13 January 2021

 

Full Report: Iran

Predictions

  • Iran’s announcement to enrich uranium to 20% will delay breakthrough in potential talks with US but will not derail possible US return to nuclear deal
  • Tehran will use IRGC as leverage in negotiations with US, increasing risk of low-level harassment of shipping in Gulf waters over next year
  • Any provocative measures will be carefully calibrated to avoid serious escalation with E3 and US that could derail negotiations

 

Event

Tehran announced on 4 January that it had begun producing low-enriched uranium up to 20%, in contravention of the Joint Comprehensive Plan of Action (JCPOA). Separately, Iran’s Revolutionary Guard (IRGC) seized the South Korean-flagged chemical tanker Hankuk Chemi near the Strait of Hormuz on 4 January, diverting it to Bandar Abbas, where it remains moored allegedly due to “environmental pollution”. The move came amidst ongoing discussions with South Korea over Tehran’s demand for Seoul to release USD 7 billion in funds frozen under US sanctions.

Context

Iran’s announcement follows the ratification of a law by the Majlis (parliament) in December, which included a stipulation to increase stockpiles of highly enriched uranium if certain US sanctions were not removed within one month (see our 9 December report). The move also comes around the one-year anniversary of the assassination of IRGC Quds Force leader General Qassem Soleimani, who was killed in a US airstrike on 3 January 2020, which has stoked tensions between Washington and Tehran in recent weeks. Soleimani’s assassination marked the first of a series of embarrassing security failures for Iran that have been tied to the US and Israel, including the assassination of a senior nuclear scientist in November.

Iran: Announcement to enrich uranium to 20% will delay breakthrough in potential talks with US

Analysis

Tehran has taken several steps away from compliance with the JCPOA since 2019, but the latest announcement represents its most significant breach of the deal, not least because it violates a key red line for the JCPOA’s European signatories (known as the E3). The EU has called on Tehran to reverse its decision, but the absence of a more significant response indicates an understanding that the move is, at least partly, intended to improve Tehran’s negotiating position in potential future talks with the US by presenting a return to compliance with the JCPOA as a major concession requiring the lifting of sanctions in exchange. Moreover, the timing of the announcement will have also been intended to signal Tehran’s continued anger over Soleimani’s assassination. Meanwhile, the IRGC will want to demonstrate its strength following last year’s security failures, and may aim to do so with the seizure of the South Korean tanker as this illustrates its ability to cause disruption in Gulf waters. That said, the tanker’s detention is almost certainly also intended to gain leverage over Seoul during negotiations over the release of frozen funds.

Domestically, the rapid application of the law demonstrates how President Rouhani, who has opposed the legislation, is progressively losing influence over major decisions on the nuclear dossier, and hardline factions will seek to undermine him further in order to strengthen their position ahead of presidential polls in June. Indeed, one lawmaker threatened on 9 January that Tehran would expel UN nuclear inspectors should US sanctions not be lifted by 21 February, and further such rhetoric is likely in the coming months.

Outlook

The growing influence of hardliners means Tehran is likely to pursue a more assertive policy agenda in the coming months, including further steps away from compliance with the nuclear deal. However, these measures, including its increased production of low-enriched uranium, are reversible and will therefore not trigger a breakdown of the JCPOA, nor prevent negotiations with the US once US President-elect Biden is inaugurated. However, it is going to make negotiations more complicated and will delay any potentially positive outcome of the talks, such as sanctions relief. Meanwhile, Tehran will use the IRGC as leverage in any negotiations with Washington, increasing the risk of low-level harassment of shipping in Gulf waters over the course of the next year as Iran seeks to pressure the US over concessions. That said, while further provocative measures by the IRGC are likely in the coming months, these will be carefully calibrated to avoid a serious escalation with the US and E3 that could derail Washington’s return to the JCPOA.

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