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Geneva Interim Nuclear Agreement Tracker

On November 24, 2013 the P5+1 and Iran signed the "Joint Plan of Action" (JPA), an accord to freeze progress on certain elements of Iran’s nuclear program in exchange for sanctions relief. Following nearly two months of additional negotiations, on January 12, 2014 the parties announced that the agreement would commence on January 20, 2014 and conclude on July 20, 2014. The interim agreement is intended to build confidence between the P5+1 and Iran and provide time for additional negotiations that will ultimately lead to a final comprehensive agreement - within "no more than one year" - that resolves all outstanding concerns about Iran’s nuclear program. As the July 20 deadline approached, the P5+1 and Iran agreed on July 18 to extend the JPA by four months to November 24, 2014, exactly one year after the two parties signed the JPA. UANI is methodically tracking how the provisions of the agreement and obligations of the parties are being implemented and interpreted by each side. As part of this effort, UANI is tracking how the agreement is affecting Iranian business activity and trade as measured by a number of key economic indicators, as well as its impact on the international sanctions regime.

Payments to Iran Under the JPA

Nuclear Breakout Timeline

How Quickly Could Iran Make the Bomb?

Prior to the interim agreement, Iran’s estimated ‘breakout’ time to build a nuclear weapon was approximately 1.5 months. After the JPA was struck in Geneva, U.S. Secretary of State John Kerry touted, “We now have a mechanism by which we are going to expand the amount of time in which [the Iranians] can break out [to obtain nuclear capability] rather than narrow it.” In reality, the accord does little to push back Iran's breakout time, with Kerry himself stating in a Senate hearing that Iran’s breakout had been pushed back “to about two months.” That only represents about a two week extension of Iran’s breakout capability prior to Geneva. Based on the $4.2 billion in frozen assets the P5+1 is releasing to Iran as part of the interim deal, the regime is effectively being awarded $300 million for each day it extends its nuclear breakout.

Iran's Continued Nuclear Progress

President Obama has hailed the interim nuclear agreement as marking “the first time in a decade that the Islamic Republic of Iran has agreed to specific actions that halt progress on its nuclear program and roll back key parts of the program.” He later remarked, “Beginning January 20th, Iran will for the first time start… dismantling some of the infrastructure that makes such enrichment possible…” Iranian officials, however, have rejected the President’s assertions. Iranian Deputy Foreign Minister Abbas Araghchi said, “I can say definitively that the structure of our nuclear program will be exactly preserved. Nothing will be put aside, dismantled or halted.”

In reality there are a number of ways in which the Iranian regime will continue to develop its nuclear program during the interim agreement, as outlined below.

Arak Heavy Water Reactor

Iran continues to perform excavation and civil construction work at this facility, which is considered a prime proliferation threat.

Research & Development

Iran continues to perform ongoing R&D activities that preceded the agreement.

Development of Advanced Centrifuges

As part of its ongoing R&D, Iran continues “experimenting with a range of test centrifuges at the Natanz pilot scale facility, including the IR-1, IR-2m, IR-4, and the IR-6.” The advanced centrifuges are multiple times faster than Iran’s first-generation models, and if put into operation, would reduce Iran’s breakout time to only a matter of weeks, if not days.

Long-Range Ballistic Missile Testing

Iran's long-range ballistic missile testing continues, which is a central component of any viable nuclear weapons program as the delivery mechanism of a warhead. December 13, 2013 was the “the latest demonstration of the country's missile capabilities,” when Iran performed a space launch vehicle test.

Expansion of LEU Stockpile

Iran stockpile of low-enriched uranium (LEU) is continuing to expand since the since the nuclear conversion facility needed to convert the LEU into oxide powder is not yet in operation.

Final Agreement: A Deep Divide

The purported goal of the interim agreement is to pave the way for a final agreement that resolves all outstanding concerns about Iran’s nuclear program. Thus far, the two sides have articulated deeply conflicting visions of such an accord that appear near-impossible to reconcile. The Iranian regime has already laid out maximalist positions that question whether the regime is prepared to negotiate in good faith and ultimately roll back elements of its nuclear program.

USA

Issue

Iran

President Obama: “They certainly don’t need a heavy-water reactor at Arak in order to have a peaceful nuclear program.”

Arak Heavy Water Reactor

Deputy Foreign Minister Araghchi: “Your actions and words show you don't want us to have the Arak heavy water reactor which means you want to deprive us of our rights. But you should know that it is a red line which we will never cross… We want to have more heavy water reactors in future.”

President Obama: “Now, in terms of specifics, we know that they don’t need to have an underground, fortified facility like Fordo[w] in order to have a peaceful nuclear program.”

