How Iran Could Get Sanctions Relief under the Nuclear Deal Sooner than Anticipated

The nuclear deal between Iran and the P5+1 reached in Vienna on July 14, 2015 establishes a step-by-step sequence for Iran to receive relief from the sanctions that have crippled its economy.  The most damaging economic sanctions will be lifted in months, while nuclear, missile, and arms restrictions are meant to come off in no fewer than five years.  However, a close reading of the Joint Comprehensive Plan of Action and a draft U.N. resolution suggests that the timing on this second round of sanctions relief could come sooner.

The first round of relief will arrive when the International Atomic Energy Agency (IAEA) verifies that Iran has implemented certain restrictions on its nuclear work, such as reducing its number of operational centrifuges and reducing its stockpile of enriched uranium gas.[1]  This is expected by early next year and will lift the toughest financial and energy sanctions.

A second round of relief from U.S. and E.U. sanctions will come eight years after the deal’s adoption and lifts most proliferation-specific sanctions.[2]  Similar U.N. sanctions will come off earlier, according to the draft Security Council resolution circulated this week: the international arms embargo after five years; restrictions on ballistic missile technology imports after eight years; and restrictions on sensitive nuclear technology after ten years.[3]

Yet many of the sanctions set to be lifted in the latter years of the agreement could be removed sooner than those milestone dates:  Removal would also be triggered when the IAEA reaches “the Broader Conclusion that all nuclear material in Iran remains in peaceful activities.”[4]  This “Broader Conclusion” – a term of art defined by the Agency – could come earlier than the five or eight or ten-year milestones, if Iran is fully cooperative with inspectors, has resolved concerns about its past nuclear activities, and addresses all of the Agency’s questions about its ongoing nuclear program.

What is the IAEA’s “Broader Conclusion” and how is it reached?

Every year, the IAEA evaluates each country with a nuclear safeguards agreement in force and draws conclusions based on IAEA verification activities, a country’s nuclear declarations, and the resolution of any questions raised by the Agency.[5]  The IAEA reaches the “Broader Conclusion that all nuclear material remained in peaceful activities” in a country if the Agency finds:

1) “No indication of the diversion of declared nuclear material from peaceful nuclear activities” and

2) “No indication of undeclared nuclear material or activities.”[6]

The “narrower conclusion” – that the IAEA finds “no diversion of declared nuclear material from peaceful nuclear activities” – is a lower bar to reach than the “Broader Conclusion,” which also requires the determination that there is no undeclared nuclear material or activity in a country.  In its 2014 Safeguards Statement, the IAEA was able to conclude that “declared nuclear material in Iran remained in peaceful activities.”  But it was unable to reach the “Broader Conclusion” about undeclared material or activities because Iran had not implemented the Additional Protocol and had not resolved the Agency’s long-standing concerns about the “possible military dimensions” of Iran’s nuclear program – the allegations that Iran had conducted nuclear weaponization work in the past.[7]

In fact, the IAEA will only reach the “Broader Conclusion” for countries with an Additional Protocol in force.  The Additional Protocol allows for greater access to nuclear-relevant sites, such as uranium mines and heavy water production plants, and includes a more robust inspections regime.  For the “Broader Conclusion,” the IAEA must also have:

• Conducted a comprehensive evaluation, including determinations that all aspects of a state’s nuclear-related activities are consistent with its declared nuclear program;

• Accessed undeclared sites, as necessary, under the terms of the Additional Protocol; and

• “Addressed all anomalies, discrepancies and inconsistencies identified in the course of its evaluation and verification activities.”[8]

For the 118 states with an Additional Protocol in force in 2014, the IAEA was able to reach the “Broader Conclusion” for 65 countries; the remaining 53 countries only met the requirements for the narrower conclusion.[9]

How soon could the IAEA reach the “Broader Conclusion” for Iran?

In a press conference in June 2015, IAEA Director General Yukiya Amano said that it is impossible to tell in advance how long it will take the IAEA to reach the “Broader Conclusion” that Iran’s nuclear program is fully peaceful: “But it’s a matter of years at least.  Not months.  Not weeks.  Years or years and years.”  According to Director General Amano, the Agency inspectors will require an extended period of access to sites in Iran: “We will continue these activities for quite a prolonged period of time and then, after making our efforts, we come to the point when we can provide credible assurance that there is no indication of activities other than peaceful activities.  This is a long process and full cooperation from the country is needed.”[10]

But how many years?  According to David Kay, former U.N. Chief Weapons Inspector, the IAEA could reach the “Broader Conclusion” sometime in the earlier years of the implementation of the agreement, provided that Iran first fully resolves the IAEA’s concerns about the “possible military dimensions” (PMD) of its nuclear program – which Iran is required to do under the deal within 90 days of the passage of a new U.N. Security Council resolution (set to be voted on Monday).

Dr. Kay, speaking this week with Iran Watch, noted that the IAEA will initially “be cautious to reach a Broader Conclusion” and could issue a provisional statement that the Agency’s evaluation regarding undeclared nuclear materials and activities “remains under evaluation.”  Yet while this provisional statement “would probably be acceptable” in the early stages of the agreement, it could become “politically very unsatisfactory for 2016 and beyond” – once the deal is implemented and “fully in effect.”

This will be especially true if the PMD issue is resolved and the IAEA’s questions about past activities are answered, Dr. Kay said.  With the Agency’s concerns about Iran’s nuclear past addressed, “then the task of the IAEA to reach conclusions concerning undeclared materials and activities relates solely to how effective it judges the implementation of the agreement and the verification activities carried out under it.”  At some point after the deal is implemented, if the IAEA “has to report […] that it cannot reach a Broader Conclusion, it is really reporting that Iran is not living up to the terms of the agreement,” Dr. Kay said.

Still, Iran would have to demonstrate a high level of cooperation on a range of sensitive issues (which it has been reluctant to do in the past) in order to win the IAEA’s approval.  Iran would have to resolve the PMD questions, satisfy the Agency’s requests for access to suspicious sites, implement the Additional Protocol, and explain discrepancies and inconsistencies identified by the Agency during inspections.  Iran may also have to ratify, rather than merely provisionally apply, the Additional Protocol, which it is not required to do under the agreement for up to eight years.

What sanctions will be lifted when the IAEA reaches the “Broader Conclusion”?

The following sanctions would be lifted sooner than the milestone date cited in the agreement and the draft U.N. Security Council resolution if the IAEA reaches the Broader Conclusion that Iran’s nuclear program is fully peaceful:

• The U.N. arms embargo, U.N. restrictions on ballistic missile technology, and the U.N. procurement channel, which will control imports of sensitive items on the Nuclear Suppliers Group list and nuclear-related dual-use items.[11]

• The second phase of E.U. sanctions relief, including from the E.U. arms embargo, restrictions on ballistic missiles, and sanctions on financial messaging services, metals, and software.

For its part, the United States would seek legislative action to terminate a range of sanctions previously lifted by presidential waiver in the first round of relief, including: restrictions on financial and banking transactions, insurance, the energy and petrochemical sectors, shipping, gold and other precious metals, the automotive sector, and trade in software and metals.

The United States would also seek legislative action to terminate sanctions on the acquisition of nuclear-related commodities and services (consistent with the final agreement).  In addition, 43 entities would be removed from the U.S. blacklist, including numerous entities linked with procurement and design work for Iran’s nuclear program.

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