Implications of the Nuclear Negotiations
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The following is an unedited transcript of the eighty-first in a series of Capitol Hill conferences convened by the Middle East Policy Council. The meeting was held on July 16, 2015, at the Rayburn House Office Building in Washington, D.C., with Richard Schmierer moderating and Thomas R. Mattair as discussant. The video can be accessed at www.mepc.org.
RICHARD SCHMIERER, Former Ambassador to Oman, Member of the Board, Middle East Policy Council
Good afternoon, everyone. I hope my mic is working. Are we OK? I see we – good. Anyway, welcome, everyone. We have a full house. That’s great to see in the middle of July. I hope everyone who’s interested has had a chance to partake of some of the food and some of the drink, and we’ll let you continue that while we get started with our program.
We’re particularly pleased with our timing. I think the topic we’ve chosen and the timing happen to have worked out very, very well. My name is Richard Schmierer. I’m a member of the board of the Middle East Policy Council. And I have the honor of welcoming you and introducing our speakers today. As you know, we’ll be talking about Iran and the Arab world, implications of the nuclear negotiations. Now I guess we could probably say the nuclear agreement.
I was interested to note this morning in The New York Times – I was the ambassador in Oman back from 2009 to 2012. And so it was interesting to read in The New York Times this morning some of the things that we were doing that we couldn’t talk about then, but are now on the front page of The New York Times. And it’s very nice to see the Sultan and the Omanis getting credit for their role in helping this deal come about.
As you know, we’ve just in the last couple of days had the agreement announced. There’s been a huge amount of commentary, the president speaking on it. And so we’re very fortunate to have the experts that we do, because we really will be able to cover the waterfront, you know, with all of the individuals here, with all the aspects of the agreement, from the economic to the political to the security and even to the technical. So we look forward to that discussion.
We’ll have our panelists speak in the order in which they appear on the program. As I mentioned to poor Sara, that’s not politically correct because her name begins with V so she ends up last on the program. But let me just quickly introduce each, and then we were going to ask each to speak for about 10 minutes or so to introduce the various topics and then my colleague, Tom Mattair, the executive director of the council, will lead a Q&A session with our panelists.
So first up will be Jim Miller. Jim is currently the president of Adaptive Strategies, but until recently was the undersecretary of defense for policy. I had the pleasure of meeting Jim when we were together at a conference in Riyadh recently, and I know we’ll certainly learn a lot from his observations on this deal.
Nabeel Khoury, who’s now a senior fellow at the Atlantic Council’s Rafik Hariri Center on the Middle East, he and I were State Department colleagues for several decades, both serving several times in the Middle East. So we’re old friends. And, Nabeel, we certainly look forward to your contributions.
Paul Pillar, who’s currently with Georgetown, is a long-time veteran from the intelligence community. And I had the pleasure of being at Georgetown with Paul a few years ago when we were primarily working on Iraq at that time. And certainly I gained a lot from his wisdom. And I know today we’ll hear now more about Iran. And I think that’ll be quite interesting as well.
And then last but certainly not least, Sara. We have Sara Vakhshouri, who’s expertise is in the energy sector. And that’s going to be a particularly interesting, and I think a very important, element of what happens following this deal and where we go with that. So I know we’ll want to use your expertise to draw out on that subject.
So anyway, I don’t – without further ado – let me just quickly, though, mention, as you know, the council has been active for several decades in the Middle East. And we do have our three primary programs, of which this is one. We do a quarterly conference here on Capitol Hill. And that’s where we are today.
And then we have our journal, the Middle East Policy Journal, which is really one of the most, I think, influential and respected journals in the field. And we always publish the proceedings of the conference in the journal. So you’ll see the proceedings in a coming issue of the journal. And then finally, we do educational programs, primarily for schools and also for the general public, on the Middle East. So those are the three primary activities of the Middle East Policy Council. And so we certainly encourage you to be involved in those and to support them as best you can.
But without further ado, then –
THOMAS MATTAIR, Executive Director, Middle East Policy Council
A little further – a little further ado. You have cards on your tables – on your chairs. So if you have questions during any of the presentations write them out and the staff will bring them to us and we’ll sort through them. And then after we’ve gone through them we’ll take questions from a mic, which is supposed to be here.
AMB. SCHMIERER: OK, yeah, we’ll make sure we have a mic out there. But anyway, we do want to make sure we have all the time for our experts to give their remarks. So without further ado, Jim, let me ask you to start. Thank you.