Fordow Fortified Underground Enrichment Facility

President Rouhani: It is “100 percent” a “red line” for Iran to dismantle any nuclear facilities.

President Obama: “They don’t need some of the advanced centrifuges that they currently possess in order to have a limited, peaceful nuclear program.”

Advanced Centrifuges

Deputy Foreign Minister Araghchi: “All research into a new generation of centrifuges will continue.”

President Obama: “And so the question ultimately is going to be, are they prepared to roll back some of the advancements that they’ve made that would not justify -- or could not be justified by simply wanting some modest, peaceful nuclear power, but, frankly, hint at a desire to have breakout capacity and go right to the edge of breakout capacity.”

Limitation on the Size of Iran’s Enrichment Program

Deputy Foreign Minister Araghchi: “We will in no way, never, dismantle our [nuclear] centrifuges.”


President Rouhani
: "So in the context of nuclear technology, particularly of research and development and peaceful nuclear technology, we will not accept any limitations. And in accordance with the parliament law, in the future, we're going to need 20,000 mega watts of nuclear produced electricity and we're determined to obtain the nuclear fuel for the nuclear installation at the hands of our Iranian scientists. And we are going to follow on this path... Not under any circumstances" will we destroy any centrifuges.

White House Press Secretary Jay Carney: “They have to deal with matters related to their ballistic missile program that are included in the United Nations Security Council resolution that is part of explicitly, according to the Joint Plan of Action, the comprehensive resolution negotiation.”

Ballistic Missile Testing

Deputy Foreign Minister Araghchi: “Defense matters [i.e. Iran’s ballistic missile program] are non-negotiable and are one of our red lines.”

Sanctions Relief

The views on sanctions relief between the U.S. and the Iranian government are also highly incongruous. The White House has described the sanctions relief provided in the agreement as “economically insignificant” and insisted that “Iran's economy will also continue to suffer because the core architecture of U.S. sanctions—especially our potent oil, financial and banking sanctions—remains firmly in place.” David Cohen, the U.S. Treasury Department official tasked with enforcing the U.S. sanctions program declared, “I am confident that the sanctions pressure on Iran will continue to mount. Iran will be even deeper in the hole six months from now, when the deal expires.” In comparison, leading Iranian officials have boasted that with this agreement, the structure of the international sanctions regime is falling apart and that the Iranian economy is progressively improving. Following the January 12 agreement on the implementation of the accord, Rouhani pronounced, “The Geneva agreement means the wall of sanctions has broken.”

In terms of total estimated value of the sanctions relief provided in the agreement, the White House estimates that Iran stands to receive $6 billion to $7 billion. Iran analysts, however, have anticipated that the true value of the sanctions relief could be more than $20 billion.

Furthermore, the momentum of an ever strengthening international sanctions regime was halted following Rouhani’s election in June 2013 in an apparent effort by the U.S. to court the regime and set a tone for renewed negotiations. The effect of this halt, and even reversal, in momentum was significant as measured by the appreciation of the rial and growth in the Tehran Stock Exchange since June 2013.

While the administration vows that the core architecture of Iran sanctions remains in place, UANI analysis shows that the four interdependent elements of the sanctions regime—(1) Increasingly strict laws and regulations, (2) enforcement action, (3) reputational risk, and; (4) the psychological impact on the Iranian economy—have weakened, and as a result, the architecture of the sanctions regime may in fact be unraveling.

In this section, UANI tracks key indicators of the Iranian economy, to gauge the true value of the sanctions relief being provided.

Value of The Rial

The effect of economic pressure can be measured in large part by tracking the Iranian rial's black market value exchange rate. When economic pressure was at its peak, Iran suffered from severe hyperinflation, and the rial became the least valued currency in the world. This is no longer the case, as the rial has regained significant value.

Since Hassan Rouhani was elected president on June 14, the Iranian rial has appreciated approximately 15%, from 36,500 rials/dollar to about 31,000 rials/dollar today (and up from record-lows of 40,000 rials/dollar in February 2013). Political developments have clearly had an impact on the rial’s value.

Inflation

According to the IMF, "inflation has dropped rapidly" since Rouhani's election, "from about 45 percent in July 2013 to below 30 percent in December 2013.. Inflation could end at 20-25 percent by end-2013/14."

Oil Exports

When the Geneva agreement was signed on November 24, a senior administration official stated that “Iran’s oil exports will remain steady at their current level of around 1 million barrels per day” (bpd). This has not been the case, since Iran has surpassed the one million barrel limit in every month since the signing of the accord. As a result, Iran has earned approximately $6.76 billion in additional sanctions relief via these above-limit oil exports up to and including June 2014.

