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Reuters:
"Behind closed doors in a 19th-century Viennese palace, U.S. and
European negotiators have tried to scare Iran with facts and figures
showing that without a swift nuclear deal it will plunge further into
economic ruin. In conference rooms at the Palais Coburg, Western
officials have repeatedly warned Iranian counterparts over the past six
months that more economic pain is a risk for an OPEC member whose oil
exports have already shrunk to a fraction of what they could have been,
diplomats and Iranian officials told Reuters. Such tactics run parallel
to the key incentive on offer to Iran - relief from sanctions. And
diplomats say the United States, Britain, France, Germany, Russia and
China are considering lifting sanctions rapidly - if Tehran accepts a
deal to curb a nuclear program that world powers suspect may have a
weapons purpose despite Iran's steadfast denials... Its sole existing
power plant, at Bushehr, took nearly 40 years to finish - by Russian
contractors - at an $11 billion cost, the Carnegie Endowment for
International Peace think-tank estimates, making it one of the world's
most expensive reactors. Moreover, Carnegie estimates, Bushehr provides
only 2 percent of Iran's electricity needs, while 15 percent of Iran's
generated electricity is lost through obsolete and poorly maintained
transmission lines. U.S. and European diplomats say it is financially
illogical for Iran to pursue uranium enrichment if it only wants to
fuel nuclear reactors and not produce nuclear weapons. This is an
argument, Western diplomats say, that Russia has made forcefully behind
closed doors - that it would be significantly cheaper and safer for
Iran to continue purchasing enriched nuclear fuel from Russia in
accordance with a deal Tehran has with Moscow for Bushehr. But Iran has
disagreed... 'Iran's economy today is about 25 percent smaller than it
would have been if we had not imposed the oil and financial sanctions,'
a senior U.S. Treasury Department official told Reuters in an
interview. 'The Iranian people need to understand the staggering
financial costs of the regime's nuclear program,' a senior U.S.
administration official said. 'The math is clear in terms of both lost
revenue from sanctions and the extraordinary cost of the program
itself. It simply makes no sense in the context of a civilian nuclear
program.' A European diplomat echoed his remarks: 'We have tried to
make Iran understand that they will face economic ruin without an
agreement. The ball is in their court.'" http://t.uani.com/WhNM8l
Al-Monitor:
"US Secretary of State John Kerry told lawmakers July 17 that
passing new triggered sanctions on Iran might help unlock a nuclear
deal, a complete reversal from the policy of the President Barack Obama
administration until now, several House Democrats of different
ideological stripes told Al-Monitor. Kerry made the remarks at a State
Department meeting with a group of Jewish lawmakers who are regularly
briefed on issues pertaining to Israel. He discussed the likely need
for an extension of the negotiations of up to four months as well as
the Israel-Gaza conflict. He made it clear that he was just floating
ideas, several lawmakers said, and had not gotten Obama to sign off on
them. 'He said it might be useful as a spur,' one lawmaker said. 'But
he said he hadn't checked with the White House.' The State Department
denies any change of policy." http://t.uani.com/1yByxVM
AFP:
"Iran and world powers are 'likely' to agree Friday on the terms
of extending a Sunday deadline to reach a nuclear deal, China's chief
negotiator in talks in Vienna said. 'Yes, it is likely,' Wang Qun told
reporters, adding however that Iran and the five permanent members of
the UN Security plus Germany were still 'discussing' how long the
extension would be and other issues... Washington and Iran earlier this
week laid the groundwork for pushing back the deadline after US
Secretary of State John Kerry held two days of intense talks with his
Iranian counterpart that failed to produce a breakthrough." http://t.uani.com/1jXme30
Nuclear Program & Negotiations
Guardian:
"Nuclear negotiations with Iran in Vienna stalled in recent weeks
following disagreements over limits on Iran's enrichment capacity and
how long those limits should last. All sides at the talks are prepared
to extend them beyond Sunday's deadline, but an extension faces
significant opposition in the US Congress. The proposed extension would
last four months, but there is a dispute in Vienna over what the terms
of that extension would be. Iran wants more of its assets from oil
sales held in western banks to be unfrozen during the extended
negotiation. The US wants Tehran to reduce its stockpile of enrichment
in return. The argument has held up an announcement of the extended
deadline, with US and Iranian officials haggling until 1am and resuming
discussions later on Friday morning." http://t.uani.com/1rwq42M
Sanctions
Relief
Reuters:
"Iran's iron ore industry is in crisis because of low prices, a
senior industry official said, with June exports the lowest in nearly
two years and ore piling up at ports. The country's top non-oil export
had been generating much-needed revenue as crude sales drop by nearly
$4 billion a month from levels before sanctions on oil kicked in.
