The curve ball

US President Trump said he would be willing to meet Iranian President Rouhani with “no preconditions” as tensions between the two countries climb following the U.S. president’s decision to withdraw from the 2015 nuclear deal.

Background

Iran’s nuclear program was first launched in the 1950s, with help from the US. Iran signed the Nuclear Non-Proliferation Treaty in 1970. Support from the West continued until the Iranian Revolution and the ascent of Ayatollah Khomeini into power in 1979. Iran’s nuclear program has been a source of concern for the international community since then. The United Nations consequently imposed a number of sanctions on the nation. By 2015, the nation had lost billions of dollars due to these sanctions; an estimated $100 billion in oil revenue alone. It had also lost out on Foreign Direct Investment. 

The Joint Comprehensive Plan of Action (JCPOA) is a comprehensive agreement between the P5+1 countries, EU and Iran to prevent nuclear arms development in Iran in exchange for removal of sanctions. October of 2025 was chosen as the Termination Day. Under the JCPOA signed in Vienna, Iran agreed to scale back the country's uranium enrichment programme. In exchange, UN-approved sanctions were lifted, and Tehran was allowed to resume trading oil and gas on the international market.

Recently, President Trump, a long-time critic of the Iran nuclear deal went ahead and pulled out of the pact in May 2018. Washington also imposed a series of additional sanctions on Iranian entities, individuals and foreign companies. The United States also said that it will exert "maximum economic and diplomatic pressure" on other countries to stop buying crude oil from Iran. US has threatened the JCPOA’s remaining signatories with punitive measures if they engaged in trade and investment with Tehran.

Analysis

US president at a joint press conference with Italian PM Conte on Monday said “I would certainly meet with Iran if they wanted to meet.” Garrett Marquis, a National Security Council spokesman said, “If the Iranian regime changes its behavior in the ways we’ve identified, the US is prepared to take actions to end sanctions, re-establish full diplomatic and commercial relations, permit Iran to have advanced technology, and support the reintegration of the Iranian economy into the international economic system.”

Secretary of State Michael Pompeo has laid out a list of demands addressing everything from Iran’s ballistic missile program to its involvement in the war in Yemen, as requirements for Iran to become a “normal country.” However, an Iranian official said the U.S. would need to show that it respects Iran and is returning to the nuclear deal that Trump rejected.

While expressing willingness to meet with the Iranian President, Trump cited his positive engagement with North Korea. He said, “There’s nothing wrong with meeting.” One possible opportunity would be during the annual United Nations General Assembly in late September in New York.

Economically, Trump may have some leverage with Tehran. Politically, however, many analysts say it would be very hard for Iran’s political leaders to meet with Trump, given his opposition to the nuclear accord they spent years negotiating, his travel ban that affects many Iranians interested in studying or working in the U.S. and his rhetoric against the government’s. Defense officials have said they have received no instructions to gird for a military conflict with Iran.

Last week, Rouhani fired Valiollah Seif, head of the country’s Central Bank, as the value of the Iranian rial continued to drop. It fell Monday to a record low against the dollar, largely in anticipation of the return of U.S. sanctions that were lifted under the nuclear deal. The administration has also said it will reinstate penalties in November against countries and companies that purchase Iranian oil, including U.S. allies around the globe.

“It’s a stretch, but there is a plausible pathway for a Trump-Rouhani summit,” former Obama Middle East adviser Ilan Goldenberg wrote on Twitter. “It goes through Vladimir Putin.” Russia is a party to the nuclear compact and has full diplomatic relations with Iran. This month, both Iranian Oil Minister Bijan Zanganeh and Ali Akbar Velayati, the top foreign policy adviser to Iran’s supreme leader, Ayatollah Ali Khamenei, visited Moscow for discussions on increased cooperation between their oil and gas industries.

Counterpoint

Direct presidential negotiations with Iranian leaders would be another break with Republican orthodoxy and a potential point of friction with Israel and with Arab allies in the Persian Gulf who are united in opposition to Iran.

Assessment

Our assessment is that a meeting between Rouhani and the American President would be a symbolic trump in the internal struggles between the reformist and the conservatives, led by the Supreme leader Ali Khamenei. We also believe that it would be important for Rouhani to get the tacit approval of the Supreme leader as he has the political and religious authority in Iran. We feel that Trump has thrown a curve ball when it appears that the US has some economic leverage with Tehran, which has faced months of protest about corruption and slow economic growth. We also feel that direct presidential negotiation with Iranian leaders would be a break with Republican orthodoxy and an irritant for Israel and the Sunni Arab allies in the Persian Gulf.