Oil Figures and “Free” Exports to Syria

Most objective indicators have shown that Iran has not been abiding by these restrictions. Iranian Oil Minister Bijan Zanganeh explicitly rejected such limits, in fact, and insisted that Iran would export at the highest level possible. Regardless of this, actual export figures have indicated that Iran’s sales have trended upwards, consistently exceeding the reported limits of one million barrels per day on average. May figures seemed to make compliance with the JPOA a mathematical impossibility.

 Nevertheless, through all of this, the US has taken no punitive action and has evidently not made the violation a point of contention at recent nuclear discussions. In fact, the Obama administration repeatedly insisted that Iranian compliance would still be forthcoming.

 Reuters now explains how the administration has managed to maintain this position, and some critics are of the opinion that the reason can be accurately described as manipulation of the data. For one thing, the language of the JPOA was vague on point of oil exports, and the Obama administration has officially bumped the acceptable level from an even one million barrels per day to 1.1 million.

 On the other hand, actual export figures are higher than the figures accepted by the Obama administration for the purpose of testing Iranian compliance. This discrepancy is possible because the administration has chosen to discount figures for condensates, a very light oil from natural gas fields, despite the fact that those exports are typically rolled into the figures for overall crude oil exports.

 US Representative Ted Deutch of Florida expressed surprise at this explanation, saying, “So you are telling me that the way that this is analyzed, that the reason that there are those that say it has been over a million bpd in violation of the statute that would trigger sanctions, is because there is an artificial line being drawn between crude oil and condensate that doesn’t typically exist outside of the sanctions world?”

 Yet another issue is that not all oil exports count towards the 1.1 million barrel per day limit. The principal exception is exports to Syria, which, according to the Washington Free Beacon, have purportedly been given free of charge for the past several months. But a lack of monetary payment does not necessarily mean that Iran isn’t meaningfully compensated by Syria, or that the two countries are not keeping track of a rising debt owed for these exports.

 What’s more, the absence of a record of monetary transactions does not mean that transactions haven’t taken place. Iran has a long track record of evading sanctions with the help of regional trading partners who avoid international payment systems for crude oil and instead use direct payments in gold, or barter, or dummy accounts in domestic currencies, or prepaid Visa cards to purchase oil behind the backs of the West.

 These factors may support the conclusions of Mark Dubowitz, executive director of the Foundation for Defense of Democracies, who said, “The administration’s argument that the Iranian delivery of crude oil to Syria should not be counted as a violation of the JPOA or U.S. sanctions laws is the triumph of bureaucratic legalese over strategic common sense.”

 Threats and the Nuclear Deal

 Of course, the Obama administration’s decision to take a generous view of Iranian oil exports and the JPOA may be motivated by the administration’s desperate desire to see a nuclear deal brokered successfully.

 Perhaps sensing this desperation, Iranian Deputy Foreign Minister Abbas Araqchi has declared that if a deal is not reached, Iran will immediately return to earlier enrichment levels, according the Reuters. Using language that reads suspiciously like a conscious threat, Araqchi described this potential situation as “a disaster for everyone.” It is the latest example of Iranian efforts to dominate negotiations in order to push for concessions from the US and other powers, while not offering any serious compromise from its end.

 The classic example of this intractability has been Iran’s position on enrichment capability and the number of operational centrifuges that it plans to retain. While Western powers would like to see this number cut from about 19,000 to as little as a few hundred, Iran has plans to expand its supply to 50,000 and has so far proven unwilling to negotiate on this point. On Wednesday, Foreign Minister Mohammad Javad Zarif reiterated this point, Bloomberg reports.

 Zarif also referred to what he called “the myth of breakout,” suggesting that the key focus of Western negotiations – to make sure that Iran is not in a position to quickly produce the components for a nuclear bomb – is faulty. He insisted that Iran is much farther away from that outcome than the US has suggested.

 While Iran is remaining stubborn on the point of uranium enrichment, Reuters indicates that there are some indications that it may be making rare concessions on the topic of plutonium enrichment, in that it claims to be redesigning the Arak heavy water facility to reduce potential outputs. This facility has been a point of contention between Iran and nuclear inspectors from the International Atomic Energy Agency, so some changes to the site may have been necessary to avoid poor IAEA reports, which might finally derail talks with the P5+1.

 Those talks are set to resume on Monday, but in the meantime, Iran has had bilateral discussions with four of the six powers, including Russia on Wednesday. According to the Express Tribune, the Russian negotiator left those talks optimistic about the prospects for the deal. But Russia is a key Iranian ally and has supported the Iranian side in talks, meaning that optimism from that camp may be dubious. Overall, there has been a decided lack of optimism since no progress was made in the last formal round of negotiations.