World Powers Reach Landmark Nuclear Deal With Iran, Oil Slides - Full Deal Text

It is only fitting that almost exactly 24 hours after the Greek "pre-deal", which may and will end up crashing and burning in very short notice, another long expected "deal", one which has been about a decade in the making, was reached, when Iran reached a landmark nuclear agreement with the U.S. and five other world powers, a long-sought foreign policy goal of the Obama administration. However, just like with the Greek deal celebrations, these too will likely be short lived as the outcome sets the White House on course for months of political strife with dissenters in Congress and in allied Middle Eastern nations.

In the end, however, the reality is that with little oversight both Iran and the West will maintain the status quo, even if the chances of a middle-east "preemptive" war involving Israel and/or Saudi Arabia increase substantially.

Here are some of the deal highlight bullets from Reuters and Bloomberg:

  • Iran ballistic missile embargo seen in place for 8 years
  • Conventional weapon embargo seen in place for 5 years
  • Iran to cut 98% of enriched uranium stockpile under deal
  • Iran will eliminate two-thirds of centrifuges under deal
  • EU to lift sanctions on Iran as it meets nuclear obligations
  • Iran deal implementation will take months, officials say
  • Iran won’t receive sanctions relief until it complies with terms of agreement

In terms of the next steps timeline, Bloomberg adds that oil sanctions on Iran unlikely to be lifted before December 2015, according to most optimistic assessment of steps involved in draft of nuclear agreement obtained by Bloomberg. Most analysts expect this to happen sometime in 2016.

Key steps as follows: the Joint Comprehensive Plan of Action, or JCPOA, will be adopted 90 days after endorsement by UN Security Council resolution, or sooner by unanimous consent of all parties.

After Adoption Day, U.S., EU will issue waivers, introduce legislation to lift oil and other sanctions on so-called Implementation Day. Implementation Day is when Intl Atomic Energy Agency verifies that Iran has met key nuclear-related obligations.  Implementation day likely to be at least ~2 months after Adoption Day, according to U.S. administration officials; less optimistic scenarios suggest implementation sometime in 2016.

The background on what for many years had seemed like a neverending discussion is largely known by most, but here is the WSJ with a quick rundown:

The Obama administration and its partners hope the deal will resolve a dispute that at times threatened to spark a military conflict. In the optimistic view, it would ease tensions with Tehran over time and pave the way for fresh attempts to resolve some of the region’s many other conflicts.

 

In a Twitter post, Iranian President Hassan Rouhani said the deal showed that “constructive engagement works,” adding “with this unnecessary crisis resolved, new horizons emerge with a focus on shared challenges.”

 

However, critics in Washington, Israel and the Gulf nations that neighbor Iran say the deal will merely delay Iran’s path to nuclear weapons. After 10 years of restraint on its activities mandated by the agreement, Tehran will then be able to ratchet up its nuclear program and potentially unleash a nuclear arms race in the region, they fear.

 

Israeli Prime Minister Benjamin Netanyahu called the deal a “historic mistake.”

 

“Wide-ranging concessions were made in all of the areas which should have prevented Iran from getting the ability to arm itself with a nuclear weapon,’’ Mr. Netanyahu said. “The desire to sign an agreement was stronger than everything else.”

The amusing irony is that according to the WSJ, the agreement could provoke new strains in U.S. ties with its traditional Middle Eastern allies in Israel and the Gulf states led by Saudi Arabia. Why is this ironic? Because as we reported in May, the US just sold "Over $4 Billion In Weapons To Israel, Iran And Saudi Arabia." A more cynical person could be almost inclined to assume the US is eagerly seeking an outcome that destabilizes the already "ISIS ravaged" region even further.

In the meantime, US arms customers, "have warned that lifting tight international sanctions will deliver an economic windfall that enables Iran to expand its regional influence by boosting funding for proxies in Syria, Lebanon, Yemen and elsewhere."

