Iran Update: Number 156

• IAEA team holds talks with officials in Tehran; plans return visit
• EU agrees on oil embargo against Iran
• Sanctions recap– Obama signs freeze on Iranian government property in the United States
• Officials exchange visits in Israel and the United States

IAEA team holds talks with officials in Tehran; plans return visit

On January 28, a team of officials from the International Atomic Energy Agency (IAEA) made a three-day visit to Tehran. The team was led by IAEA Deputy Director-General Herman Nackaerts and included senior nuclear weapons experts Jacques Baute and Neville Whiting. The purpose of the visit was to address possible military dimensions to Iran’s nuclear program and was to possibly include a visit to Fordow, the underground nuclear facility at which uranium enrichment most recently commenced in Iran. Iranian Foreign Minister Ali Akbar Salehi gave positive remarks about the IAEA visit, even offering to extend its duration. Although Iranian officials praised the talks as ‘constructive and positive,’ Nackaerts stated that there remained ‘a lot of work to be done.’ Reports indicated that Iranian officials had not answered some of the questions raised by the November IAEA report, and the IAEA team had been denied access to sites and personnel, notably Mohsen Fakhrizadeh, an academic thought to be heavily involved with the Iranian nuclear programme.

American and European officials branded the IAEA visit a ‘failure,’ believing that Iran’s leaders were simply buying time and resisting international pressure. Further talks are scheduled for February 20-21.

Also at the end of January, Foreign Minister Salehi claimed that Iranian scientists would soon install locally-fabricated fuel plates enriched to 20 percent to power the Tehran Research Reactor (TRR), which is used for medical purposes and under IAEA safeguards.

EU Agrees on an Oil Embargo against Iran

On January 23, the European Union agreed to a phased oil embargo against Iran and a freeze on the assets of Iran’s Central Bank. The embargo bans any future oil contracts with Iran immediately, including crude oil, petroleum products and petrochemical products, as well as equipment and technology for Iran’s oil sector. Any existing contracts with Iran need to conclude by July 1, giving EU member states time to source alternative supplies of oil. Europe accounts for one fifth of Iranian oil exports, and countries such as Italy, Greece and Spain are expected to be affected the most by the embargo, owing to existing oil they are owed from longstanding ‘buyback’ contracts on favourable credit terms with Iran.

The embargo came as Iran expressed its willingness to engage in negotiations with the P5 + 1, since talks stalled almost a year ago in Turkey. In response, Iran has threatened to terminate its oil contracts with European countries before the embargo comes into effect, as early as February. Iran’s Parliament has been debating legislation against the European embargo – its foreign policy committee head declaring that the oil embargo will hurt EU states more than it will Iran. Furthermore, attempts by other Arab oil producers to fill any shortfalls in oil supply in the international market (notably Saudi Arabia, Iraq and Libya) were labelled as ‘unfriendly’ by a deputy foreign minister. However, the draft bill against the oil embargo was postponed in Parliament, and Iran’s Oil Minister Rostam Qasemi said Iran would only cut exports to ‘some’ countries, failing to identify which ones.

Sanctions recap– Obama signs freeze on Iranian government property in the United States

Continuing with its policy of financial and economic sanctions against Iran, on February 7, U.S. President Barack Obama signed an executive order to enforce a freeze on all property in the United States belonging to the Central Bank of Iran, the Iranian government, and other related financial institutions. Further measures are currently awaiting a vote in the United States’ Senate, including sanctions against Iran’s use of the global telecommunications network. Titled the ‘Iran Sanctions, Accountability and Human Rights Act,’ the legislation would target SWIFT (the Society for Worldwide Interbank Financial Telecommunication) in particular, denying Iran access to billions of dollars in revenue from abroad that is routed through this system. The measure would complement existing legislation penalising foreign banks that conduct business with the central bank, by forcing the network to expel Iranian banks that have already been blacklisted. It would also force greater transparency from companies dealing with sanctioned Iranian businesses or individuals, to disclose their activities. The act is strongly expected to pass.