JAMES MILLER, Former Undersecretary for Policy, U.S. Department of Defense, President, Adaptive Strategies, LLC, Board of Directors, The Atlantic Council
Thanks, Richard. And thanks to the Middle East Policy Council, Tom as well, for hosting today’s meeting. I’m very pleased today to join my colleagues to discuss the Iran nuclear deal and its implications for the region.
Since I’m kicking things off, I thought I’d start with a few words to set context about the nuclear deal itself, the Joint Comprehensive Plan of Act, or JCPOA for a little shorter. OK, can you hear that better? OK. I see I’ll get a lot of guidance. Is this getting close? OK. OK, very good. Of course, I’ll then offer my views about implications for the region as well.
If you haven’t read it, the JCPOA is a lengthy document, 159 pages, complex with annexes and a ton of technical details. And I hope and expect that you and all staff and members here on the Hill are busy digging into it. The document addresses the three Iranian pathways to a nuclear bomb – uranium enrichment, plutonium reprocessing, and then covert production which could follow either path or another.
On the Iranian pathway, the agreement requires Iran to remove two-thirds of its installed centrifuges, so it’s allowed to operate about 5,000 centrifuges at Natanz. It allows Iran to use only the less-capable so-called IR-1 centrifuges for the next 10 years and to enrich only to 3.7 percent, less than highly enriched and also less than the 20 percent or so that was a concern for recent years.
Under the agreement, Iran is required to convert Fordow, the underground facility of greatest concern, to a nuclear physics and technology center. And it does not allow any enrichment or enrichment research and development, or any nuclear material there for 15 years. Basically, what all this means is that the time it would take Iran to breakout, to have enough highly enriched uranium for a nuclear weapon will increase from two to three months today to a year or more under the agreement.
On the plutonium pathway, the core of Iran’s heavy water reactor at Arak will be removed and filled with concrete. It’s already started. Iran will ship out all of the spent fuel for present and future research reactors for 15 years. So the plutonium pathway is effectively blocked.
And on the potential covert pathway, which could take either uranium or plutonium in principle, the IAEA, the International Atomic Energy Agency, will have access to any suspicious sites, including military sites, within 24 days, as long as a majority of the P5+1 agrees. I expect we’ll come back to that question of 24 days and what does agreement mean in the Q&A. I’ll say a little bit more about it.
But what it means is that Iran, Russia, China, even working together, cannot block inspections. And it’s important to understand that nuclear facilities are different from chemical or biological facilities. It’s a lot more infrastructure. It’s much harder to get rid of nuclear material because of traces of radioactivity. So Iran is not going to be able to move things around quickly to hide either large-scale infrastructure of radioactive material.
So in my view, 24 days is not going to open up a window for successful cheating. When you consider also our so-called national technical means of collection, which perhaps Paul Pillar will talk about in general terms, we will be much better postured under this agreement to detect any Iranian effort to pursue either breakout or covert path to a nuclear weapon.
Iran has agreed to provide the IAEA with the information needed to complete its investigation into possible military dimensions, so-called PMD, of Iran’s past nuclear research. The IAEA must agree that Iran has come clean before the agreement can be implemented, before the process of lifting sanctions can begin.
And finally, the agreement puts in place the most extensive verification in history for nonproliferation. Inspectors have – will have 24 by 7 access to Iran’s declared facilities. The IAEA will have access to the entire nuclear supply chain – including mines, mills, conversion, centrifuges and storage, plus its challenge inspections which I mentioned before. So overall, in broad terms, the agreement will push Iran from today’s posture of being two to three months away from a breakout to being a year or more, and it will give the international community much better ability to verify its compliance than we would otherwise have.
A number of concerns have been raised about this agreement and how it’ll play out. I’ll go through each of them, and focus in particular on those that come to regional security at the end of my remaining eight minutes or so. Number one, some think that the P5+1 could have gotten a better deal, and in particular that Iran should have been forced to give up any right to enrichment. In technical terms, that’s malarkey.
The Iranians were never going to accept a zero enrichment proposal. In my view, the U.S. and P5+1 negotiators did an excellent job. I’ll be glad to go into more detail in the Q&A about why I think that’s the case and why I think Iran would not ever give up its enrichment capability. In any event, the question at hand is the agreement in hand and not some hypothetical.
