The End of a Deal? Trump Announces U.S. Withdrawal from Iran Nuclear Accord

May 9, 2018

Publication Type: 

  • Articles and Reports

Weapon Program: 

  • Nuclear
  • Missile


Valerie Lincy, Mana Mostatabi, Meghan Peri Crimmins

On May 8, U.S. President Donald Trump announced that the United States would withdraw from the Iran nuclear accord, known formally as the Joint Comprehensive Plan of Action (JCPOA). The move comes over two years after the accord's implementation and follows a months-long campaign in favor of and against the accord by a number of U.S. allies. Speaking from the White House, President Trump said that despite extensive engagement with U.S. allies aimed at fixing the accord’s flaws, he had concluded that "we cannot prevent an Iranian nuclear bomb under the decaying and rotten structure of the current agreement." In addition to flaws within the JCPOA itself, related to inspections and sunset provisions, the President described the accord's failure to address Iran's development of ballistic missiles, its support for terrorism, and its "sinister activities" in the Middle East and beyond as additional reasons for the U.S. withdrawal.

Following his remarks, the President signed a National Security Presidential Memorandum directing the Secretaries of State and of the Treasury to "immediately begin taking steps to re-impose all United States sanctions lifted or waived in connection with the JCPOA." Thus, the administration is setting an accelerated timeline for the re-imposition of all U.S. sanctions targeting activities by non-U.S. entities in key sectors of Iran's economy, including the energy and financial sectors.

Reaction from around the world was swift and largely critical. In a joint statement, the leaders of France, Germany, and the United Kingdom – parties to the JCPOA – responded to the President's announcement "with regret and concern." They emphasized their "continuing commitment to the JCPOA" and to "ensuring the continuing economic benefits to the Iranian people that are linked to the agreement." Speaking on behalf of the European Union, High Representative Federica Mogherini said that "the EU will remain committed to the continued full and effective implementation of the nuclear deal." She emphasized that "the lifting of nuclear related sanctions is an essential part of the agreement" and stressed the EU's "commitment to ensuring that this can continue to be delivered." Iranian President Hassan Rouhani said Iran would consult with the other parties to the accord in the coming weeks to determine whether "we can achieve what the Iranian nation wanted from the JCPOA." Iran's continued commitment to the JCPOA without the United States may depend on the outcome of these consultations. Israeli Prime Minister Benjamin Netanyahu welcomed the announcement and praised the President's "bold decision" and "his commitment to confront the terrorist regime in Tehran and his commitment to ensure that Iran never gets nuclear weapons."

Re-Imposing Sanctions 
The most surprising part of the President's announcement was the plan to "immediately begin taking steps" to re-impose all U.S. sanctions, following a wind-down period. These so-called "secondary sanctions" target activities by non-U.S. public and private entities engaging in a wide range of sectors in Iran, from financial to energy, shipping, insurance, and automotive. If enforced, they are likely to impact not only Iran but U.S. allies in Europe and Asia engaging with Iran in these sectors. The staggered expiry of U.S. sanctions waivers between now and July could have allowed more time either for the United States and Europe to agree on JCPOA "fixes" or for governments and companies around the world to prepare for a resumption of U.S. sanctions. The President's decision on sanctions suggests that he not only wants a U.S. withdrawal from the accord, but an end to the accord itself, and its replacement with "a real, comprehensive, and lasting solution to the Iranian nuclear threat."

In a briefing yesterday, U.S. National Security Advisor John Bolton said that the President's announcement is effectively "reinstituting all of the nuclear-related sanctions that were waived" as part of the JPCOA, and that "any new or prospective contract" in a proscribed sector would now be "forbidden." According to guidance published by the Treasury Department, sanctions waivers will be issued during a wind-down period of 90 or 180 days, to allow existing contracts to be closed. In order to avoid sanctions, foreign firms "are advised to use these time periods to wind-down their activities with or involving Iran that will become sanctionable at the end of the applicable wind-down period."

The 90-day period covers sanctions related to the purchase or acquisition of U.S. dollar banknotes by the Iranian government, trade with Iran in gold or precious metals, trade or transfers to or from Iran of certain metals, significant transactions involving the Iranian rial, the purchase of Iranian debt, and support of Iran's automotive sector. After August 6, 2018, any such activity by a non-U.S. person would be subject to sanction. On this date, authorizations related to the import of Iranian carpets and foodstuffs and the sale of commercial aircraft to Iran will also be revoked.