Nearly all Iran's iron ore exports go to China and were worth a total
of $2.4 billion in 2013, based on Chinese customs data. But a supply
glut, as major iron ore miners rushed to fill Chinese demand that has
fallen short of expectations, has pushed prices to half the record seen
in 2011. That has hurt smaller and higher cost producers such as Iran,
the world's eighth-biggest shipper of the raw material, opening a gap
for the big three of Rio Tinto, BHP Billiton and Vale SA. Iran's iron
ore exports dropped by a third in June from a year ago to 1.2 million
tonnes, the lowest since September 2012, according to the Iranian Iron
Ore Producers and Exporters Association (IRIOPEX)." http://t.uani.com/1rwoYUU
Gaza War
Al-Monitor:
"Nothing in Tehran suggests that three wars are taking place
within what it calls its national security borders. 'The bloc is under
fire,' said an Iranian official who spoke with Al-Monitor on condition
of anonymity. 'It is one battle from Baghdad to Gaza. We believe that
all that's happening is linked to each other. Our enemies want us to be
weak so that they can impose their conditions on us, but this won't
happen.' The war in Gaza seems to be very high on the Iranian agenda.
Supreme Leader Ayatollah Ali Khamenei spoke twice within three days
calling on Muslims to unite. 'The Gaza incidents are utterly
disastrous, and the Zionist regime is carrying out the current
atrocities by taking advantage of the negligence of the Islamic world,'
he said, adding, 'The killing of the people of Gaza by the usurping
Zionists should spur Islamic governments and nations to resolve their
differences and become united.' ... According to information acquired
by Al-Monitor from sources in Tehran, Gaza and Beirut, a new strategy
was adopted after the July-August 2006 war in Lebanon with respect to
military support. The main goal was protecting the fighting groups from
the danger of a military siege by making them capable of producing as
many rockets as they need on the spot. 'The main goal was letting our
men gain the knowledge, and then everything is easy,' said Amin, a
Palestinian official Al-Monitor interviewed via telephone. 'This was
the idea of Imad Mughniyeh, the Hezbollah military commander. He
thought that having (rocket-making) knowledge in the brains of experts
would mean that Israel would not be able to achieve anything even if it
destroyed the entire rocket stockpile; that doesn't mean halting the
rocket support.'" http://t.uani.com/1r8TnJz
Iraq Crisis
AP:
"A powerful Iranian general has emerged as the chief tactician in
Iraq's fight against Sunni militants, working on the front lines alongside
120 advisers from his country's Revolutionary Guard to direct Shiite
militiamen and government forces in the smallest details of battle,
militia commanders and government officials say. The startlingly
hands-on role of Iranian Gen. Ghasem Soleimani points to the extent of
the Shiite-led Iraqi government's reliance on its ally Tehran. It also
strikes a strong contrast with the more methodical, cautious approach
of the United States, Iran's rival for influence in Iraq. Shiite
fighters have come to idolize the Iranians who have moved into the heat
of battle alongside them - with two Iranian advisers killed in fighting
- while government officials grumble the United States has failed to
come to their aid. The Iranian role, however, risks further sharpening
the sectarian rifts in the conflict. At a time when the U.S. and others
are pressing Iraq's government to reach out to Sunnis to reduce support
for the insurgency, the effective Iranian command of Iraq's defense is
likely to further alienate Sunnis, who have long accused Shiite-led
Iran of trying to dominate Iraq through its allies here." http://t.uani.com/Uftefz
Human Rights
ICHRI:
"A Baha'i man, Sarang Ettehadi, has been summoned to begin serving
his one-year prison sentence on charges of 'propaganda against the
state through participation in Baha'i worship and prayer groups.'
Ettehadi told the International Campaign for Human Rights in Iran that
he had been instructed via a telephone call from the Evin Prison Courts
on July 6, 2014, to appear to begin serving his sentence within a week.
Ettehadi's wife, Nasim Ashrafi, already began serving her sentence at
Evin Prison on May 6, 2014." http://t.uani.com/1niNqd5
Opinion &
Analysis
Patrick Clawson
in WINEP: "The firm stance Tehran has taken in the
nuclear negotiations seems out of step with the image of a country
desperate to achieve sanctions relief. That raises the question of just
how crippling the sanctions imposed on Iran have been. The answer? No
longer so much. The intensified U.S. and European sanctions in the
Iranian year 2012/13 hit the Islamic Republic's economy hard, to the
considerable surprise of the country's elite. As an April 2014
International Monetary Fund (IMF) report details, oil export proceeds
fell the equivalent of 15% of gross domestic product during that
period. A comparable shock to the U.S. economy would be a $2.5 trillion
annual loss. Similarly, real GDP fell by 8.5% over 2012/13 and 2013/14,
or about twice as much as the 4.3% drop in U.S. output during the
2007-2009 recession. Meanwhile, inflation rose to 45% in 2012/13, and
the rial lost 60% of its value on the parallel market. Against this
backdrop, the spring 2013 presidential election focused on the economy.