A second issue that’s been asked is: What if Iran doesn’t come clean to the IAEA about possible military dimensions of its past nuclear activities. As I mentioned before, until the IAEA certifies that they’ve done so, sanctions would not come off. Iran needs to come clean in order to move forward, and that includes providing access to the Parchin facility in order for the deal to go forward.
Third, some have argued that Iran might cheat. I absolutely share that concern, that Iran may want to try to cheat. Our ability to detect any suspect activity and respond, and so deter cheating, is much stronger under the agreement. As I noted, it puts in place much stronger verification than we’ve had before or we would have otherwise – 24 by 7 at declared facilities and challenge inspections, including military facilities across the country. And we need to be prepared to respond to cheating should it occur with options ranging from diplomacy to the snapback of sanctions to the use of military force, if necessary. If we and the international community are well-prepared to respond to any Iranian cheating, we’ll have a much better chance of deterring it in the first place.
Another question that’s been raised is: Once there is a deal, what if Iran does not allow the IAEA access to suspect sites. So the IAEA says we want to visit a location, Iran says no, and we get stuck even if a majority of the P5+1 say that that should happen. This type of standoff could happen, and it would be a real test, and it’s something that bears thinking about and planning for.
The U.S. and our allies cannot let Iran block IAEA access to sites, including to military installations, if there’s a good reason for the IAEA to be suspect. Again, our options would range from diplomacy to snapback of sanctions to the use of military force. And we need to ensure that viable military options remain on the table and quivers – and arrows in the quiver for the duration of this agreement and, indeed, well after the agreement would end.
Finally, some have argued that after this agreement’s terms end – some at 10 years, some at 15 years, some go to 25 years – Iran will have a free hand. While some things will have changed in 10 to 15 years, Iran will still be obliged to keep its commitment not to pursue nuclear weapons. It will continue to be subject to these enhanced inspections, what some are calling the additional protocol plus of the NPT. And of course, to repeat again for the third time, we must be prepared to take the full range of actions in response to any Iranian cheating or any Iranian breakout. And, yes, that includes military options first to deter and second, if necessary, to prevent any breakout.
So my bottom line is that this agreement is strongly in the interests of the United States and of our allies and partners. Perhaps the most important concerns that have been raised about the agreement are not within the four corners of the agreement itself, but about two other issues. First, will Iran use the so-called windfall of 100 (billion dollars) to $150 billion from sanctions relief to support proxies in the region and terrorists? And second, is this agreement a sign that the United States is shifting away from support of its traditional allies and partners in the Gulf and toward Iran?
My answer to the first question is yes. My answer to the second question is no. And now I’d like to explain why I believe that. And I’ll conclude after these two – after these two issues. So after the IAEA certifies – if it does certify that Iran has met its obligations under the agreement, this would be the so-called implementation day of the agreement, Iran will get relief from sanctions imposed. They were imposed because of its nuclear program. And this sanctions relief is estimated as much as $150 billion equivalent.
Iran could use some of the money from sanctions relief to stir up even more trouble in the region, including supporting Hezbollah and Hamas, including additional support for the Houthis in Yemen and supporting President Bashar al-Assad in Syria. In fact, my view is that Iran will almost certainly do so. Because the Iranian people are counting on getting a big economic boost from this agreement, I would expect that the vast majority of the sum will go towards their domestic economy.
And I think that the regime will be held accountable for that, but I also expect that some of these funds will go to the IRGC, the Iranian Republican Guard Corps, and its Quds Force, including their operations in Syria. I expect some will go to support Hamas and Hezbollah and to the Houthis in Yemen and, as I noted also, to support Assad in Syria. I think it’s unrealistic not to assume this and to plan for it.
To set all this in context, Iran’s military budget is estimated to be about $30 billion a year. That’s about 40 percent of the Saudi annual defense budget and about 5 percent of the U.S. defense budget. So we have the ability – just to take those two countries as a start – we have the ability to increase our efforts to counter Iran. And we need to do so. In fact, Iran’s nefarious behavior is a real problem with or without a deal. By some reports, President Rouhani increased the IRGC budget by 50 percent for 2015 relative to 2014. So this is not a new issue, but it’s one that we will have to deal with in a very determined way.
We need to work closely with our partners in the region to improve our intelligence collection, to improve our interdiction capabilities, and to improve our ability to defeat cyber and other asymmetric threats. Specifically, we need to follow up on the Gulf Cooperation Council summit, the GCC summit that occurred last May at Camp David. The GCC summit ended with some very good words.