Despite its efforts, including visits to China and Japan by Secretary of the Treasury, Timothy Geithner, however, the United States has been unsuccessful in gaining China or India’s support for further sanctions against Iran. And although Chinese Prime Minister Wen Jiabao undertook a six-day tour in the Middle East and signed oil contracts with Saudi Arabia and Qatar, China will continue to import oil from Iran, filling the void left by European countries. India’s Finance Minister said India would also continue to buy Iranian oil because there simply were not enough alternative sources to meet its energy needs.

Iran’s economy is widely thought to be deteriorating from the impact of international sanctions, visible when in January the rial fell to its lowest point against the dollar in unofficial foreign exchange transactions, and there were waves of panic-buying of foreign currencies by Iranian households and small investors. In the midst of increasing inflation, shortages and unemployment, Iranian President Mahmoud Ahmadinejad was forced to approve a sharp rise in bank interest rates to prevent further devaluation of the country’s currency (already at 8 percent). Supreme Leader Ayatollah Khamenei stated that the repercussions of international sanctions had been ‘painful and crippling’, but insisted they would make Iran ‘more self-reliant’. The Iranian Foreign Ministry also dismissed the latest round of sanctions as part of a ‘psychological war’ to divide Iranian citizens, maintaining that they would not affect the nuclear programme.

Officials Exchange Visits Between Israel and the United States

Having postponed a major joint military exercise with Israel a week earlier, United States Chairman of the Joint Chiefs of Staff, General Martin E. Dempsey visited Israel on January 20 to discuss regional and international security issues, and probably to dissuade the Israeli government from unilateral action against Iran’s nuclear facilities. The head of the Israeli intelligence service, Tamir Pardo, made a secret visit to his counterparts in Washington, DC at the end of January, apparently to discuss a possible Israeli military strike against Iranian nuclear facilities according to a Congressional hearing this month. Iran’s Supreme Leader, the Ayatollah Khamenei, reacted sharply in a speech broadcast across Iran, issuing a warning that Iran had its own ‘tools of war’ to respond to threats of war, and would use them where necessary.

This is a time of increasing uncertainty over Israel’s next moves. In the past week, the Obama Administration has given mixed signals on its assessment of possible Israeli military action. Whilst Secretary of Defense, Leon Panetta warned there was a ‘strong likelihood’ Israel would launch a military strike against Iran in late Spring to avoid Iran entering a ‘zone of immunity,’ the Director of National Intelligence, James Clapper, conceded in an annual worldwide threat assessment that the United States has little indication that Iran would proceed to assemble nuclear weapons, and that the U.S. intelligence community did not believe that U.S. sanctions would bring about the downfall of the Iranian leadership. President Obama stated his belief that Israel had yet to make a decision, and that both nations upheld diplomacy as the ‘preferred solution’.

Nikita Shah, BASIC

Stories and Links

Senate resolution would rule out containing nuclear Iran
Laura Rozen, The Envoy via Yahoo! News, February 8, 2012;_ylc=X3oDMTEwaXQ4MGw5BF9TAzIwMjM4Mjc1MjQEZW1haWxJZAMxMzI4NzUzNzIy

‘India and Iran Reach Oil Pay Deal despite Sanctions’
BBC, February 8, 2012

Obama Imposes Freeze on Iran Property in the US
Jackie Calmes and Rick Gladstone, The New York Times, February 6, 2012

Iran Sanctions Bid Targets Oil, Tanker Companies to Cut Exports
Indira A.R. Lakshmanan, Bloomberg, February 6, 2012

‘No Israel Decision on Attack, Obama Says’
Scott Shane, The New York Times, February 6, 2012

‘War of Nerves: Iran’s Warships Arrive in Saudi Arabia’
RT, February, 5, 2012

U.S. Lawmakers Urge SWIFT to Drop Iranian Banks
Roberta Rampton, News Daily, February 2, 2012

Little New in IAEA-Iran Talks: Diplomats
Fredrik Dahl, Reuters, February 2, 2012

Obama: U.S. Has ‘Very Good’ Intell on Iran
Julie Pace, TIME, February 1, 2012,8599,2106232,00.html

IAEA Chief Inspector Says Still Work to Do in Iran
The Telegraph, February 1, 2012