The 180-day period covers sanctions related to Iran's port and shipping sector, including the Islamic Republic of Iran Shipping Lines (IRISL), petroleum-related purchases from Iran, transactions with Iran's Central Bank and with other Iranian financial institutions, the provision of specialized financial messaging services, such as those provided by SWIFT, the provision of insurance, and engagement or investment in Iran's energy sector. After November 4, 2018, any such activity by a non-U.S. person would be subject to sanction. On this date, authorizations that permitted foreign subsidiaries of U.S. companies (General License H) to engage in certain business with Iran will also be removed.

The re-imposition in early November of sanctions designed to limit the sale of Iran’s crude oil is an important milestone, although the impact could be felt sooner. The statute authorizing these sanctions extends an exception for countries that demonstrate a significant reduction in the purchase of Iranian crude oil in the preceding 180-day period. The State Department will make its first determination in November, based on reductions in a country's purchases of Iranian crude oil made between May and November.   

In addition, as of November 4, the some 400 entities that were removed from Treasury's Specially Designated Nationals and Blocked Persons (SDN) List as part of the JCPOA may be re-designated. These entities could be re-designated sooner under authorities targeting Iran’s support for terrorism, ballistic missile program, human rights abuses, and destabilizing activity in the region. Treasury's guidance states that it will continue to "target aggressively anyone who engages in such sanctionable activity" regardless of whether an entity was previously removed from the SDN list under JCPOA.

Prelude to the President's Decision 
Yesterday's announcement comes after a number of highly critical statements by the President about the nuclear accord. In October 2017, the President decided not to certify Iran's compliance with the JCPOA under the Iran Nuclear Review Agreement Act (INARA) because he judged the sanctions relief provided to Iran was neither "appropriate" nor "proportionate" with the restrictions imposed on Iran's nuclear program. At the same time, the President announced a "new strategy to address the full range of Iran's destructive actions," actions which the accord does not address.

In a January 2018 statement, the President threatened to stop waiving sanctions and "withdraw from the deal immediately" unless an agreement could be reached with European allies "to fix the terrible flaws of the Iran nuclear deal." He issued sanctions waivers on that date only to allow time for Europe and the United States to "secure a new supplemental agreement that would impose new multilateral sanctions if Iran develops or tests long-range missiles, thwarts inspections, or makes progress toward a nuclear weapon." The President emphasized that the provisions of a supplemental agreement "must never expire." This requirement, it appears, was what ultimately sunk negotiations with France, Germany, and the United Kingdom, as it was seen as modifying the basic terms of the JCPOA. U.S. and European officials reportedly had reached agreement on the President's other requirements for a supplemental agreement.

In his January statement, the President also called on Congress to put forward bi-partisan legislation that would help fix the deal. He emphasized that any bill must include "four critical components," including that Iran allow inspectors immediate access to any site, Iran never "comes close" to having a nuclear weapon, sanctions are imposed on Iran's ballistic missile program, and the JCPOA's nuclear restrictions are permanent. While a number of Iran-related bills have been introduced in Congress, no bill that includes the sweeping provisions described by the President has been put forward.

Last Minute Lobbying and the Atomic Archive 
In the days before the President's announcement, he met with a number of European leaders, including French President Emmanuel Macron, German Chancellor Angela Merkel, and U.K. Foreign Secretary Boris Johnson. Their unanimous message was that while the JCPOA was incomplete, it was an important basis on which to build the type of comprehensive agreement sought by the U.S. administration. In a speech before the U.S. Congress on April 25, President Macron said such an agreement should be based on four pillars, including the JCPOA, the post-2025 period (when key nuclear restrictions are scheduled to "sunset"), containing Iran's military influence in the region, and Iran's ballistic missile program.