It said that the U.S. would work with our partners in the region to cooperate more on counterterrorism, especially against Daesh and al-Qaida, protect critical infrastructure, support border and aviation security, combat money laundering and terrorist financing, and interdict foreign fighters. This is a good agenda to which we should add three areas that we have been working on for some time, and that also should be amped up – cyber security, maritime security and interdiction, and air and missile defense.
There is a tremendous amount of work to be done. We need to push hard in the coming weeks and months to get it done. Secretary of Defense Carter’s planned trip to Saudi Arabia with a stop in Israel next week is a good next step. And we should be defining specific next steps to strengthen our capabilities, our partner’s capabilities and our combined capabilities to deal with these challenges. It’s not just about spending more on the military. It also means taking action when necessary. For example, the U.S. stopping an Iranian vessel carrying arms to the Houthis in April. We will need to do that.
The administration should also be looking to increase its support to Iraq and to the moderate opposition in Syria. In Iraq, in my view, the U.S. should be leaning into embedding U.S. forces as advisers to trusted Iraqi units so that they can help by serving as forward air controllers to bring in more volume of coordinated air strikes. We should also be looking at how to continue to ramp up our intelligence assets and logistical support.
In Syria, the training of opposition forces started late and has been slow. We now have the first group of U.S.-trained Free Syrian Army fighters going into Syria. And we need to continue to vet more fighters and to accelerate that pipeline. And we also look at ways – need to look at ways to enable them. As their numbers grow, we will need to look at ways to provide secure territory within Syria for them and we’ll need to work with Jordan and Turkey and our other partners and be prepared to provide significant additional support for areas that are secured both from the Assad regime and from Daesh.
The final issue: Some in the region are concerned that with this deal the United States will do a mini-pivot away from our long-standing GCC partners and toward Iran. I don’t see anyone in the United States administration, or elsewhere for that matter, wanting to go this path. On the contrary, I’ve seen the administration saying the right things about Iran, about consultation and about the strength of our commitment to our allies and partners. In addition to talking the talk the administration, with support from Congress, should be walking the walk, as I’ve outlined, by ramping up support to our partners and actively countering Iran in the region.
Stepping back and in conclusion, this nuclear deal, the JCPOA, is strongly in the interests of the United States and of our partners, in my view. It offers Iran the ability over time to join the community of nations. Over the long term, that could happen. That’s not how I would bet, as you can tell from my earlier remarks, but it could happen. But it could happen, and if it does we should encourage it.
But coming back to the real world and the most likely case, we should expect Iran to continue to act like Iran and to ramp up its nefarious activities in the region. So we need not only to sustain our strong military presence and to continue to strengthen our partnerships and our partners’ military capabilities and, as I said, our combined capabilities, we need to take steps to counter Iran’s influence and activities across the region. And we have to work extremely closely with our Gulf partners in doing so.
Finally, President Obama has said that all options, including military force, have been on the table to prevent Iran from getting a nuclear weapon. It will be important for Congress to reaffirm that and for the next president to make that crystal clear for the duration of this agreement and for the period afterwards as well. Thank you. And I look forward to your questions.
AMB. SCHMIERER: Thank you very much, Jim. Nabeel, can we turn to you?
NABEEL KHOURY, Senior Fellow, Atlantic Council’s Rafik Hariri Center for the Middle East and Former Director of the Near East South Asia Office of INR at the State Department
Thanks, Rich. And first of all, accentuating the positive, we need to congratulate Rich and Tom and Anne and their team for – on the excellent timing of this event. When I was first invited for this, the agreement had not yet been concluded. So did you have inside information, or did you have inside information? (Laughs.) We won’t press you on that.
And also, concentrating on the positive, I think will agree with the main thrust of Jim’s presentation, that this is a good agreement. I will disagree maybe with the focus on then – on the what follows, and the idea that we need to confront Iran. I take it for granted that we need to be militarily prepared. We need to have contingency planning, certainly. But the thrust of we know these guys are going to be up to no good and we should be ready for that I think defeats the purpose of this agreement.
My thrust will be on diplomacy. As an old State Department hand, I guess that’s normal. But I think we need to try to take advantage of this agreement to hopefully build future agreements on it that will resolve the problems in the region diplomatically and not by force. So, first, the agreement portrayed good diplomacy. And kudos are due to John Kerry and his team. It could not have been easy for a bunch of Europeans and Americans to go with the Iranians to the big bazaar, diplomats who are steeped in a long history of the art of negotiation, and to come out with some good nuggets from these negotiations.
