Iranian President Hassan Rouhani on Wednesday announced his country was taking another step in reducing its commitments to the 2015 Joint Comprehensive Plan of Action (JCPOA) nuclear deal by restarting its nuclear research and development efforts without heed to limitations stipulated in the plan. Richard Nephew, senior research scholar at the Center on Global Energy Policy at Columbia University, discusses the implications of the move and what might come next. He formerly served as principal deputy coordinator for sanctions policy at the Department of State in the Obama administration, and was the lead sanctions expert for the US team negotiating with Iran.

Q. What is the significance of the announcement by President Rouhani to abandon Iran’s commitments to limit the country’s nuclear research and development?
 
A. The significance is two-fold. First, on a very practical level, this means the Iranians have announced their intention to violate one of the nuclear agreement’s core tenets, which is that Iran’s advanced centrifuge activities should be heavily restricted for a number of years. This is necessary to keep their nuclear program from being swiftly on the brink of being able to produce nuclear weapons and to bring back some degree of confidence that the Iranians aren’t intending to do so. The Iranians are undermining one of the main benefits of the nuclear agreement that we were supposed to get.
 
Second, in the context of the broader political dispute, the Iranians are trying to create a sense of risk and leverage with Europe and others so they will be more willing to push back on the United States with respect to sanctions. I think the Iranians are still approaching this in a sequential and incremental way; I don’t think they’re doing all they could do. But they’re definitely turning up the heat on Europe. They’re doing it in an area that would be seen as sensitive and causing concern, as nuclear research and development would.
 
Q. What is the effect of this decision on Iran’s ability to build nuclear weapons?
 
A. It basically means that, over time, Iran will improve its ability to produce nuclear material quickly. But that is not something that is going to directly enter into its ability to produce weapons today. This is something that is much more relevant to the political dispute than nuclear weapons at present.
 
Q. Does this mean that the agreement is over? What are the Iranians thinking with this move?
 
A. I think this is just part of Iran’s strategy to create pressure on Europe and others to push back on the United States. They have consistently taken an incremental approach to reducing their commitments within the nuclear agreement, and this is just more of the same. They are purposefully picking something that’s got a long lead time, and something where the results won’t be too public—like with producing more nuclear material. So, this is something they can downplay if they want to in the future and something they can stop or slow down. It’s part of the political messaging; it doesn’t mean the Iranians have withdrawn from the agreement. In fact, President Rouhani said very clearly when he announced this decision that Iran would be fully prepared to completely comply with its obligations again, assuming Europe and others are prepared to address Iran’s concerns with respect to US sanctions.
 
Q. What does the development indicate as far as US sanctions policy?
 
A. President Rouhani has been very clear that he ordered this step directly in response to US sanctions that were announced Wednesday with regard to a petroleum smuggling scheme that the Iran Revolutionary Guard Corps is running. There was already a pending deadline of this week for a new Iranian nuclear commitment reduction, so it was something that was probably going to happen anyway. But I think he did decide to act in order to demonstrate to the United States that Iran wouldn’t be taking US sanctions lying down.
 
I think that it’s not going to change US sanctions strategy at all. The administration is pretty committed to what it’s doing with respect to sanctions and putting pressure on the Rouhani administration, and I don’t see this shifting their approach. I do think they will use it as part of their argument that Iran isn’t to be trusted and that the Iranians are the ones causing the crisis. But I don’t think many people in the international community believe that kind of argument.
 
Q. Does this mean that a French proposal for a meeting of US President Donald Trump, French President Emmanuel Marcon, and President Rouhani is going to be cancelled? Is the diplomatic effort the French are leading collapsing?
 
A. The prospect of a real diplomatic process was always a bit dubious. Trump is prepared to be unpredictable and to act in ways that are inconsistent with what his own administration is saying and doing at various different times. We have seen this with North Korea, when the US issued threats while Trump said he would entertain direct talks with Kim Jong-un. I don’t think this necessarily changes Trump’s readiness to sit down and meet with the Iranians.
 
I do think we should keep our expectations for any diplomatic initiative in check. Just because the president is willing to or is going to have a meeting with Rouhani does not mean that the US strategy has shifted or that this will have an impact on US sanctions policy. The people who are doing a lot of that work on Iran in the US government on a day-to-day basis are opposed to a diplomatic effort with the Iranians, especially people like National Security Advisor John Bolton.
 
Q. There are news stories that the French are prepared to issue a $15 billion line of credit to the Iranians, potentially in exchange for future shipments of Iranian oil, if Tehran goes back to fully complying with the JCPOA. What impact would that have?
 
A. Any financial arrangement that involves the sale of Iranian oil in the future or today is potentially sanctionable by the United States. The $15 billion line of credit would not necessarily be excluded from sanctions by the United States—it is something that the administration could sanction if it wanted.
 
Extending $15 billion as a credit for future shipments of oil is not conceptually difficult to identify or to describe. But what is difficult to identify or describe is the way in which you can do this without directly violating US sanctions, if the US is intent on using those sanctions tools. If the US is prepared to allow those transactions to happen and not impose sanctions on them, then that kind of arrangement can be set up today involving any number of countries. So far, the US has not been prepared to allow that kind of a financial arrangement to be created and has threated sanctions against a wide range of people for considering similar sorts of things.
 
So, the real question is not whether $15 billion can lined up or whether or not these banks are going to be prepared to engage in these transactions. It comes back to Washington and whether or not the administration will be willing to allow such an arrangement to go forward.