Insider news & Analysis in Iran
Iran Demands Economic Cooperation,

By Edward Carney

As Reuters reported on Tuesday, the head of the Atomic Energy Organization of Iran has issued new threats of prospective Iranian withdrawal from the 2015 nuclear deal, as part of an effort to pressure the agreement’s European signatories into granting Tehran additional incentives and economic advantages.

These threats are nothing new, as Iranian officials have been complaining of inadequate financial returns on the agreement since very soon after it went into effect at the beginning of 2016. But the threats have been amplified in the past several months, following US President Donald Trump’s announcement in May that his government would no longer be a party to the Joint Comprehensive Plan of Action.

Since then, Tehran and the European Union have mutually affirmed commitment to keeping the deal in force despite the return of American sanctions, which began in August and was completed with a second, farther-reaching round on November 5. But Iran’s commitment has generally been phrased in conditional terms, and on Tuesday, AEOI chief Ali Akbar Salehi declared that the Islamic Republic was running out of patience with the EU. “If we cannot sell our oil and we don’t enjoy financial transactions, then I don’t think keeping the deal will benefit us anymore,” Salehi said, threatening the pull out of the JCPOA and resume the enrichment of uranium to purity levels exceeding 20 percent.

As well as articulating this specific threat, which has been repeated numerous times since Tehran first determined that it was unsatisfied with the economic benefits of the agreement, Salehi also vaguely warned of “ominous” and “unpredictable” consequences if the EU did not quickly satisfy Iranian demands.

Those demands include the completion of European plans to set up a “special purpose vehicle” to handle transactions with Iranian entities and evade US sanctions. The SPV was announced soon after the re-imposition of the first round of sanctions, but the plan was short on details and the EU has struggled to find a country that is willing to take on the risk of hosting the financial infrastructure.

But in the immediate aftermath of Salehi’s remarks, the Iranian propaganda network Press TV published a report implying that the EU was on the verge of overcoming this obstacle, perhaps in response to effective pressure from Iranian officials. The report credited unnamed diplomatic sources with the claim that France and Germany would likely host the SPV. Press TV also declared that the United Kingdom – being the last of the three European signatories to the JCPOA – was considering participation in that hosting as well.

There was apparently no independent confirmation for Press TV’s claims on Tuesday, and while it is plausible that the “E3” nations are considering lead roles in the effort to circumvent US sanctions, it must be acknowledged those countries and much of the international community are facing simultaneous pressures from Iran and the US, the latter of which naturally tend to carry more weight.

As the Press TV report acknowledges, it was presumably American pressure that prevented both Luxembourg and Austria from accepting offers to hose the SPV, and there is little reason to assume that the UK, France, or Germany will be distinctly less susceptible to that pressure.

Furthermore, it remains possible that Tehran’s efforts to exert its own pressure and present the European Union with ultimatums may backfire, particularly in view of the recent resurgence of the Islamic Republic’s anti-Western policies. At the end of June and beginning of July, two Iranian operatives and a high-ranking Iranian diplomat were arrested in connection with a plot to set off explosives at the annual Iran Freedom rally that was held near Paris under the banner of the leading coalition of Iranian opposition, the National Council of Resistance of Iran. And in October, Danish authorities arrested another Iranian agent who was reportedly plotting the assassination of Iranian-Arab opposition activists living in Denmark.

These two incidents led to the imposition of sanctions by the aggrieved states, which in turn urged the European Union to join in penalizing the Islamic Republic for its support of terrorism. The EU took up this issue last week during a meeting of foreign ministers in Brussels, apparently setting the stage for much broader application of penalties imposed by France on the Iranian Ministry of Intelligence. A French decision to host the SPV would surely be scrutinized by Iran’s adversaries, including the US, in the wake of French efforts to increase terrorism-related sanctions.

This prospective scrutiny, together with the underlying sanctions, may have prompted Tehran to step up its pressure on the EU this week. But Salehi’s remarks came just one day after Tehran and the EU held talks over civil nuclear cooperation – a meeting that arguably signaled mutual, ongoing cooperation over the JCPOA and the possibility of expanded relations in spite of US pressure. It remains to be seen how an Iranian ultimatum will be received at this particular stage, especially in light of the fact that Salehi was not the only official to offer remarks on Iran’s economic benefit.