I think both the Iranian diplomats and the American and European diplomats worked very hard and achieved things that are in the interests of both sides. I think this is a good agreement in the sense of limiting Iran’s nuclear program, and in the sense of verification. And as the president said, none of the options that were on the table before are off the table now. So if things don’t go well, you could always go back to other options.
And by the way, the critics of this agreement, who started with their criticism way before anything was known about the details of the agreement, have not presented any credible alternatives. And that’s another reason why this is the best agreement one could achieve under the circumstances.
Now, if this were the first step or a part of a broad U.S. strategy towards the Middle East, there would be no ifs, buts or howevers about it. It would be a great agreement. But if, as both the secretary of state and the president have said – the president said yesterday, I think: Don’t judge this and don’t judge me on resolving all the problems of the Middle East. Just judge me in terms of limiting the nuclear program of Iran.
If this is indeed the whole of this, then I’m disappointed, and we should all be disappointed. The U.S. policy in the Middle East has many challenges, and the Middle East itself falling apart because of all sorts of revolutionary and extremist forces at play. And because of the overall dynamic of Saudi-Iranian rivalry, which fuels many of the conflicts – not all of them – in the regime, means that the – both the interests of the region and the interests of the United States lie in resolving these conflicts.
For me, the nuclear issue is a side issue. I know that this offends some people, but the issue of – we always over-focus on weapons of mass destruction. And we know where that led us to in 2003. The Syrian example from 2013 – all of a sudden lots of drama about the Syrian chemical weapons. Why? Because they were a threat to the Syrian people and to the region. So there was diplomacy there and then success was declared in that the majority – and I’m sure that they were not all removed – but the majority of Syrian chemical weapons were removed.
What happened after that? The Assad killing machine continued unabated. And the dangers of the conflict and the chaos that it breeds normally have continued to impact the Syrian people, the region and the international community. So the removal of Assad’s chemical weapons did nothing – changed none of the basics of the conflict in Syria. I’m afraid that if we limit ourselves to simply relaxing and saying Iran will not acquire a nuclear weapon, and then rest on those laurels, that we will have done ourselves a disservice.
Now, the problems in the region which this should build upon – this agreement, which I think is a good agreement, should build upon a better understanding and easier working relationship with Iran. I agree with Jim, I don’t think that we’re going to shift – and many people in the region are worried that the U.S. is shifting to ally itself to Iran, abandoning its traditional allies. I don’t think we’re about to do that, and I don’t think we should do that.
But I think we should develop a better diplomatic working relationship with Iran rather than now using threatening words like we will confront them and we need to up the military budget and we need to do this and that. All that is being done on the side. DOD is perfectly capable of doing all that on the quiet. What we need to be stressing is, hey, this is a good start. Let’s build on it and let’s be able to sit down and seriously discuss all the issues, starting with Syria, going to Iraq, going to Yemen, and not forgetting Bahrain. All these are explosive – they’re already exploding – but some of them are potentially explosive beyond what we are seeing right now.
We should be able to sit down with the Iranians. The Saudis and the Iranians have been talking for a long time, but they don’t talk seriously. They don’t talk frankly about these problems. And they do need the U.S. to mediate and to bring them together and to bridge the gap between them and to end this rivalry and hopefully get them working together on these problems. There’s no time here to go through all these problems, but since I said starting with Syria, I want to stress that the Syrian case – the Syrian conflict is a potentially ideal place to start and give this new agreement with Iran the chance to develop diplomatically and to build a better understanding between the West and Iran on what really matters.
The Syrian – in humanitarian terms, the Syrian tragedy has exceeded in civilian death and displacement and in destruction anything that we have seen since World War II. We are commemorating this week the massacre in Srebrenica, the horrible death of 8,000 individuals in that Balkan War. And the thing about that, though, is that it signaled the beginning of that conflict – the end of that conflict, the 8,000 individuals who died a horrible death in concentration camps. There was some good that came out of that, in that it spurred the U.N., it spurred quick, efficient military action, and it spurred good, efficient diplomatic action which ended in the Dayton Accords and ended that conflict and, by the way, brought criminals to the International Court of Justice.
