- Policy Briefs
This week, the United Nations published some guidance about a critical part of the nuclear agreement with Iran: the procurement channel. Sales to Iran of items controlled by the Nuclear Suppliers Group (NSG) and of non-listed items with nuclear applications must pass through this channel, following a review by the newly created Procurement Working Group. The role of this group was set forth in the nuclear agreement, but little information had been released about how it will function in practice.
The recent guidance – in the form of two short PowerPoint presentations – comes about two months after the agreement was officially implemented, with Iran scaling back parts of its nuclear program in exchange for sanctions relief. Because the deal was implemented faster than initially anticipated by Western diplomats, restrictions on Iran's nuclear program have been loosened without the structure necessary to ensure that Iran, as well as any government or company that wants to engage in business with Iran, is complying with the remaining – and considerable – constraints.
A number of these restrictions relate to procurement. Iran built up its nuclear and missile capabilities using material and equipment acquired illicitly from abroad. The nuclear agreement is meant to guard against such procurement – at least on the nuclear side – by scrutinizing the sensitive items Iran is once again allowed to import, as well as the end-users in Iran allowed to participate in this trade.
The scrutiny is to be overseen by the Procurement Working Group, comprised of one member from Iran and one member from each of the P5+1 countries, plus the E.U. High Representative. According to the information released this week, the group is one of several entities involved in monitoring and approving Iranian nuclear imports. This bureaucracy may hinder the channel from functioning expeditiously, with the possibility of foot-dragging at each level.
Export proposals must be made by countries – not companies – to the U.N. Security Council, through a U.N. facilitator and the Security Council Affairs Division of the U.N. Department of Political Affairs. Individual countries seeking to export goods through the procurement channel must establish their own internal mechanisms for putting forth proposals. It is unclear whether many countries have had the necessary time to do so.
Each export proposal then will be passed from the Security Council to a Joint Commission that was established by the agreement. The Procurement Working Group, which is subordinate to this Commission, reviews the request and issues a recommendation. The group operates by consensus and is intended to make decisions within 30 working days. Its recommendation is then sent back to the Security Council for a final decision, and the exporting state is informed.
This mechanism is meant to function for ten years and review transfers of not only tangible items but also the provision of "technical assistance or training, financial assistance, investment, brokering or other services related to the supply, sale, transfer, manufacture, or use" of these items. The broad scope of the procurement channel – and the sheer volume of requests that may pour in – could place enormous stress on the working group given the short timeline for reviewing proposals.
Each export proposal must include a description of the item, its proposed end-use and end-use location, as well as information about the exporting entity, the end-user in Iran, and any other parties to the transaction, including agents, brokers, consignees, or freight forwarders. Proposals must also include an end-user certification form from either the Atomic Energy Organization of Iran (for the nuclear sector) or Iran's Ministry of Foreign Affairs (for non-nuclear civilian sectors). All of these elements must be screened and potentially investigated by the working group.
The recent guidance also confirms exceptions to the channel that were spelled out in the nuclear agreement, including light-water reactor technology and related reactor fuel, imports to modify the Arak heavy water reactor, and trade in natural and low-enriched uranium (LEU) to help maintain Iran’s 300 kg cap on LEU. Transfers of these goods would have to be reported to the Security Council and to the International Atomic Energy Agency (IAEA), and supplier countries would be responsible for ensuring proper end-use.
The Joint Commission and the Procurement Working Group have additional functions, such as providing expertise on end-use verification to exporting states and responding to requests for guidance from third parties, within nine working days, according to the recent guidance. Reports on procurement channel decisions will apparently be made every six months to the Security Council. It is not clear if these reports will be made public, or if they will be combined into a more general report on implementation made by the U.N. Secretary General to the Security Council. According to the guidance, "the operation of the procurement channel will be subject to the confidentiality of the U.N." This means that procurement requests, working group recommendations, and Security Council decisions may not be made public.
Violations of procurement rules will be handled by the Joint Commission and the Security Council. Under prior United Nations resolutions, a dedicated U.N. committee was charged with monitoring the implementation of sanctions against Iran, and an expert panel focused on investigating and reporting on possible violations. This Panel of Experts was one of the most valuable international instruments for scrutinizing and publicizing illicit Iranian activity. However, in response to demands from Iranian negotiators, both the U.N. committee and the Panel of Experts were dissolved as part of the nuclear agreement. It appears there will now be less transparency about procurement and sanctions violations than before, much like the reduced detail about Iran's nuclear program included in IAEA reports since the implementation of the nuclear agreement.
The procurement channel is just one example of how former restrictions on Iran’s nuclear program were removed faster than new enforcement structures could be put in place. It is unclear how long it will take for the United Nations, the new Joint Commission, and individual states to get the channel up and running—and whether sufficient information will be publicly released about the channel's operations and decisions. The implementation of the nuclear deal in January was hailed as a diplomatic milestone. But the agreement's success in reining in Iran's nuclear ambitions cannot be known until it has been in place for some time and its enforcement mechanisms have been tested.