Amid talk of May 12 as a do-or-die date for Trump to restore sanctions, experts say a far more impactful decision point doesn’t come until midsummer.
The Iran nuclear deal may have more time than you think.
French President Emmanuel Macron and German Chancellor Angela Merkel are both visiting Washington this week in part to persuade President Donald Trump not to withdraw from the agreement next month.
Most discussions about the deal have focused on May 12 as a make-or-break deadline when Trump must decide whether to continue suspending economic sanctions on Iran that were lifted under the July 2015 deal but come up for periodic review. As the date has crept closer, Iranian officials as well as Trump have ramped up their rhetoric, with Iran threatening to restart its nuclear activity if Trump scuttles the deal and Trump warning Iran on Tuesday that it will face “big problems” if it takes that path.
But some experts say the deal can survive even if Trump sits back and allows the sanctions that must be reviewed by May 12 to take effect once more. The potentially more important deadline, they say, arrives around July 11, when Trump must decide whether to reimpose a substantially larger batch of sanctions.
Even then, the deal could hobble forward in a diminished format. But the sanctions that expire this summer are more likely to provoke an extreme reaction from Tehran — including a possible resumption of nuclear activities — than those coming up next month, some analysts said.
The deal is “unlikely to completely blow up [May 12], since neither side wants that or to be blamed,” said Philip Gordon, a former senior foreign policy adviser to President Barack Obama. “But still it can only take so many blows before it will die a death by a thousand cuts.”
The 2015 nuclear deal is a political arrangement among Iran, the U.S., Germany, China, Russia, Britain and France, which removed nuclear-related U.S. and international sanctions on Iran in exchange for the Islamic Republic’s dismantling of its nuclear program. It’s not a treaty or binding legal document. That means the various parties have leeway to define whether they’re abiding by the agreement or what will push them to leave it.
Some critics of the deal say Trump should reimpose the May 12 batch of sanctions to ramp up pressure on Iran and America’s European allies to find ways to address the U.S. president’s concerns about the agreement before mid-July’s sanctions decision. That would amount to a kind of punch in the nose of the deal rather than a lethal blow.
Few U.S. companies currently do business in Iran, thanks to continuing U.S. sanctions related to human rights abuses, ballistic missiles and terrorism. But the U.S. can make it much harder for foreign companies to do so. Washington can impose so-called secondary sanctions on foreign companies that do business with Iran’s Central Bank, effectively barring them from making transactions in U.S. dollars.
Those sanctions, some of which are up for review in May, are especially likely to scare off banks and other financial entities in countries that purchase Iranian oil, because Iran requires such transactions to go through its Central Bank. Limiting exports from Iran’s oil-dependent economy, especially to Europe, was a key goal of the original sanctions imposed several years ago, as the U.S pressured Iran to make nuclear concessions.
But the secondary sanctions whose waivers expire in July would punish Iran’s economy more broadly because they hit an array of sectors — including shipping, commercial aviation, precious metals and more oil exports.
“The May 12 waiver deadline may come and go without any immediate impact on sanctions or the deal, but the July deadline may matter an awful lot more,” said David Mortlock, a sanctions lawyer who worked on Iran-related issues under Obama. “In July, we could see broad sanctions come roaring back effective immediately, with significant impact on global trade with Iran.”
Trump officials have accused Iran of several minor technical violations of the agreement and also say it has breached the “spirit” of the deal, giving them license to walk away from U.S. commitments. But international inspectors say Iran has adhered to its obligations under the agreement.
If Trump restores any sanctions, the U.S. will technically be in violation of the nuclear deal, analysts say.
That doesn’t mean, however, that Trump will necessarily quit the deal completely. If anything, some of his aides have suggested that the U.S. will still press forward with attempts to “fix” the deal regardless of Trump’s May 12 decision.
“If there’s no chance that we can fix it,” Pompeo said, “I will recommend to the president that we do our level best to work with our allies to achieve a better outcome and a better deal — even after May 12, senator. Even after May 12, there’s still much diplomatic work to be done.”