Meanwhile, the diplomats are happy:

French Prime Minister Manuel Valls hailed a deal as an important step in calming tensions. “Everyone is aware of the change this represents,” Mr. Valls said in a television interview on the sidelines of France’s Bastille Day celebrations.

 

“There’s been a tension with Iran for ten years or so. Of course, it’s not over, but a very important step has been taken,” he added.

 

The final round of negotiations stretched for more than two weeks and was punctuated by tensions and setbacks, at times devolving into shouting matches among international officials. The U.S. repeatedly warned it was willing to walk away from a bad deal while Iranians threatened to rev back up their nuclear program.

The quid:

At the heart of the agreement between Iran and the six powers—the U.S., U.K., Russia, China, Germany and France—is Tehran’s acceptance of strict limits on its nuclear activities for 10 years. These are supposed to ensure that the country remains a minimum of 12 months away from amassing enough nuclear fuel for a bomb. After the 10-year period, those constraints will ease in the subsequent five years.

 

In exchange, the U.S., the European Union and the United Nations will lift tight international sanctions on Tehran, a move that Western diplomats say could help Iran’s economy to expand by 7% to 8% annually for years to come.

 

Iran, which analysts say could double oil exports quickly after sanctions are lifted, will also receive more than $100 billion in assets locked overseas under U.S. sanctions.

... and the pro quo:

Iran must take an array of specific steps. It must disable two-thirds of its centrifuge machines used to enrich uranium, which can be used as fuel for nuclear energy or nuclear weapons. It must slash its stockpile of enriched uranium and redesign its nuclear reactor in the city of Arak so that it produces less plutonium, which can also be used in a weapon.

 

Oil-rich Iran has always insisted its nuclear program is for entirely peaceful purposes, such as producing electricity and medical isotopes.

 

After years of stalling, Iran also must disclose information on its past nuclear activities, which many Western officials believe was aimed at gaining nuclear weapons know-how. Iran must provisionally implement an agreement giving United Nations inspectors much broader access to sites inside the country and eventually get parliamentary approval for that agreement.

But the biggest hurdle for implementation will be the US itself, where a vocal republican-controlled Congress has said it would fight the deal:

The nuclear deal will fan intense political debate in Washington, where Congress may vote within 60 days on the agreement. As a last resort, the Obama administration may have to rely on the support of Democrats to uphold a presidential veto if the Republican-led Congress votes to overturn the agreement.

At the end of the day, the "deal" - just like Greece's pyrrhic defeat, will be mostly watercooler talk with little actual implementation:

 

“The technical obstacles can be surpassed with goodwill and diligence, but political hurdles can turn into poison pills,” said Ali Vaez, senior Iran analyst at Crisis International, an international conflict resolution group.

 

“Neither Iran nor the U.S. has ever implemented such a complex quid pro quo. In an atmosphere of mistrust, misunderstandings are inevitable—thus the need for preserving the positive diplomatic momentum even after the deal is sealed.”

For now however, the biggest loser from a potential deal, oil, is sliding on concerns what the imminent surge in Iran deliveries to the global market will do to prices: as a result oil slid nearly 2 percent after Tuesday's deal.  Brent crude was last down $1.35 a barrel, or 2.3 percent, at $56.50 a barrel.

"Sanctions have crippled Iran's oil production, halving oil exports and severely limiting new development projects. The prospect of them being lifted is creating great excitement ... as foreign trade and investment will allow Iran to make huge efficiencies and drive down the cost of production," said Sarosh Zaiwalla, a London-based sanctions lawyer.

The fall in crude prices hit oil producers' currencies. The Norwegian crown fell 0.3 percent to 8.11 per dollar, having earlier fallen to 8.14, while the Canadian dollar fell 0.4 percent against the greenback to a four-month low of C$1.2796.

But the biggest winner, if only for the time being is Obama, who will make a statement wihin the hour to show the American people just what a strong diplomat he really is.

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For those searching, below is the full text of the 159 page deal as leaked by Iran's Tabnak news site.