Israeli Prime Minister Benjamin Netanyahu, a strong critic of the JCPOA, took a different approach. In a live television presentation on April 30, Netanyahu unveiled information about Iran's nuclear weapon program based on material seized by Israeli agents from a storage facility in Tehran. According to Netanyahu, the "secret atomic archive" – comprised of 55,000 pages and 55,000 digital files – provides new detail about Project Amad, a coordinated nuclear weapon program that Iran ran between 1999 and 2003. After 2003, according to the Prime Minister, Iran sought to preserve its weaponzation gains and retained a team to continue this work through an organization controlled by Iran's military. In his May 8 statement, President Trump explicitly referenced the archive as "conclusively showing the Iranian regime and its history of pursuing nuclear weapons."

Iran's Nuclear Plans 
The future of the JCPOA depends on Iran's decision regarding its nuclear program. Iran may decide to resume nuclear work limited by the accord in response to the U.S. withdrawal. In his statement on May 8, President Rouhani said he had "instructed the Atomic Energy Organization to be ready for the next steps if necessary and start industrial enrichment without any limitation." However, he said that Iran would "wait a few weeks" before implementing this decision, to allow for consultations with other parties to the accord. Iran's decision will be based in part on the assurances of these parties as to the continued economic benefit of remaining sanctions relief. If these assurances are judged inadequate, or if the economic harm caused by the U.S. re-imposition of sanctions is judged to be too great, Iran may withdraw from the accord as well.

The restrictions on Iran's uranium enrichment program imposed by the JCPOA lengthened Iran's known "breakout" time – the time it would take Iran to produce enough fuel for a nuclear weapon – from as little as a few months to about one year. Some of these restrictions would be reversible if the accord collapses. For instance, Iran could reinstall the thousands of first-generation gas centrifuges it dismantled as part of the accord, including about 1,000 advanced centrifuges. Iran could use these machines to produce unlimited quantities of low-enriched uranium, the production of which is capped at 300 kg under the accord. It would take some time – perhaps years – for Iran to reconstitute the multi-ton stockpile of low-enriched uranium it had amassed by 2013, which was sufficient, with further enrichment, to fuel approximately seven nuclear weapons. The stockpile was exported as a condition of the JCPOA. If the accord collapses, Iran would also be free to conduct uranium enrichment at any location in Iran, including the underground Fordow plant. Currently, Iran's limited uranium enrichment is permitted only at the Natanz plant.

The plutonium pathway would be more difficult to reconstitute. Under the JCPOA, Iran removed the existing core of its 40 megawatt Arak heavy water reactor and filled it with concrete, rendering it unusable. In its previous form, the reactor was well-suited to producing plutonium for nuclear weapons. Iran is working with China to redesign the reactor "to minimize the production of plutonium and not to produce weapon-grade plutonium in normal operation." If the accord collapses, Iran might seek to modify the design and might decide not to ship out all spent fuel from the reactor, as it has committed to do under the accord. Likewise, Iran could decide to build additional heavy water reactors, which under the accord Iran was barred from doing until 2031.

The International Atomic Energy Agency (IAEA), which is charged with monitoring and verification of the JCPOA's nuclear restrictions, has regularly confirmed Iran's compliance with these restrictions since their implementation. If the accord collapses, the IAEA would still be responsible for verifying that Iran is abiding by its obligations under the Nuclear Nonproliferation Treaty (NPT) not to build nuclear weapons. This means verifying both the non-diversion of material at declared facilities and the absence of undeclared material and activities. However, under this arrangement, the Agency is limited to inspecting locations where fissile material is present and verifying that a country's material declaration is correct. The Agency's authority to inspect sites and equipment where there is no declared fissile material would be more limited than it is under the JCPOA.

Guidance on U.S. Withdrawal 
The White House published a series of documents following President Trump’s announcement, including a background briefing on the President’s decision, a fact sheet reviewing the decision to withdraw from the JCPOA, and a Presidential Memorandum outlining next steps the United States will take to counter Iran’s “malign influence” and to “deny Iran all paths to a nuclear weapon.”

Following the President’s announcement, the U.S. Department of the Treasury released a statement by Secretary Steven Mnuchin, as well as two guidance documents, including an updated list of OFAC advisories and guidance and answers to Frequently Asked Questions about the re-imposition of sanctions.

International Reaction 
Various U.S. officials, world leaders, and multilateral organizations were quick to respond to the U.S. withdrawal from the deal. Below are excerpts from statements issued following President Trump’s announcement.