The Syrian massacres continue on a daily basis. The count has exceeded 250,000 civilian deaths. And the extremism which has been spawned in Syria is impacting the entire region and, if left alone, it would impact the international community as well. It is worthy of attention. And I think Iran’s attention can be directed towards it because Iran’s cost has been heavy and is rising. Currently, the Iranians and Lebanese Hezbollah have invested heavily in trying to shore up the Assad regime.
There are three different ways in which this could go. Left as is, the Islamist radical forces – IS and Jaysh al-Fateh, which includes many other fashions, AQ, al-Qaida in its various iterations – are on an offensive and are pushing at least from two sides, and the Western-reluctantly-supported Syrian opposition pushing from the south. Eventually this is going to encircle the Assad regime – if not take away Damascus completely, certainly encircle Damascus and the Alawite Mountains and the strip along the Lebanese-Syrian border.
Lebanese Hezbollah and Iran would in – would throw in everything they have to defend that, which means a long conflict, a long war, and a huge cost which Hezbollah is already bearing in terms of human losses in the fight that they are conducting on behalf of Assad in Syria. I think, given the situation, Iran would much rather – let’s say it has the motivation to try to end this conflict in such a way as would preserve a relationship between Iran and a future Syria.
And a diplomatic solution could be found that only the Iranians could actually help implement in Syria. Nobody else has that kind of influence on the Assad regime. And it behooves us to get to that matter with the Iranians right away. Saudi Arabia would have to be convinced, because Saudi Arabia had derail if it remains unhappy – and it is currently unhappy with the agreement with Iran. So the – a diplomatic option would be the best option. And it would see the installation of a coalition fully representative government in Damascus that includes full representation for the Alawites in Syria.
In my opinion, it should be a democratic federated Syria, because with federation, with regions that include some kind of autonomy, it would give a sense of security to the various ethnic and religious groups, especially the Alawites, in Syria. And I would also give Iran the sense that they would not be totally excluded from interacting with this new country and that their interests would be preserved, particularly in a special relationship that they would surely have with the Alawite region.
If this doesn’t happen, left as is, like I said, I think we’re looking to a protracted struggle, and not the least of which would be among the radical Islamist groups themselves. Let’s say they take Damascus. They would then turn against teach other, for sure. And they don’t like each other. They compete for power. And once they sense that they can take over the whole country, or most of it, they would turn against one another and try to liquidate one another. And that’s a long, protracted, vicious struggle that nobody could really jump in the middle of.
The other third way that this could go is the Turkish military option. And Turkey has already been threatening, hinting at, imply that it would take a unilateral approach to Syria if NATO and the U.S. don’t come along. That would consist of them trying to secure a security belt, a safe zone along the Turkish-Syria border. The problem with that, many justifications from it, is that it would not be stable. It would bring the Turks to rule over an area that largely consists of Syrian Kurds. And the honeymoon – brief honeymoon that we’ve seen between Turks and Kurds would surely end at that point. So that’s not a good idea, but that’s an idea which the Turks may well be forced into if they don’t see any other options.
If, on the other hand, the U.S. and NATO go along with what Turkey has said all along – provide the support – the aerial support, the on-the-ground support, provide the political cover – and we should push IS out of Syria completely, certainly out of the northeastern parts of Syria where they are now strong and dominate. The U.S. working with this – and I don’t see this happening but I’m saying theoretically – the U.S. working with this option means getting the Kurds and the Turks to work together.
And right now the Kurds have done a good job working to some extent with Turkey, but also with the Free Syria Army. Taking this option all the way, it could end up in Damascus or on the outskirts of Damascus, therefore presenting the Assad regime and Iran with an offer they could not refuse. You get there and then you bargain for the kind of government of the future of Syria.
And with that, I will end, again stressing that the agreement with Iran presents options – diplomatic options of working with Iran that we should put all our diplomatic energy on right now. Thank you.
AMB. SCHMIERER: Thank you, Nabeel. You’ve given us a lot to think about. Paul, I’ll invite you up.
PAUL PILLAR, Non-resident Senior Fellow, Center for Security Studies, Georgetown University; Non-resident Senior Fellow, Brookings Institution; Contributing Editor, The National Interest; Former CIA analyst
Well, thank you, and good afternoon. My thanks to the Council for asking me to be included in this.
