 years of the JCPOA. Delivery of the system does not violate the JCPOA, and while Iran’s choice to deploy the system at Fordow is unusual, IAEA inspectors will continue to have access to Fordow to ensure its activities are not used for weapons purposes. What’s important is that inspectors continue to have unrestricted access to Fordow to verify no weapons activity is taking place.

Republicans Allege “Ransom” Payment

The U.S. paid Iran $1.7 billion in cash to settle a transactional dispute from the 1970s.The initial $400 million cash payment to Iran, delivered and announced in January, was related to a transaction before the 1979 Iranian revolution –– not for hostages and not related to the nuclear deal. When the Shah ruled Iran and was an ally of the U.S., Iran paid $400 million to the U.S. for military hardware. Before the U.S. delivered the hardware, the Shah was overthrown by Ayatollah Khomeini, and the U.S. never made the delivery. In the decades since, a tribunal has been addressing the legal aspects of the U.S. returning the funds to Iran. Iran sought billions in interest in addition to the initial payment and the tribunal was likely to rule in Iran’s favor. Instead, a settlement was reached to pay $400 million plus just $1.3 billion in interest –– a $1.7 billion total –– which was much less than what Iran sought. The remaining $1.3 billion was also paid in cash in two separate shipments in the three weeks following the initial January payment.

The initial payment –– the $400 million –– was announced on the same day the nuclear deal was implemented in January, and the same day American hostages were released from Iran. As details of the type of payment (cash) emerged in August, the White House acknowledged the payment was used as leverage to ensure the Americans were returned. But it was not ransom –– this was money already owed to Iran and settled in a separate negotiation unrelated to the nuclear deal or the hostage situation. The payment was made in cash because Iran doesn’t have access to the U.S. financial system or to U.S. dollars. The U.S. made the settlement on its terms and got the better of the deal.

Iranian Purchase of Boeing Planes

In June, a memorandum of agreement was signed for the sale of about 80 of Boeing’s commercial airliners to Iran Air. The agreement also expressed Iran Air’s intent to lease about 30 additional Boeing commercial aircraft. The sale is worth about $17 billion and would be the first commercial deal between a U.S. company and Iran since the nuclear deal was implemented, and the first time U.S. aircraft have been sold to Iran since 1979. The aircraft would be delivered to Iran Air over the next six years. According to the State Department, the deal is allowable business activity under the sanctions relief provided with the JCPOA, but only after Boeing is granted a license from the U.S. Treasury Department’s Office of Foreign Assets Control.

In January, Airbus, a competing European aircraft manufacturer, made a deal with Iran to sell Iran 118 commercial aircraft for about $25 billion. Because 10% of their aircraft are made up of U.S.-made parts, Airbus has said its deal with Iran will also require licensing and approval by the U.S. Airbus has applied for the license but it has not yet been approved.  Boeing Vice Chairman, President and CEO of Commercial Airplanes, Ray Conner, has said that if Congress blocks the deal, other U.S. companies that provide parts for its competitors should also be blocked.

In July, the House of Representatives passed legislation with bipartisan support that included two amendments blocking the sale of Boeing aircraft, as well as Airbus aircraft, to Iran over concerns that the aircraft would be used for illicit activities. One amendment would prohibit the Treasury Department Office of Foreign Assets Control from using funds to authorize the license needed to allow aircraft to be sold to Iran. The other amendment ensures Iran doesn’t receive loans from U.S. financial institutions to purchase military compatible aircraft by prohibiting the Office of Foreign Assets Control from using funds to authorize the financing of these transactions.² The President has indicated he would veto legislation that undermines the nuclear deal. If the Pentagon and CIA say the sale is not in U.S. national security interests, the deal will not go forward. On September 21, the Treasury Department approved licenses for both Boeing and Airbus to deliver planes to Iran.

Heavy Water Purchases

In April, the U.S. agreed to purchase 32 metric tons of excess heavy water from Iran for $8.6 million—which had been stored in Oman. Iran had previously been unable to find a buyer for its excess heavy water, which was estimated to be up to 50 tons, and Oman had agreed to store it until a buyer was available. This is an example of the exemptions reported earlier.

Under the JCPOA, Iran agreed to keep its stores of heavy water below 130 metric tons. Heavy water is naturally occurring, but when combined with uranium, it has serious implications of weapons grade material. According to the Department of Energy, the U.S.-purchased Iranian heavy water will be resold to domestic commercial and research buyers. The purchase serves a dual benefit in preventing Iran from exceeding its 130 metric tons of heavy water while providing heavy water for the domestic market. It’s in U.S. interests that we buy the heavy water, serving our needs while preventing Iran and other countries from acquiring it and potentially using it for nuclear weapons.

Ballistic Missile Tests

In March, Iran tested two ballistic missiles with ranges capable of hitting Israel. One of these missiles had “Israel should be wiped off the Earth” written on it in Hebrew. The U.S., Great Britain, France and Germany declared the tests “inconsistent with” and “in defiance of” United Nations Security Council Resolution 2231 in a letter to the United Nations. The tests, however, were not seen as a direct violation of the resolution due to its vague language. The resolution states “Iran is called upon not to undertake any activity related to ballistic missiles designed to be capable of delivering nuclear weapons…”³ instead of explicitly saying Iran “shall not” undertake ballistic missile activity. It’s unlikely sanctions will be imposed by the UN given Russia and China’s veto power over any possible resolution.

The U.S., however, has imposed unilateral sanctions in response to Iran’s ballistic missile tests. Following the March tests, the U.S. Treasury Department sanctioned two Iranian companies that support Iran’s ballistic missile program. In addition, two British individuals and groups, and two UAE entities, were sanctioned for helping an Iranian airline avoid sanctions.⁴ Going forward, the U.S. and European counterparts will need to respond to any further ballistic missile tests by Iran, and urge the UN Security Council to respond. Congress should continue putting pressure on Iran for its ballistic missile tests while ensuring Israel has the military equipment and aid needed to counter Iranian threats.