Hassan Rouhani's candidacy took off in no small part because he hammered
home the theme that improving the economy required a nuclear deal with
the West -- that being the only way to obtain sanctions relief, attract
foreign investment, and secure trade openings for Iran. Yet even
without a comprehensive deal and major relief, the government has been
able to establish a modus vivendi under sanctions. Iran's economy
contracted sharply in part because authorities were putting in place
the kind of adjustment measures the IMF often recommends when a country
faces an external shock. Those measures had the impact the IMF
typically predicts: pain followed by gain. Iran has already experienced
the pain; now it is beginning to see the gain... Today, Iran's foreign
trade position is strong despite sanctions. The April 2014 IMF report
showed that in 2013/14, the country imported $73 billion in goods and
services and exported $46 billion in non-oil goods and services,
meaning it would have needed only $27 billion in oil and gas exports to
balance its current account -- the equivalent of 740,000 barrels of oil
per day (b/d) at $100 a barrel. In fact, Iran exported more crude than
that in 2103/14; adding in sales of other petroleum products, it
totaled $56 billion in oil and gas exports, giving it a $29 billion
current account surplus. Looking at future years, the IMF forecasts
that Iran would need only $28 billion in oil and gas exports to balance
its account in 2019/20, which it could earn even if such exports fall
considerably from their current level. It is instructive to compare these
figures with the sanctions relief provided earlier this year by the
interim nuclear deal known as the Joint Plan of Action (JPOA). Even if
one assumes that there is no leakage in the sanctions regime, the
agreement allows Iran to export 1 million b/d of crude oil worth about
$35 billion a year -- an amount more than sufficient to meet its
foreign exchange needs for the foreseeable future. Of course, this
assumes that Tehran has access to the proceeds from these sales.
Because of U.S. banking restrictions, most such proceeds are tied up in
the countries to which the oil was exported, meaning Iran can use the
funds only to import from those countries. While that is a problem,
Iran's situation under the JPOA is actually better than the 1 million
b/d target cited by the State Department. This is largely due to its
substantial exports of non-crude oil -- especially the $10 billion it
receives annually from 300,000 b/d of condensates exports that the
department insists are not counted in the 1 million b/d target. Tighter
monetary policy under Rouhani has also brought inflation down sharply,
from a rate of over 40% in spring 2013 to around 17% today. This trend
will help restore confidence and encourage investment. In short, Iran
has brought its economy into line with the resources available under
the new sanctions regime. And it has done so without running up the
kind of huge government debt seen in many developed economies... Having
taken the tough measures to adjust to the sanctions shock, Iran is
relatively well positioned to resume growth even if the current
sanctions remain in place. The IMF forecasts that growth in 2014/15
will be 1.5%, rising to 2.3% per year afterward if oil sales do not
pick up and sanctions persist. And that is absent any substantial reform
in the government's various growth-inhibiting policies, which are at
least as much a burden on the economy as are sanctions. Put another
way, Iran's economy under sanctions is poised to grow at about the same
pace as the U.S. economy... In short, sanctions brought Iran to the
table, but the regime may be willing to pay the price rather than
agreeing to the steps the P5+1 are demanding. Sanctions hobbled the
country, but Iran is still walking, and that may be good enough for its
leaders." http://t.uani.com/1sxqJ6Y
Michael Hayden
& Evan Bayh in WSJ: "The temptation is
obvious: Iraq is threatened by a radical Sunni insurgency. The United
States and Shiite Iran thus have common interest in blunting the
success of an al Qaeda offshoot. The enemy of my enemy is my
situational ally. What is missed is that Tehran and Washington have
incompatible strategic objectives. The U.S. needs a stable and
inclusive Iraq, while Iran's ambitions lie in preserving a
Shiite-dominated state that relies on Tehran for its survival. If we
are not careful, the clerical regime will seek to leverage the chaos in
Mesopotamia to extract nuclear concessions from us before the Sunday
deadline for a deal as talks continue in Vienna this week. We need to
be careful not to create indebtedness, even perceived indebtedness...
