Iran Nuclear Deal Set to Take Effect Secretary of State Kerry to mark expected ‘implementation day’ in Vienna on Saturday: Jay Solomon
http://www.wsj.com/articles/iran-nuclear-deal-set-to-take-effect-1452902671
The United Nations’ nuclear watchdog agency in Vienna was expected to certify by Saturday that Tehran has met its commitments under the July accord with global powers to significantly scale back its nuclear program, according to these officials.
In return, most Western sanctions on Iran will start to be repealed, sending tens of billions of dollars in frozen Iranian oil money back to Tehran and opening world markets to hundreds of thousands of barrels of Iranian petroleum.
The White House says the implementation of the agreement would be a major advance in the U.S. campaign to stop the spread of nuclear weapons. But its also poses major security and diplomatic risks for the U.S. and its close Mideast allies, such as Israel, Saudi Arabia and the United Arab Emirates, according to regional diplomats and analysts.
“Every country in the world is worried about this,” said Saudi Foreign Minister Adel al-Jubeir in London on Thursday, referring to the return of frozen assets. “The concern in most countries in the world is that Iran not use these funds in order to fund destabilization activities, but instead use the funds to improve the well-being of its people.”
Iran and Saudi Arabia are in an escalating conflict marked by proxy wars in Syria, Iraq and Yemen. Arab diplomats fear the unshackling of Tehran’s economy will allow Iran’s theocratic leaders to play an even more assertive role in their region.
American officials have voiced optimism the deal could breed stronger relations between Washington and Tehran after four decades of enmity, sparked by the 1979 Islamic revolution and the taking of hostages at the U.S. embassy there.
“All parties have continued making steady progress toward implementation day of the [agreement], which will ensure the exclusively peaceful nature of Iran’s nuclear program,” State Department spokesman Mark Toner said Friday.
An Iranian negotiator, Hamid Baeidnejad, tweeted Friday that “the landmark agreement is on the way.”
To mark the expected milestone, Secretary of State John Kerry will visit Vienna on Saturday, according to U.S. officials, where he will meet his Iranian counterpart, Javad Zarif, and the European Union foreign policy chief, Federica Mogherini.
In recent weeks, however, Iran has shown its intent to continue challenging the U.S. and its allies for influence, regardless of the nuclear deal.
Tehran has test-fired two ballistic missiles in violation of U.N. resolutions since October, according to U.S. officials. This week, Iran briefly detained 10 American sailors whose small boats had wandered into Iranian waters.
A group of 13 Republican senators, including presidential candidate Ted Cruz, wrote to President Barack Obama on Friday expressing concern that “Iran’s belligerent actions have thus far gone unpunished,” saying that would invite further transgressions.
Opposition to the agreement in the U.S. stems in part on Iran’s continued detention of at least four American citizens, some for more than four years, on dubious or unspecified charges. They include a former U.S. marine and a Washington Post staff member. A fifth American has been missing in Iran and has not been accounted for.
ENLARGE The sanctions imposed on Iran by the U.N. Security Council will be automatically lifted when the International Atomic Energy Agency informs the Council of its final report that Iran has met its obligations. A snap-back mechanism allows the U.N. to reimpose sanctions if Iran violates the deal in the next decade.
European and Asian companies are eager to enter an Iranian market of 80 million people with huge oil and gas reserves and an educated and youthful population. U.S. companies largely will remain barred from returning to the Iranian market due to unilateral American sanctions.
Both the U.S. Treasury Department and European Union say they will release new guidelines for investing in Iran soon.
Expectations that sanctions against Iran’s oil exports will be lifted helped fuel a sharp drop in the global price of crude oil, which fell below $29 per barrel this week—the lowest in more than a decade.
Iranian oil officials have said they’re preparing to increase their oil exports to Asia and Europe by 500,000 barrels a day in the coming weeks and by one million by the end of the year.
“The lifting of sanctions could not have come at any worse time for the oil market, and could therefore potentially drive prices further down,” Frankfurt-based Commerzbank AG said in a report this week.
Iranian officials concerned about the cheap price said they are considering bartering their oil for goods, while also looking to invest in foreign refineries to lock in buyers.
Mr. Obama has made the Iran nuclear agreement his signature foreign policy initiative and has aggressively pursued diplomacy with Tehran since 2009.
Iran, as part of the agreement, has significantly scaled back its nuclear infrastructure in recent weeks. This has included shipping 25,000 pounds of enriched uranium to Russia, converting a heavy-water reactor to produce less plutonium, and taking off line thousands of centrifuge machines used to produce nuclear fuel.
ENLARGE Mr. Kerry has said this will push back the time required for Iran to produce a nuclear weapon to a year, from just months before the deal. Tehran denies it is seeking atomic weapons.
Opposition to the Iran deal in the U.S. Congress, and among Washington’s Mideast allies, however, remains intense. U.S. lawmakers in recent weeks have drafted legislation aimed at imposing new sanctions on Iran for its ballistic-missile tests and its support for terrorism.
Iranian officials have said such sanctions would violate the nuclear agreement, and Mr. Obama has pledged to veto them.
European and Asian companies have said the uncertainty about future U.S. policy toward Iran, and potentially more sanctions, has made plans for investment in the country difficult.
Some Republican presidential candidates have pledged to pull out of the agreement if elected later this year. Democratic presidential front-runner Hillary Clinton has vowed to vigorously enforce it.
Business officials and people familiar with talks said they expect that major long-term investments and contracts from the West could take months to emerge, with many firms likely to wait until 2017.
European firms like Total SA of France and Eni SpA of Italy have visited Iran in recent months to rekindle ties.
U.S. companies are still consulting the government and lawyers to assess the conditions they could be allowed to Iran. Some are considering setting up separate companies abroad that will allow them to do business with Iran.
For example, Exxon Mobil Corp. has contacted professionals familiar with Iran’s oil industry to map a “who’s who” of its decision makers, according people familiar with the matter. The company declined to comment.
“We’ve seen U.S. companies engaging in a cautious study of what may become possible if and when sanctions against Iran are reduced,“ said Eric Shimp, policy adviser at U.S. law firm Alston & Bird. But for now, ”we’re looking at an uncomfortable stay in limbo for U.S. industry interested in Iran.”
Europe was Iran’s biggest trade partner before the sanctions noose tightened in 2012. EU goods trade with Iran fell to €11.7 billion in 2014 ($12.8 billion), down from close to €28 billion in 2011, according to the bloc.
—Laurence Norman in Brussels, Benoît Faucon in London and Timothy Puko in New York contributed to this article.
Write to Jay Solomon at jay.solomon@wsj.com
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