  • U.S. Permanent Representative to the UN, Ambassador Nikki Haley: "The President absolutely made the right decision to pull out of the Iran nuclear deal [...] We must never allow Iran to get nuclear weapons, and we must resist their support for terrorism that continues to threaten America and our allies."
  • U.S. National Security Advisor John Bolton:  "Iran has used the course of the negotiations […] to increase the capability and sophistication both of its nuclear weapons program and its ballistic missile program […] the only sure way to get on the path of stopping Iran from developing nuclear weapons and delivery capabilities is to get out of the deal."
  • U.S. Secretary of State Mike Pompeo: "As we exit the Iran deal, we will be working with our allies to find a real, comprehensive, and lasting solution to the Iranian threat […] But our effort is broader than just the nuclear threat and we will be working together with partners to eliminate the threat of Iran’s ballistic missile program [...]"
  • Iranian President Hassan Rouhani: "From this moment, the JCPOA is between Iran and five countries. From this moment, P5+1 has lost the 1 and in such a situation, we must wait to see what these major countries of the world will do for the JCPOA […] I have instructed the Atomic Energy Organization to be ready for the next steps if necessary and start industrial enrichment without any limitation and we will wait a few weeks until we implement it, consulting with our friends and allies, as well as the other members to the JCPOA who have signed it and will be loyal to it." 
  • Iranian Foreign Minister Javad Zarif (via Twitter): "In response to US persistent violations & unlawful withdrawal from the nuclear deal, as instructed by President Rouhani, I'll spearhead a diplomatic effort to examine whether remaining JCPOA participants can ensure its full benefits for Iran. Outcome will determine our response."
  • International Atomic Energy Agency’s Director General Yukiya Amano: "The IAEA is closely following developments related to the Joint Comprehensive Plan of Action (JCPOA) [...] Iran is subject to the world’s most robust nuclear verification regime under the JCPOA, which is a significant verification gain. As of today, the IAEA can confirm that the nuclear-related commitments are being implemented by Iran."
  • EU High Representative Federica Mogherini: "As long as Iran continues to implement its nuclear related commitments, as it is doing so far, the European Union will remain committed to the continued full and effective implementation of the nuclear deal. We fully trust the work, competence and autonomy of the International Atomic Energy Agency that has published 10 reports certifying that Iran has fully complied with its commitments."
  • French President Emmanuel Macron (via Twitter): "We will work collectively on a broader framework, covering nuclear activity, the post-2025 period, ballistic activity, and stability in the Middle-East, notably Syria, Yemen, and Iraq."
  • German Foreign Ministry: "From Europe’s perspective, the agreement, with its tight restrictions and control mechanisms, ensures that the Iranian nuclear programme serves only civilian and hence peaceful purposes. It is therefore in Europe’s security interests to maintain the agreement and continue to implement it."
  • U.K. Foreign Secretary Boris Johnson: "Britain has no intention of walking away [from the Iran nuclear deal]; instead we will cooperate with the other parties to ensure that while Iran continues to restrict its nuclear programme, then its people will benefit from sanctions relief in accordance with the central bargain of the deal."
  • Israeli Prime Minister Benjamin Netanyahu: "Israel fully supports President Trump’s bold decision today to reject the disastrous nuclear deal with the terrorist regime in Tehran [...] Israel thanks President Trump for his courageous leadership, his commitment to confront the terrorist regime in Tehran and his commitment to ensure that Iran never gets nuclear weapons, not today, not in a decade, not ever."
  • Russian Foreign Ministry: "Washington’s actions undermine the international community’s confidence in the IAEA, which has repeatedly proved its high professionalism in the course of the JCPOA implementation […] Russia is open to further cooperation with the other JCPOA participants and will continue to actively develop bilateral collaboration and political dialogue with the Islamic Republic of Iran."
  • Saudi Arabian Foreign Ministry: "The Iranian regime […] took advantage of the economic benefits afforded by the lifting of sanctions and used them to continue its destabilizing activities in the region, especially by developing its ballistic missiles and supporting terrorist organizations in the region, including Hizbollah and the Houthi militias, which used the capabilities provided by Iran to target civilians in the Kingdom of Saudi Arabia and Yemen."