nuclear

Trump’s Decision: the JCPOA or Something Else?

In his surprise speech today, Israeli Prime Minister Benjamin Netanyahu presented what he described as Iran’s “nuclear files,” promising to show proof that Iran has cheated on the Joint Comprehensive Plan of Action (JCPOA), the 2015 diplomatic agreement better known as the Iranian nuclear deal.

Instead, what he presented was a curious mix of details on the extent of Iran’s nuclear weapons program prior to 2003—all the major components of which were already publicly known and presented by the United States or the International Atomic Energy Agency—with a series of unfounded assertions about Iran wanting to continue with its nuclear program.

The presentation thus appears to have been far more about politics than anything else, with Netanyahu trying to use details of Iran’s past nuclear activity to argue that it cannot be trusted to comply with the JCPOA today. This is particularly ironic given that these details were among the key reasons which led to international sanctions and the eventual negotiation of the deal itself.  

Nonetheless, with President Trump rapidly approaching another key decision point on May 12th, this presentation will only add fuel to the fire. The president is widely expected to refuse to waive sanctions as required under the JCPOA, despite ongoing Iranian compliance with the deal confirmed and certified by the IAEA, the State Department, and members of his own administration.  

This all raises a key question: What comes after May 12th? Assuming the president does refuse to reissue sanctions waivers, the United States will technically be in default of the deal, regardless of whether we formally withdraw or not. And it remains unclear whether the Trump administration has any coherent follow-through plan.

Last fall, John Glaser and I explored this question in a Cato Policy Analysis, “Unforced Error: The Risks of Confrontation with Iran.” We looked past the JCPOA to ask what other policy options—if any—would be an improvement on the deal. Unfortunately, the four options we examined were all problematic: none resolved the nuclear problem, and several were astoundingly costly and dangerous. Nothing has changed to make these options more palatable in the meantime. 

On North Korea, Diplomacy Is the Sensible Option

The Trump administration’s approach to North Korea’s nuclear weapons and ballistic missile development has been almost exclusively an emphasis on military confrontation. The latest eruption of escalatory actions and rhetoric is in keeping with the norm.

Following Pyongyang’s successful testing of an inter-continental ballistic missile (ICBM) this week, Trump referenced “some pretty severe things that we are thinking about” in response. Gen. Vincent K. Brooks, commander of U.S. forces in South Korean, warned ominously that “it would be a grave mistake for anyone” to doubt our willingness to use military force in response to North Korean “provocation.” UN Ambassador Nikki Haley said in a statement that we will use “our considerable military forces…if we must, but we prefer not to have to go in that direction.” Finally, U.S. and South Korean forces “fired a barrage of guided-missiles into the ocean” off the east coast of the Korean Peninsula, as a show of force.

Many Americans believe the hardline approach to North Korea is wise because peaceful negotiations, in Eli Lake’s words, have been used by Pyongyang “to buy time and extract concessions from the West.” Diplomacy doesn’t work on the intransigent North Korea, we’re told.

But that conflicts with the historical record. According to Stanford University’s Siegfried S. Hecker, the record from the Bill Clinton and George W. Bush administrations shows that “Pyongyang was willing to slow its drive for nuclear weapons” but “only when it believed the fundamental relationship with the United States was improving, but not when the regime was threatened.”

This is a crucial point. For decades, Washington’s general approach has involved economic sanctions, military encirclement, and regular threats of preventive war. In this environment, and without good faith overtures from Washington, North Korea is going to continue to insist on having the ability to deter invasion or attack by the United States or its allies.

Dual-Capable Cruise Missiles: Past Performance No Guarantee of Future Results

Earlier this week I attended a very thoughtful and stimulating debate on the modernization of U.S. nuclear missiles hosted by the Project on Nuclear Issues (PONI) at CSIS. The debate addressed the merits and downsides of two planned U.S. nuclear delivery system recapitalization efforts: the Ground Based Strategic Deterrent intended to replace the Minuteman III ballistic missile system, and the Long-Range Stand-Off (LRSO) cruise missile that is supposed to replace the AGM-86 air-launched cruise missile (ALCM). The ALCM is a dual-capable missile, meaning it can carry either a nuclear or conventional payload. While the LRSO is planned to be only used for nuclear missions, in a conflict scenario it would be hard to discern between it and a conventionally-armed cruise missile until the moment of impact.

One topic raised during the debate was the effect of the LRSO on strategic stability, an important and hotly debated issue. The advocates of the LRSO downplayed the destabilizing potential of the system by pointing out that the United States has used dual-capable cruise missiles in past conflicts. Concerns about strategic stability should be kept in mind, they argued, but the United States has a track record of using dual-capable cruise missiles while safely navigating such concerns.

This argument may be technically true, but it ignores a critical fact: all past uses of dual-capable cruise missiles were in conflicts with countries that did not have nuclear weapons—not between two nuclear-armed countries. Policymakers should be wary of arguments that use historical evidence to dismiss or downplay the negative effects of LRSO on strategic stability because there are no adequate past cases to test such arguments against.

Iran and the Global Oil Glut

Today’s Iran deal is a victory for U.S. nonproliferation efforts, and while it may not be perfect, it goes a long way towards ensuring that Iran cannot develop nuclear weapons, and that the IAEA will regain crucial oversight access to Iran’s nuclear facilities. But though it is fundamentally an arms control agreement, some of the biggest impacts may in fact be felt in global oil and gas markets, as easing sanctions allow Iran’s hydrocarbon sector to reopen to the world.

Much of the text of the deal focuses on the sanctions which will be lifted in exchange for Iranian concessions on nuclear enrichment and processing. These include agreement by both the U.S. and EU to permit the import of oil and gas, as well as lifting asset freezes and bans on the export to Iran of technology and equipment for oil and gas extraction. More importantly, bans on investment, financing and service provision in the industry will be lifted, paving the way for European and American firms to provide technical services and invest in the country.

Oil prices have been volatile since the deal was announced, falling almost two percent before recovering. The initial price drop reflects the expectation that Iran may release some of its approximately thirty million reserve barrels of oil onto the market as soon as it is able. Iran also has the potential to impact oil prices in the long-term, holding the world’s fourth-largest reserves of crude oil, and second-largest gas reserves. Production has been depressed by sanctions, but once they are lifted, it is plausible that Iran could increase production to its pre-sanctions levels (2-3 million barrels a day) within several years.

Iran: From Hyperinflation to Stability?

With the announcement on Saturday night that Iran and the P5+1 group reached a tentative deal over the Iranian nuclear program, the Iranian rial appreciated 3.45% against the dollar on the black market. The rial jumped from 30000 IRR/USD on Saturday November 23rd to 29000 IRR/USD on Sunday November 24th. A daily appreciation of this magnitude is rare. In fact, it has occurred fewer than ten times since the beginning of 2013. Indeed, this indicates that the diplomatic breakthrough is having a positive effect on Iranian expectations.

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