Iran Delays, OPEC+ Acts
The Iranian decision means at least a two-month (but perhaps much more) delay before any sanctions might be lifted.
The United States will now have to wait for a new Iranian negotiating team to arrive in Vienna before talks over the nuclear accord can resume. The talks had stalled in mid-July amidst uncertainty over whether Iran would send its delegation back to Vienna or whether it would wait until the inauguration of its new President, Ebrahim Raisi. Washington has now been notified that the Iranians will only renew discussions after President Raisi is inaugurated on August 3. The current expectation is that the new Iranian team will not arrive for the proximity discussion until mid-August. While we do not have specifics on who will be on that team, it will be a new team, and it will have both new guidance on what is acceptable and a learning curve with regard to the negotiation and the format. What does all of this mean for the timing and likelihood of a deal?
President Raisi comes to the negotiations with strong backing from the Supreme Leader and the Iranian Revolutionary Guard Corps but without a popular mandate. Many less hard-line candidates were eliminated from the ballot before the elections were held. Based on these purges by the Guardian’s Council, it was clear to the Iranian electorate who the acceptable candidate was to the Supreme Leader, and this was Raisi. While Raisi garnered 62% of the vote, the overall election turnout was very low, and 13% of the ballots were either blank or invalid – a likely protest vote (the previous high percent of blank/invalid votes was 2%). While Raisi does not have any near-term electoral concerns regarding his popularity, the government must nevertheless pay attention to popular sentiment. The Iranian economy remains mired in the doldrums, and protests have increased over power outages during this very hot summer. Delivering on an agreement that would bring economic growth would help solidify control for the new president.
Despite his hard-line reputation, Raisi has not ruled out returning to the JCPOA. During the campaign, he said that “We would definitely abide by the JCPOA in the format that was approved with nine clauses by the supreme leader, as it is a contract and a commitment that governments must abide by." The outgoing Foreign Minister Mohammad Javad Zarif, in his final report on the talks, framed the situation as one where a deal was very much possible for the incoming administration. Zarif indicated that he was leaving Raisi with a “framework for a possible deal” which included Washington lifting most, though not all, of the U.S. sanctions.” Such a setting makes it more difficult for Raisi’s team to either not return to the table or to walk away without seeming to make a good faith effort to negotiate an agreement.
While progress was made in previous talks, significant issues remain to be resolved, and some can only be resolved if the two sides significantly moderate some core demands. For Iran, a central issue is their desire for the accord to bind future U.S. administrations, something essentially impossible for the Biden administration given that the agreement is not a treaty. For the United States, a core issue is an Iranian agreement to follow-on talks on its missiles and support for proxies in the region. It is difficult to see Iran having interest in such talks given that these topics are central to its national security arsenal. Talks restart in mid-August, and a quick deal is possible, although unlikely given the new team on the one side of the table. If they wanted a quick deal, the sides could target the mid-September United Nations General Assembly session for intensive discussions and an agreement.