It is clear that the Geneva negotiations and the  signing of the interim agreement significantly altered a trend of ever increasing reductions in oil purchasers from Iran, mainly by signaling an easing of restrictions and reducing risks for purchasers and traders.

Tehran Stock Exchange

Since Rouhani’s election, the Tehran Stock Exchange index has increased by more than 50%, from about 45,000 points to over 70,000 points.

GDP Growth

As a result of the significant sanctions relief and the halt in sanctions momentum, Iran's economic fortunes have turned. The Iranian economy is expected to enjoy GDP growth of 1.5% for 2014/2015, following an estimated contraction of 1.7% in 2013/2014 and a contraction of 5.8% in 2012/2013.

Trade Delegations

Since the signing of the Geneva agreement on November 24, Iran has been receiving trade delegations from countries that are eager to rekindle commerce with Iran. The pace of these missions and delegations has only increased since the agreement commenced on January 20. According to The New York Times, “In the first two weeks of the year, Iran welcomed more delegations from Europe than in all of 2013.” Prominent trade delegations with corporate executives have visited from Austria, France, Italy, and many other countries.

Corporate Comeback

Since the signing of the Geneva agreement, there have been numerous reports and firsthand accounts of Iran's automotive and energy sectors anticipating the return of major multinational corporations. With the momentum of sanctions halted and now reversed, reputational and financial risk has clearly declined for multinational corporations that are publicly pursuing the renewal or expansion of their Iran business.

Austria

OMV AG (Energy)
Austrian Airlines (Airline)
Plasser & Theurer (Transportation Infrastructure)
AVL (Automotive, Engineering)
Doka (Engineering, Construction)
ILF (Engineering)
Doppelmayr (Manufacturing)

Belgium

Tessenderlo Group (Chemical)

China

Zhuhai Zhenrong (Energy)

France

Societe Generale (Banking)
Alcatel-Lucent (Telecommunications)
BNP Paribas (Banking)
Peugeot (Automotive)
Renault (Automotive)
Total SA (Energy)
Alstom (Transportation Infrastructure, Energy)
Credit Agricole (Banking)
Sanofi S.A. (Pharmaceuticals)
GDF Suez SA (Energy)
Safran SA (Aerospace, Aviation, Conglomerate, Defense)
Airbus Group (Aerospace & Defense)
Amundi (Banking)
Orange (Telecommunications)
Lafarge (Construction, Manufacturing)

Germany

Bosch (Manufacturing)
Commerzbank (Financial Services)
Lufthansa (Airline)
Merck KGaA (Chemicals, Pharmaceuticals)

Indonesia

Italy

ENI (Energy)
Pininfarina SpA (Automotive)

Japan

Japan P&I Club (Financial Services, Shipping)

Lebanon

Unifert (Agriculture)

Luxembourg

ArcelorMittal (Steel)

Netherlands/UK

Russia

Gazprom (Energy)
Lukoil (Energy)
Russian Railways (Transportation Infrastructure)

South Korea

Woori Bank (Banking)

Switzerland

Vitol (Energy)

Turkey

Turkish Airlines (Airline)
Halkbank (Banking)
Gubretas (Agriculture, Chemicals)

UK

BP (Energy)
GlaxoSmithKline PLC (Pharmaceuticals)

Sanctions Enforcement

Sanctions Designations Timer:

55

Days PassedSince Last Treasury Sanctions Designation Action

2013-2014 Iran SDN Sanctions Designations

SDN Designation Announcements

Entities Added

2/6/2013

4

3/14/2013

25

4/11/2013

6

5/9/2013

15

5/15/2013

2

5/16/2013

39

5/23/2013

20

5/30/2013

3

5/31/2013

31

6/4/2013

38

-----ROUHANI ELECTED ON JUNE 14-----

9/6/2013

10

12/12/2013

19

2/6/2014

20

4/29/2014

11

5/23/2014

1

8/29/2014 34

TOTAL Before Rouhani’s Election

183

TOTAL After Rouhani’s Election

95

TOTAL Designations Since Nov. 24 Geneva Agreement

85

The Obama administration has pledged to fully enforce all existing sanctions against Iran. David Cohen, the U.S. Treasury Department’s point man on sanctions vowed, “The Joint Plan of Action reached in Geneva does not, and will not, interfere with our continued efforts to expose and disrupt those supporting Iran’s nuclear program or seeking to evade our sanctions.”

Evidence indicates, however, that since Rouhani’s election, the U.S. has been much less aggressive in enforcing sanctions. In 2013 before Rouhani’s June 14 election, Treasury issued 10 sanctions announcements which designated 183 entities for violating Iran sanctions. Since Rouhani’s election, there have only been five announcements, blacklisting a total of 61 entities.