Iran can always choose to ignore any U.S. reimposition of sanctions and stick to its side of the bargain anyway, keeping its nuclear program in check and doing what business it can with the non-American outside world.
European countries impacted by the May 12 sanctions might continue doing business with Iran on other fronts, if not necessarily oil, that don’t require dealing with the Central Bank of Iran or other sanctioned Iranian entities. They might also take advantage of nuances in the U.S. sanctions statute that allow for exemptions, even on oil transactions.
Iran’s leaders, of course, are warning Trump not to test them, casting his decision as much more black and white than it has to be.
“It is either all or nothing. European leaders should encourage Trump not just to stay in the nuclear deal, but more important to begin implementing his part of the bargain in good faith,” Iranian Foreign Minister Javad Zarif wrote on Twitter this week.
In an interview with The Associated Press published Tuesday, Zarif insisted that if Trump quit the deal, Iran would likely walk away as well.
Also on Tuesday, Iranian President Hassan Rouhani warned that anyone who “betrays” the deal will face “severe consequences.”
“I am telling those in the White House that if they do not live up to their commitments… the Iranian government will firmly react,” Rouhani said in a speech, according to a Reuters report.
Trump says he’s willing to abandon the deal completely. But he has also hedged his bets. With Macron alongside him Tuesday, Trump said, “Nobody knows what I’m going to do on the 12th, although Mr. President, you have a pretty good idea,” he said, turning to the French leader. “But we’ll see.”
Trump also hinted that he’s open to Macron’s proposal for a new agreement that builds upon the existing Iran nuclear deal but covers a host of other issues, including Iran’s ballistic missile program.
“We’ll see also if I do what some people expect, whether or not it will be possible to do a new deal with solid foundations,” Trump said.
Some of the nuclear deal’s critics argue that Trump should call Iran’s bluff and reimpose the May 12 sanctions. Doing so would send a signal to Iran, Europe and the rest of the world that he is serious about the need to fix what he calls the deal’s “terrible flaws,” the critics say.
Those flaws, Trump has said, include expiration dates or “sunsets” for some of the deal’s provisions, a failure to limit Iran’s advancing ballistic missile program and restrictions on what Iranian facilities international inspectors can visit.
Mark Dubowitz, chief executive of the Foundation for Defense of Democracies and a longtime critic of the Iran agreement, argued that Trump should not only reimpose sanctions on May 12 but also separately sanction the Central Bank of Iran on Syria-related issues.
“If there’s no agreement by May 12, Trump should remain in the deal, not extend the waiver, sanction the Central Bank of Iran for its support for the Syrian regime, and give the Europeans until the July 11 and 12 waiver decisions to get the European parties’ agreement,” he said.
Trump also wants to rein in Iran’s expanding influence in the Middle East, including its use of proxy militias in places like Syria, Lebanon and Yemen.
Trump could reimpose the May 12 sanctions but delay their formal implementation by several months, Mortlock said. That would buy the Europeans more time to devise measures that might assuage the U.S. president’s concerns, Mortlock said.
At that point, the survival of the deal might depend on how Iran and the Europeans — not to mention China and Russia — respond. Some of the countries might decide it’s worth keeping some version of the deal in place, even if the U.S. has effectively walked away from it.
Iran’s desire to do business with the West and improve its stagnant economy could outweigh its desire to make a point out of pride.
But as long as Trump continues to denounce the nuclear deal or leave his intentions unclear, major Western businesses are likely to continue avoiding the Iranian market, some analysts said.
And if Iran concludes it will never see the economic benefits it was promised in exchange for curbing its nuclear program, its leaders will have little reason to abide by the agreement in the long run.
“Sanctions are in part a psychological thing,” said Richard Nephew, another Obama-era alum who worked on the deal. “When you send a signal to markets that something is about to get worse, you reinforce them staying away.”