As the conflict grows, America has been reluctant to engage,
insensitive to our regional allies' concerns, and unusually deferential
to our adversaries' ambitions. Although Iran would welcome a stable
Shiite-dominated Iraq, it has little interest in an Iraq where Sunnis,
Shiites and Kurds cooperate. Iranian ambitions are best served by
Shiite authoritarians in Baghdad who dominate the country's Sunni
citizens and are at odds with Sunni Arabs elsewhere... It is equally
imperative to prevent the turmoil in Iraq and Syria from easing
America's red lines on Iran's nuclear program. Countering the nuclear
challenge from Tehran is straightforward: The U.S. and its allies have
to demand and devise an Iranian civilian nuclear program that cannot be
exploited for military purposes. To achieve that goal, the White House
must make clear that the hardened uranium-enrichment facility in Fordow
must be closed and not transformed into an easily convertible
research-and-development installation. The Arak plutonium plant has to
be similarly neutered. And finally, the main enrichment facility at
Natanz has to be dramatically scaled back and all enriched uranium
shipped abroad for fuel reprocessing. Washington must also insist on a
credible verification regime. The Islamic Republic has to come clean
about all of its past weaponization activities. If the purpose of an
agreement is to put distance between current capacities and nuclear
breakout, how can outsiders reliably calculate how quickly an Iranian
decision to weaponize could be put into effect without a thorough
accounting of past actions? Iran must also submit to intrusive
inspections, without challenge or delay, at any site identified by the
United Nations' International Atomic Energy Agency. This means snap
examinations of any suspect facility by inspectors permanently
stationed in Iran. One of the problems with the Joint Plan of
Action-signed in late 2013 by Iran and six other powers, including the
U.S.-is that it stipulates that any final agreement on Tehran's nuclear
program will have a sunset clause. Upon its expiration, whenever that
may be, Iran would be free to build up an industrial-size program,
giving it the ability to manufacture an arsenal of nuclear arms at
short notice. It is unclear what legitimate purpose is served by this.
The sunset clause must be removed. There are also great dangers if the
interim agreement under the Joint Plan of Action is succeeded by
another interim agreement or even if the current negotiating window is extended
by another six months. The administration will be sorely tempted to let
negotiations continue to drag on, hoping that the Iranians will relent
and drop their resistance to any meaningful rollback of their nuclear
program. But the current lull during the 'freeze' on Iranian nuclear
development limits only some nuclear activities; the Iranians continue
to build other essential elements, such as improving the efficiency of
centrifuges. As centrifuge-enrichment capacity increases, Tehran's
ability to construct clandestine enrichment sites alarmingly grows.
(The lull also has let the Iranian economy improve; inflation is down
and their currency has strengthened, further reducing our leverage.)
Time is not on our side." http://t.uani.com/WmOdyu
Glenn Kessler in
WashPost: "The National Iranian American Council
(NIAC), a group that aims to foster better ties between the United
States and Iran, has garnered a fair amount of publicity for a report
titled, 'Losing Billions: The Cost of Iran Sanctions to the U.S.
Economy.' The cover of the report shows U.S. dollars disappearing in a
black hole... But there is the issue of how the report is framed, as
illustrated in the news release. First of all, note that the report
carefully refers to 'job opportunities,' not jobs. (Parsi's quote in
the news release is less careful.) That's because one cannot assume
that that people remain unemployed, year after year. You certainly
cannot add up the job numbers over time, though that's what some
reporters did - perhaps misled by Table 4, which lists 'job losses'
year by year, though it correctly does not offer a total... Meanwhile,
there's a problem with the headline number of $175 billion in lost
exports. Hufbauer says that this really should be expressed as an
annual figure, or at the least make clear that it is over an 18-year
period. (The report instead says 'from 1995 to 2012.') 'The authors are
trying to get as high a number as possible,' but he said an annual
figure provides more context. NIAC here is playing a game with 'big
numbers.' While $175 billion sounds like a lot, it is only 5/1,000th of
the total U.S. exports over that 18-year period. In other words, it's
barely a rounding error in the trillions of dollars of U.S. trade over
nearly two decades. Yet the report asserts that 'the negative impact of
sanctions to the U.S. economy has been staggering...the human cost has
been even greater.' Moreover, the number assumes that American
businesses simply sat on their hands when they lost access to the
Iranian market-rather than search for other markets for their products.
'What do companies do when a market is cut off?' said Hufbauer. 'They
look for new markets.' ... The impact of U.S-led sanctions on the
United States might be worthy subject for inquiry, but NIAC is gilding
the lily here. The report does not do enough to make clear that there
is a difference between 'lost jobs' and 'lost job opportunities' - and
should have expressed the export number on an annual basis, with a
clear explanation of what that number means in the overall U.S.
economy." http://t.uani.com/WhRP4u
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Eye on Iran is a periodic news summary from United Against
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