Chapter 7 - Sustaining the JCPOA: Iranian threats, challenges and calculations

Iran, the P5+1^{Footnote 13} and the International Atomic Energy Agency (IAEA) have each taken a number of steps to implement the Joint Comprehensive Plan of Action (JCPOA) since July 2015. Iran has scaled back key elements of its sensitive nuclear activities, granted more access to the IAEA to assure the international community that nuclear material is not being diverted from peaceful use, and provided more information about its past nuclear activities to allow the IAEA to clarify the Possible Military Dimensions (PMD) and nature of its past weapon-related activities. The P5+1 for its part has started to lift sanctions and grant Iran access to its frozen assets abroad. However, this process and its impact are disputed: a key challenge in the implementation process lies in Iran’s ability to feel the effects of sanctions relief, rather than only witness sanctions being lifted.

...a key challenge in the implementation process lies in Iran’s ability to feel the effects of sanctions relief, rather than only witness sanctions being lifted.

In the United States, some believe that Washington does not have an obligation to facilitate Iran’s reintegration into the world economy, while others contend that the sustainability of the JCPOA and the future of US-Iran and West-Iran relations are contingent upon the country being able to rebuild its economy^{Footnote 14}. The IAEA for its part has produced the PMD report, shedding light on Tehran’s past activities. The report divides Iranian nuclear activities into three key timeframes, which reflect the progression of Iran’s nuclear planning since 2002, when the Iranian nuclear file was revealed:

1. Pre-2003: Iran had a consolidated nuclear weapons program;
2. 2003-2009: Iran conducted some weapon-related research and development; and
3. Since 2009: No indication of a weapons program.

While the report has been controversial in the United States, it does provide invaluable insight into Iran’s nuclear ambitions and thinking, and confirms the US intelligence community’s findings on the subject. The IAEA has also started to produce progress reports on the implementation of the JCPOA, confirming Iranian compliance with it so far. This paper assesses Iran’s nuclear thinking in the post-JCPOA era, before discussing the potential challenges to the JCPOA and its implementation, which could alter Tehran’s current nuclear policy.

Nuclear weapons in Iran’s security calculations following the JCPOA

The PMD report confirms the UN intelligence community’s assessment that there is no indication of Iran pursuing a nuclear weapon since 2009. Prior to the JCPOA, the US intelligence community had assessed that, while Tehran had the scientific, technical, and industrial capabilities to build a nuclear weapon, it had not made the political decision to pursue a nuclear weapon^{Footnote 15}. The PMD report does provide more information about Iran’s nuclear pursuits, depicting a clearer picture of Iran’s weapon-related activities. Prior to 2009, Iran had adopted a policy of hedging, one similar to that pursued by the Shah when he initiated the nuclear program as part of the Atoms for Peace initiative in the 1950s. In other words, while the country pursued a nuclear energy program for the legitimate reasons it presented to the international community (for use in medical, industrial, research, power and other peaceful areas), it also conducted research and development on weaponisation.

Today, with the JCPOA, it is much more difficult for Tehran to continue this policy of hedging for the duration of the JCPOA. It is unclear and difficult to predict what Iran will do after the deal. If the JCPOA is implemented adequately, Iran’s activities will be limited to those allowed under the NPT, declared in accordance with its Safeguards Agreement and the Additional Protocol, and with the terms of the JCPOA. Moreover, the implementation process will be crucial in determining the future of the Iranian nuclear program and Tehran’s nuclear thinking: if it feels the effects of the political, economic, and nuclear benefits of the JCPOA, the Iranian leadership will be more likely to continue to comply with international obligations. In other words, if Tehran is able to continue its nuclear program, and reintegrate into the world political and economic stage, it will be more likely to continue complying with the terms of the JCPOA. However, if Iran does not receive the sanctions relief it bargained for, or sees itself unable to utilise the procurement channel, it may resume activities relating to hedging by either cheating or reneging on the pledges it made in the JCPOA. 

Challenges to JCPOA implementation

Challenges to the JCPOA from Iran are likely to stem from three key areas: defence-related activities, which do not directly violate the JCPOA but challenge it; Iran’s regional activities; and the increasingly clear perception in Iran that the country received the shorter end of the stick from the JCPOA.