Iran’s Deputy Foreign Minister Abbas Araqchi also spoke out against supposed European inaction, but his statements were even more critical, arguably implying that Tehran had already determined to pull out of the JCPOA. Although he stated that the EU and the Islamic Republic could still “cooperate to restore” the agreement’s “balance,” he also insisted that in its current state, there is “nothing left” for Iran. According to Radio Farda, Araqchi also called attention to the effect that the White House and more specifically its special representative on Iran, Brian Hook, had had on European follow-through with regard to the SPV.
Yet Araqchi offered no clear plan for counteracting the American influence. His remarks, like those of the AEOI head, only served to vaguely threaten Western powers if they failed to take more action to re-invigorate the Iranian economy. At the same time, hardline representatives of the Iranian military and paramilitary establishment appeared committed to making these threats more concrete by highlighting the professed military advancements of the Islamic Republic.

Tasnim News Agency, which is close to the Iranian Revolutionary Guard Corps, boasted of the imminent premiere of a new naval destroyer called “Shahad,” as well as proclaiming that Iranian forces have “increased their presence in international waters” during recent years. Tasnim quoted Rear Admiral Hossein Khanzadi as saying that the Shahad destroyer would be joined by a new submarine later the same week, by a higher-class submarine a month later, and by yet another destroyer within six months.

These naval developments were described as part of a project called “Mowj,” or “Wave” in English, suggesting that the Iranian regime is involved in a long-term, large-scale military buildup. Furthermore, according to Press TV, that buildup is not limited to naval equipment but includes major developments in aerospace technology as well. Specifically, Press TV declared that the production of domestically-made Iranian fighter jets had reached such a level that the country would soon be able to export components of its air force.

However, the Press TV report also pointed to the August unveiling of the Kowsar jet as one example of this development, in spite of the fact that the viability of aircraft was widely disputed in international media following the broadcast of footage that supposedly depicted a newly-minted fighter taxiing on an Iranian runway. Tehran routinely holds ceremonies to boast of high-tech military developments, but in many cases the “new” equipment turns out to be outmoded technology with superficial additions and alterations.

The propaganda purpose of these ceremonies was inadvertently highlighted in the Tasnim and Press TV reports, both of which include remarks proclaiming the Islamic Republic to be largely impervious to economic sanctions. Although Press TV quoted Iranian Defense Minister Amir Hatami as acknowledging that US sanctions are becoming increasingly “miserable,” he reportedly insisted that Iran was nonetheless “making advancements in all fields.” Meanwhile, Tasnim quoted Rear Admiral Khanzadi as saying that sanctions have had no impact on Iran’s naval industry.

If these claims are taken seriously, they naturally lead to the question of why Iran appeared so desperate on Tuesday to compel the EU toward action that would shore up the Iranian economy. Furthermore, the promotion of military development in the face of “miserable” sanctions may be viewed by Iran’s critics as a warning that sanctions relief and greater investments in the Islamic Republic would likely be directed, first and foremost, toward activities that threaten or undermine Western interests.

Organizations like the National Council of Resistance of Iran have long warned of Tehran’s misplaced economic priorities. And these warnings have evidently seeped into ongoing protests inside the Islamic Republic, which Supreme Leader Ali Khamenei and other officials have blamed on the NCRI’s main constituent group, the People’s Mojahedin Organization of Iran. As well as endorsing the PMOI’s platform of regime change, recent anti-government protests have called out the clerical regime for spending money on military adventurism in Syria and Yemen, at the expense of the dire needs of the Iranian people.

Such criticism is reminiscent not only of PMOI talking points but also the criticism that underlay President Trump’s withdrawal from the nuclear deal. To the extent that Tehran’s latest military propaganda represents evidence of misplaced priorities, it may also represent a challenge for European policymakers who remain committed to defying US sanctions and complying with Iranian ultimatums that are backed up with veiled military threats.

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