CNAS Press Note: The JCPOA with Iran, One Year Later

Washington, July 13 – As Iran and international powers approach the one-year anniversary of their historic nuclear accord on July 14, Center for a New American Security (CNAS) Senior Fellows Ilan Goldenberg and Elizabeth Rosenberg have written a new Press Note reflecting on the success of the Joint Comprehensive Plan of Action (JCPOA) with Iran and the challenges that lie ahead.

The full Press Note is below:

One year after Iran traded restraint on in its nuclear program for relief from U.S. and international sanctions in a landmark agreement, the Joint Comprehensive Plan of Action (JCPOA) is delivering results. This deal has curbed and reversed Iran’s nuclear activity, imposing powerful inspection and verification requirements on enrichment activity of the state. Iran is not the nuclear menace to the region it was a year ago, and the proliferation security community has taken a major step forward in the creation of a successful U.N.-led process for controlling the dangerous nuclear activity of a rogue state. Critics of the deal remain on all sides, however, and the slow pace of economic relief in Iran is fueling fear and speculation that political events or leadership changes in the United States or Iran could precipitate the collapse of the deal.

On the nuclear front, Iran has exceeded expectations. Most experts and government officials did not believe that Iran would be able to execute its initial nuclear obligations under the JCPOA until the spring or summer of 2016. Instead, Iran was able to dismantle two thirds of its centrifuges and ship out 97 percent of of its low enriched uranium (LEU) by January 2016, taking its overt dash time to a nuclear weapon from a matter of weeks to a full year. Meanwhile, Iran has submitted to an unprecedented inspections and verification regime that makes it extraordinarily difficult for it to pursue a meaningful covert nuclear program.

Notwithstanding complaints from Iranian officials that they have received scant economic relief from the deal and that the United States is dragging its feet on sanctions commitments, new commerce is now flowing to Iran. Dozens of banking ties have been established with international financial institutions, oil sales have quickly risen to levels seen prior to the imposition of the toughest sanctions several years ago, and European and the U.S. business leaders have announced major new deals with Iranian companies. The IMF predicts a robust, positive growth rate for Iran this year and continued progress on economic diversification and inflation. Iran’s self-imposed economic problems will ensure a slow pace of change, quite apart from the impediments of remaining sanctions, but the trend line is unambiguous. Dissatisfaction voiced in Iran over the slow pace of economic change should be viewed primarily as a political attempt to extract greater sanctions concessions from the West. It is also a tactic by which Iranian pragmatists hedge themselves politically with hardliners at home.

But even while there is clear progress on the nuclear accord, Iran’s regional behavior remains highly problematic. Provocative ballistic missile launches and continuing support for President Assad, Hezbollah, and Iraqi Shia militias are clear signs that the United States and Iran still have conflicting interests in the Middle East that are unlikely to change anytime soon.  And competition between pragmatists and hardliners inside Iran has only intensified since the signing of the JCPOA as President Rouhani and his allies try to leverage the nuclear agreement to gain more influence while opponents of the deal try to box him in.

This belligerence and internal competition is a red flag for would-be investors circumspect about making any long-term bets with what is still a revolutionary state. The hopeful, high-level commitments Iran has made to international technical bodies to clean up its corrupt banking system and address money laundering and terrorist financing deficiencies are woefully inadequate signals that Tehran plans on becoming a more responsible international actor.

Ultimately, the challenge for the United States and its international partners will be to balance three imperatives: maintain the nuclear security gains of the JCPOA; find the appropriate means to counter Iran’s destabilizing regional activity; and expand communication channels with Iran to try and seek additional areas of common interest.

Goldenberg and Rosenberg are available for interviews. To arrange an interview, please contact Neal Urwitz at nurwitz@cnas.org or 202-457-9409.