Defence-related activities

Iran is not likely to test directly the JCPOA if the status quo persists. In other words, Iran is not likely to violate directly the terms of the JCPOA by resuming prohibited nuclear activities or reversing the measures taken as part of the JCPOA. Instead, the country is likely to continue, and potentially even increase, its non-nuclear activities. These non-nuclear activities pose challenges for the JCPOA, and create discomfort in the West, particularly the United States, and in the Middle East, especially Israel and the Gulf Cooperation Council (GCC) members. These activities include ballistic missile tests, cyber activities (including, cyberattacks and cyberespionage), and the development of the space program. These activities are mainly led by the Islamic Revolutionary Guard Corps (IRGC), and undertaken for a number of reasons. First, they aim to compensate for what many in the IRGC and other hardliners in Iran perceive as excessive concessions in the deal. As such, they aim to appease domestic critics of the latter and Rouhani’s security and foreign policies, which are viewed as too soft. Second, these activities are a way for the IRGC to increase the country’s material power, while also projecting power, and showing adversaries, such as the United States, Israel and Saudi Arabia, that Iran remains a force to be reckoned with and can push boundaries.

Regional activities

Iran’s regional activities have long been a source of concern to its neighbours and Western powers, particularly the United States, which has a network of allies and interests in the Middle East. However, since the 2003 US intervention in Iraq and the Arab Spring, the GCC views Iran as its main adversary and the gravest threat to its security and interests. Today, this threat surpasses that represented by Israel, and Iran has replaced the traditional Arab foe, Israel, in the GCC psyche^{Footnote 16}. Iranian “expansion” and “influence” in the region, and “interference with Arab affairs” are a key concern for the GCC. The United States also sees an emboldened Iran as a key challenge to its national security and interests in the region, but also increasingly recognises the potential areas for collaboration (particularly in Iraq and Afghanistan) in a regional environment where Tehran has more influence, while the GCC states’ interests are not necessarily aligned with its own. This in turn further worries the GCC^{Footnote 17}. Iran for its part believes that it needs a network of proxy groups and other allies to ensure its security, and that unless it maintains a presence and influence in various parts of the Middle East, where the central authorities have either collapsed or become so weak that they are on the verge of collapse, it will have to fight various threats at home^{Footnote 18}. Consequently, two challenges stem from Iran’s regional influence. First, some of these activities directly or indirectly undermine or represent a threat to US interests. Second, what is viewed as Iran’s increased presence in the region, along with its potential collaboration with the United States, make some GCC states apprehensive.

Iran’s regional activities and the situation in Syria, Iraq, Yemen, Lebanon and Afghanistan were not up for discussion during the nuclear negotiations. The United States and Iran in particular did discuss regional issues on the margin of the talks (despite denying it publicly), but Tehran’s regional activities and support for terrorist groups were outside the scope of the JCPOA. Yet, these challenges can affect the implementation of the deal. Indeed, as Iran continues its regional involvement, the United States is under increasing pressure to respond (both for domestic reasons and due to the interests and concerns of its allies). If this response results in more sanctions, it will create more barriers to Iran feeling the benefits of sanctions relief despite sanctions being lifted, which will in turn lead Iran to become increasingly disillusioned with the JCPOA. It is important also to note that while much of Washington’s internal discussion since the JCPOA has focused on how to reassure GCC allies, there is no clear indication that any measure the United States would be able or willing to take would help alleviate these concerns^{Footnote 19}. Hence, while sanctions relating to Iran’s regional activities will certainly have an impact on the implementation of the JCPOA, they are unlikely to reassure the concerned GCC states. This may, in fact, be in conflict with most of the GCC states’ financial interests, which are to increase economic ties and trade with Iran. 

Economic recovery

The Iranian optimism of a post-sanctions era, bringing about economic recovery and paving the way for Iran’s reintegration into the world economy and global market, has almost entirely dissipated, leaving in its place pressing concerns. If Iran fails to receive the economic recovery it bargained for, it will be less likely to sustain the JCPOA and may contemplate resuming its non‑compliance. Two categories of challenges exist in the process of granting Iran sanctions relief. First, some of these challenges are external to Iran and stem from US domestic politics, the lack of clarity from key US institutions, and the remaining sanctions. Second, some of these challenges stem from Tehran’s own domestic politics and economy, including the Revolutionary Guards’ presence in most important sectors of the economy, corruption and mismanagement, as well as lack of political continuity. These challenges continue to deter businesses from investing in Iran. In spring 2016, the West made attempts to reassure investors and encourage them to go to Iran. For its part, Iran is aware of the domestic and structural challenges and is taking steps to address them^{Footnote 20}. This is critical to the country’s ability to attract investors and businesses, as these groups will return to Iran only as the domestic environment becomes more conducive to investment with the continued implementation of the JCPOA.

While various blocs in Iran have different views of the nuclear deal, they virtually all agree that more foreign investment and trade are positive. But hardliners, in particular Supreme Leader Khamenei, believe they have been proven right that sanctions would not be removed, more sanctions would be imposed, and that the United States would create more obstacles in the way of Iran’s political and economic pursuits. If the status quo persists, the hardliners stand to benefit from the lack of progress on sanctions relief, and will have more tools at their disposal to undermine Rouhani in 2017.