Mossad Chief Held Talks on Iran in US Visit: CIA
Agence France Presse, January 31, 2012

As Syria Wobbles Under Pressure, Iran Feels the Weight of an Alliance
Rick Gladstone, The New York Times, January 31, 2012

Iran Says to Stop Some Oil Sales, Inspectors Visit
India Times, January 30, 2012

India To Continue buying Iran’s Oil, Defying Sanctions
The Associated Press, January 30, 2012

Israel Senses Bluffing in Iran’s Threats of Retaliation
Ethan Bronner, The New York Times, January 26, 2012

EU Imposes Iran Oil Embargo
Henry Chu and Paul Richter, Los Angeles Times, January 24, 2012

Iran Backs From Warning on U.S. Ships
Reuters, January 21, 2012

Iran Cracks Down on Dollar Trades
Bill Spindle, Benoit Faucon, Farnaz Fassihi, Wall Street Journal, January 17, 2012

‘Russia says it Would Be Threatened by Iran Military Action’
Reuters, January 13, 2012

Foreign Ministry Denies Sanctions’ Effect on Currency
Iran Briefing, January 3, 2012

Foreign Ministry denies sanctions’ effect on currency

Editorials, Analyses and Reports

The Economic Crisis in Iran
Masih Alinejad, Huffington Post, February 7, 2012

Obama Seeks to Cool War Fever While Keeping Up Pressure on Iran
Tony Karon, TIME, February 7, 2012

The Not-So-Great Game: What would happen if we stopped playing games with Iran?
John Feffer, Word Beat-Foreign Policy in Focus, Institute for Policy Studies, February 7, 2012

Negotiating with Iran: Obstacles and Outcomes
Carnegie Endowment for International Peace event in Brussels, with James Acton, Shahram Chubin, and Jessica Tuchman Mathews, February 6, 2012

Executive Order on Blocking the Property of the Government of Iran and Iranian Financial Institutions
Office of the Press Secretary, White House, February 6, 2012

Poll: Voters willing to see US attack Iran over nuclear weapons
Jonathan Easley, The Hill, February 6, 2012

The Iranian Nuclear Issue: Achieving a Win-Win Diplomatic Solution
Pierre Goldschmidt, Carnegie Endowment for International Peace, February 4, 2012

The Futility of Predicting Iran’s Future
Bilal Y. Saab, Foreign Policy, February 2, 2012

Envisioning a Deal with Iran
William H. Luers and Thomas Pickering, The New York Times, February 2, 2012

Key Official U.S. and IAEA Statements About Iran’s Nuclear Programs
Anthony Cordesman, CSIS, February 2, 2012

Meeting the Challenge, Stopping the Clock
Bipartisan Policy Center, February 1, 2012

Unclassified Statement for the Record on the Worldwide Threat Assessment of the United States Intelligence Community for the Senate Select Committee on Intelligence
James R. Clapper, Office of the Director of National Intelligence, January 31, 2012

Having It Both Ways: Iran and the Gap Between Theory and Practice in Chinese Foreign Policy
Banyan Blog, The Economist, January 28, 2012

Joint Motion For a Resolution on Iran and its Nuclear Programme
European Parliament, January 25, 2012

Confronting Iran in Year of Elections
David E. Sanger, The New York Times, January 21, 2012

A Nuclear-Free Zone in the Middle East?
Letters to the Editor, The New York Times, January 19, 2012

Iran, Restraint and Grand Strategy
Brendan R. Green, The National Interest, January 18, 2012

Not Time to Attack Iran
Colin Kahl, Foreign Affairs, January 17, 2012

A Single Roll of the Dice: Obama’s Diplomacy with Iran
Trita Parsi, Yale University Press, 2012

A Crude Threat: The Limits of an Iranian Missile Campaign Against Saudi Arabian Oil
Joshua R. Itzkowitz Shifrinson and Miranda Priebe, International Security, 36:1 (2011), pp. 167-201

Closing Time: Assessing the Iranian Threat to the Strait of Hormuz
Caitlin Talmadge, International Security, 33:1 (2008), pp. 82-117


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