Israel Stepping Up Efforts To Dissuade US From Signing Deal With Iran

Iran’s Industries Minister Reza Fatemi-Amin traveled to Moscow at the head of a large delegation to attend the opening ceremony of the MIMS Automobility Moscow 2022, from August 22 to 25. 

He told IRNA that the show marks a turning point in automotive industry cooperation between Iran and Russia as the two countries seek to offset the impacts of foreign sanctions on their economies.

Seeking to expand their markets in Russia, Iran’s largest carmaker the Iran Khodro Company, branded as IKCO, and its rival Saipa plan to cooperate with Russian automakers in car productions, such as a project between Saipa and Russia’s AvtoVaz -- maker of the Lada -- to manufacture a Renault model that was discontinued in Iran in 2018 after the French company left Iran because of US sanctions. 

Sixteen European car manufacturers (including four of the top 10 by market share) sold close to half a million units of Russia’s total sales of 1.67 million in 2021, making the country the eight-largest car market in the world in terms of global sales volumes. But following the sanctions over the Russian invasion of Ukraine, almost all foreign firms left and car sales were down by 84 percent in May. 

Criticizing Iranian automakers for producing low-quality vehicles responsible for a high rate of road accident casualties, Iran’s traffic police said Tuesday that substandard and unsafe cars lead to at least 17,000 deaths and 300,000 injuries every year.

Fars, linked to the Revolutionary Guard, is not the only government-controlled media outlet periodically bringing up this issue, as Iran negotiates with the United States through the Europeans to restore the 2015 nuclear deal (JCPOA).

Once the deal is restored the United States will lift oil export sanctions imposed by former President Donald Trump when he withdrew from the JCPOA in 2018. It will also remove international banking restrictions also imposed as part of Trump’s ‘maximum pressure’ on Tehran.

But what Iranian media presents as ‘Europe’s freezing winter” has almost nothing to do with Tehran’s crude oil exports, except generally helping to bring down oil prices. Europe’s need to replace Russian gas is a specific issue on its own that Iran cannot help with at all.

There are two major reasons why a nuclear agreement now cannot impact Iran’s ability to export natural gas for the foreseeable future.

First is Iran’s huge domestic need that exceeds its current production capacity, and second is the absence of the infrastructure to export the gas as LNG.

Iran produces around 750 million cubic meters of gas per day, which is a considerable amount, but it has suffered from domestic shortages for the past three years as demand has risen and gas production has plateaued or decreased.

The huge domestic demand primarily comes from extraordinary low prices – a de facto fuel subsidy offered to the population more as a loft-over of the revolutionary days than any good reason. Some estimates say that Iran has sustained a loss of close to $300 billion in the past decade simply by selling gas cheap to domestic consumers. In the same manner, gasoline and electricity are extremely cheap in Iran. A gallon of gasoline is sold at the pump for around 22 US cents.

Natural gas production could have increased with exports in mind, since Iran has the second largest reserves in the world, but for close to 20 years successive government were unable to invest in boosting extraction. The reason for this was both international sanctions (2010-2015) and current US sanctions imposed since 2018. There are also US sanctions prohibiting American participation in Iran’s energy sector going back to 1996.

All these sanctions were imposed because of Iran’s nuclear program and they banned investments and critical technology that only Western energy giants could have provided for expanding production.

Even Chinese energy companies left Iran’s South Pars gas field in the Persian Gulf that can easily produce more than 10 percent of global needs.

Having fallen behind in gas production, Iran also never built LNG terminals to serve global markets, like its tiny neighbor Qatar has done. Building such terminals can take 3-5 years, even if a nuclear agreement is signed today and US sanctions are lifted. Considering the need to build larger gas platforms to boost production, the time needed for Iran to ship LNG to Europe is at least 7-8 years.

There are also political hurdles Tehran must overcome. Its most important strategic ally is Russia, which would not like Iran taking a big share of its European market. The Iranian government is talking about a “gas swap” with Moscow, which means Russia wants Iran to sell its natural gas.

If current European strategy of replacing Russian gas stays in place in the absence of a resolution to the Ukraine crisis, any gas deal with Iran would mean buying energy from Moscow.

Mohammad Jamshidi tweeted that Washington believed the offer to remove the Guards (IRGC) from its list of ‘foreign terrorist organizations’ might draw Rouhani into talks over “regional issues” and Iran’s missile program. The centrist Rouhani left office in August 2021, succeeded by President Ebrahim Raisi, many of whose supporters are critics or opponents of the 2015 nuclear deal, the JCPOA (Joint Comprehensive Plan of Action).

With the US and Iran inching closer together in talks to revive the JCPOA, Raisi may want to project any agreement as more favorable than anything Rouhani would have achieved.

In a briefing in Tehran last week, the outlines of which reached Iran International, Ali Bagheri Kani, Iran’s lead negotiator in nuclear talks, said Iran had rejected a US demand that Iran enter talks over its missile program and regional alliances.

