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Iran’s Year to Come in from the Cold

By Alison Szalwinski

January 15, 2015

The November 2014 agreement between the P5+1 (the five permanent members of the UN Security Council plus Germany) and Iran to extend nuclear talks for seven months raises the question of whether 2015 will bring a final deal on Iran’s nuclear program. In addition to these negotiations, a number of related developments must be watched carefully as well. The alignment of U.S. and Iranian interests over militants in Iraq, the possibility of the Republican-controlled Senate passing new sanctions, and the pressure from energy-hungry Asian nations looking for new opportunities to engage with Iran will all determine whether Iran’s global relations will alter significantly in 2015 or remain fraught with tension.

The recent extension of nuclear talks renews the conditions of the November 2013 Joint Plan of Action: in exchange for Iran freezing its nuclear program and allowing International Atomic Energy Agency inspectors greater access to nuclear facilities, the P5+1 agrees not to impose new sanctions and to gradually return approximately $4.2 billion in frozen oil sales. Secretary of State John Kerry optimistically welcomed the agreement’s extension, asserting that new ideas have emerged “that could…help resolve some issues that had been intractable” and anticipating that a framework deal could be resolved within three to four months.

The primary disputes to be ironed out in the talks include the continuation of Iran’s enrichment program, the timeline for lifting sanctions, and the duration of a potential agreement. Iran insists that it be allowed to further develop its enrichment capacity, increasing the number of centrifuges and constructing additional power and research facilities. The P5+1 strongly opposes this demand, as these steps could dramatically shorten Iran’s breakout time. Iran wants sanctions removed immediately and the deal to last five to seven years, whereas the P5+1 seeks gradual removal contingent on Iran’s implementation of the deal over ten to fifteen years.

Several factors could inhibit an agreement. The Republican takeover of Congress has prompted speculation that a new sanctions bill will be introduced to pressure Iran into compliance. While the president has promised to veto such a bill, misbehavior on the part of Iran, such as that alleged in a recent report that Iran has sought to procure materials and equipment for its heavy-water reactor at Arak in violation of UN sanctions, could convince Congress to override the president’s veto. But while the staunchest proponents of new sanctions have continued to call for congressional action, it appears likely that the new Congress will give negotiators a few months to make progress before introducing legislation.

Meanwhile, outside the scope of the nuclear talks, the activities of the Islamic State of Iraq and Syria (ISIS) have produced an area of converging interests for Iran and the United States. Both sides continue to reject the possibility of formal policy coordination, but they share a desire to prevent ISIS from gaining ground in Iraq and threatening regional stability. This has prompted them to open channels of communication over militant activities. Greater cooperation between Iran and the United States on any front will undoubtedly make U.S. partners in the region uneasy, including Saudi Arabia and Israel. However, the reality of events in Iraq and Syria means that addressing the ISIS threat will continue to be a common interest between the two nations.

Beyond the critical U.S.-Iran relationship, Iran’s relations with other Asian nations will be equally complex in 2015. While many countries, including China, Japan, South Korea, and India, are apprehensive about Iran taking further steps in its nuclear program, they continue to look to Iran as a major source of energy and trade. As Iran’s largest trading partner, China hopes to see current negotiations succeed so that trade restrictions may be lifted and more oil exported. Toward the end of 2014, China and Iran increased their military cooperation. They have plans for more military exercises in 2015, including their first-ever bilateral blue water naval exercise.

Japan also has a complicated relationship with Iran. Tokyo’s desire to improve relations with Tehran in order to satisfy energy demand conflicts with its extreme moral opposition to nuclear weapons. Iranian leaders, including Iranian Parliament chairman Ali Laijani, have said that the country wants to follow the “Japan model” of peaceful nuclear development, leading some commentators to speculate that Tokyo could be an ideal mediator between Washington and Tehran, particularly if negotiations break down.

The first few months of 2015 are critical for determining Iran’s standing in the international community. If a final agreement is not reached, the United States is likely to double down on sanctions and press other countries to follow suit, resulting in greater restrictions on energy exports, trade, and finance. Should talks succeed, however, this will be only the beginning of a long road Iran must travel to come in from the cold.

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This is one of 15 essays examining how 2015 will shape the economy, political systems, and geopolitical arena in the Asia-Pacific and beyond. Download all 15 essays in PDF format or access them online below.

Alison Szalwinski is a Political and Security Affairs Project Associate at NBR.

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