‘Follow on’ talks?

The administration of President Joe Biden, while accepting the original logic of the JCPOA in detaching Iran’s nuclear program from other matters, has said it wants ‘follow on’ deal covering Iran’s missile development and links with groups the US deems ‘terrorists.’ As a candidate running against President Donald Trump, who left the JCPOA in 2018, Biden wrote an op-ed for CNN in 2020 saying the US would under his presidency rejoin the JCPOA “as a starting point for follow-on negotiations.”

While recent days have brought signs of Iran and the US bridging gaps over reviving the JCPOA, the greatest remaining challenge may be agreeing a way forward over the International Atomic Energy Agency (IAEA) probe into unexplained uranium traces found in Iran by inspectors.

Mohammad Marandi, who has acted as a spokesman-cum-advisor for Iranian negotiators, tweeted Wednesday that “no deal will be implemented” unless the IAEA board of governors “permanently” closed these enquiries.

The US, France, Germany, and the United Kingdom in June successfully moved a resolution at the 35-member IAEA board criticizing Iran’s failure to satisfy the agency over the uranium traces, which relate to work carried out before 2003. The US and ‘E3’ argue, as does the IAEA chief Rafael Mariano Grossi, that the issue relates to Iran’s ‘safeguards’ commitments under the Nuclear Non-Proliferation Treaty and is separate from the JCPOA talks.

US: ‘Doing our homework’

Leading Iranian officials, including Raisi, have argued that Iran expects the probe to be dropped as part of restoring the JCPOA. They claim a precedent in the IAEA’s ‘final’ report on Iran’s pre-2003 nuclear work issued in December 2015, some months after the JCPOA was signed.

Marandi in his tweet also suggested he had said for “months” that Iran did not see IRGC delisting as a precondition for success in the talks. It was widely reported in June that Tehran had dropped the demand, which had apparently been raised on the grounds that the Trump administration had listed the IRGC as part of ‘maximum pressure’ after withdrawing the US from the JCPOA in 2018.

A US National Security Council spokesman said Monday that Washington, having received August 15 Iran’s response to European Union proposals on JCPOA revival, circulated August 8, was “currently doing our homework and will respond at an appropriate time and after our internal process is complete.” The spokesman said Washington was encouraged that “Iran appears to have dropped some of its non-starter demands, such as lifting the FTO designation of the IRGC.”

Egyptian President Abdel Fattah el-Sissi met with Emirati President Mohammed bin Zayed Al Nahyan, King Abdullah II of Jordan, Iraqi caretaker Prime Minister Mustafa Al-Kadhimi and Bahrain's King Hamad bin Isa Al Khalifa in the Mediterranean city of el-Alamein on Monday, but the official summit is slated for Tuesday. 

According to an Egyptian statement, the five-party talks focused on consolidating regional ties and cooperation between their countries, and an Iraqi statement said the talks would discuss regional security along with energy, investment, and climate change. 

Neither statement mentioned Iran and the ongoing efforts to restore the deal but many of the Persian Gulf nations – Saudi Arabia in particular — have grave concerns about the Islamic Republic’s activities in the region, fearing that reviving the 2015 accord and lifting sanctions will empower Tehran to expand its destabilizing activities in the region.

Iraq has hosted several rounds of talks between Iran and its regional rival Saudi Arabia, whose ties worsened considerably since 2016, when Riyadh cut ties with Tehran after mobs attacked its embassy in Tehran after Riyadh executed 47 dissidents including the leading Shiite cleric Sheikh Nimr al-Nimr.

There were also talks recently between Iran and Egypt as both governments explore ways to ease decades-long tensions. Diplomatic representation between Egypt and Iran is at the level of interest section offices since the two countries severed ties following the 1979 Islamic Revolution. 

In their letter released to media on Monday, the prisoners said that considering the spread of the new covid-19 variant in the prison and lack of enough room for quarantine areas, the inmates are in danger. 

They denounced a lack of proper attention to their health conditions, noting this is not the first time that health conditions for the prisoners have been ignored in the women's ward at Evin and other prisons, including Qarchak prison near the capital. “What has worsened the situation these days is the daily increase in the number of female prisoners while the Covid-19 is spreading."

Rights defender Narges Mohammadi, one of the signatories of the letter, said earlier in the month that authorities put the lives of female prisoners in danger by refusing to protect them from Covid despite new cases. Mohammadi, who has been transferred to the Women’s Ward of Evin Prison after a recent open-heart surgery, said that some of the inmates have tested positive for Covid while several others have developed symptoms but have not been tested.

Ill-treatment of political prisoners and activists at Evin and other prisons such as Qarchak is not limited to denying them necessary healthcare. Sepideh Rashno, an anti-hijab protester who is reportedly held at a ward run by the IRGC at Evin, had to be taken to hospital to check for internal bleeding symptoms resulting from torture before her ‘forced confession’ was aired on state-run television last week.