I’ve been asked to address U.S.-Iranian relations and where they might go in the wake of this agreement that’s just been concluded. The agreement has to stand or fall as a nuclear agreement. It doesn’t not depend, nor should it depend, on particular assumptions or projections about the rest of the relationship or about other aspects of Iranian behavior.
It is, instead, an effort to dispose of one particular issue which, rightly or wrongly, has acquired enormous salience – that is to say, the nuclear issue. And so the agreement has to be judged against the alternative of no agreement as to which of those two options does a better job of precluding an Iranian nuclear weapon. And by the way, as you read the fine print of the agreement, I suggest you also read the so-to-speak of the fine print of the alternative of no agreement, and consider that at the same time.
Nonetheless, precisely because the nuclear issue has been so salient, the deal is bound to have some knock-on effects with regard to the rest of the relationship. And the most important effect in very general terms is it does lessen somewhat the political and other impediments to dialogue between the United States and Iran on many issues in which both countries have a strong interest, regardless of whether their particular objectives and interests converge or diverge or, as most often the case, there’s some of each.
We’ve already had some progress in this regard simply by talking to each other. I mean, bear in mind that we don’t have to go back any more than about three or four years and U.S., Iranian officials basically were not speaking with each other. Now our two foreign ministers have spent a lot of quality time with each other, mostly on the nuclear agreement, but the ice has been broken to talk about other things.
There certainly are several areas in the region that immediately come to mind where such dialogue would be fruitful. We’ve heard at length from Nabeel about Syria. I’m not going to add anything to what he says. I agree with basically everything he said on that. I would just mention two others – Iraq, where there are a great deal of convergent interests with both the United States and Iran having an interesting in assisting the Iraqi government in pushing back ISIS or ISIL, if you will.
There has already been necessarily some coordination or at least deconfliction at the tactical level to make sure we don’t get physically in each other’s ways. But there is a need to talk more about battlefield – more than battlefield tactical matters. It’s ultimately a political problem that has to do with the nature and direction of the regime in Baghdad and it certainly would be useful for the sake of getting some improvement in the Iraqi situation if Tehran and Washington were telling Baghdad things that are consistent.
And then there’s Afghanistan, on the other side of Iran, where we have already shown during those few brief months in late 2001 and early 2002, at the time of the Bonn conference, that the United States and Iran and its diplomats could work constructively together on shared interests. And that took place before we slammed the door in the Iranians’ face and declared the axis of evil. But it’s a matter of getting back to the kind of cooperation we had at Bonn. And there are other regional issues too that we could talk about in the discussion period.
There are going to be effects on domestic Iranian politics that affect all this. And we’ve heard two schools of thought about this. One is that the agreement is a victory for the pragmatists or moderates, people like Rouhani and Zarif. The other opposing school of thought is, well, there’s going to have to be some kind of compensation for all this, in that the hardliners are going to be thrown bones and be allowed to do hard line things. And that second school of thought does have some validity.
And I think you can look at how the politics play out on our end, and the political necessity for President Obama and his administration to be saying tough things about Iran right now – you’ve just head some – and to make sure that they do not allow themselves to be portrayed as wimps toward Iran. And it will work somewhat the same way on the Iranian side.
Nonetheless, politics in general work in Iran the way they work in other countries. And in politics, everybody loves a winner. Success begets power. And power begets more power. So I would say the net effect will be to help the moderates and pragmatists in the Iranian political equation. And that means relatively more influence for those who have a relatively more moderate and pragmatic inclination when it comes to aspects of Iranian policy in the region.
One significant caveat to that conclusion is that much will depend on the pace and extent of economic improvement in Iran, and the extent to which the elevated hopes and expectations of the Iranian public in that regard get realized. And they may not be realized nearly as much or as fast as many Iranians expect. And I think that’s partly because of what the private sector response will be to sanctions relief.
And much of the private sector, including financial institutions, have had the fear of Allah instilled in them by the U.S. Treasury Department with regard to the sorts of penalties they would suffer if they stepped even an inch over whatever the line happens to be on any day with regard to sanctions. So I think we’re going to see some slowness in that regard. And possibly – and I’ve heard this speculation from someone well-informed on the Iranian political scene – maybe even the supreme leader has made some calculations along this line.
If we take the supreme leader as someone who has supported the negotiations but probably would not like to see some political sea-change in favor of the moderate side in Iran – perhaps he has calculated that there won’t be enough economic improvement between now and the Majlis elections that are scheduled to be held early next year in order for such a sea-change to take place. But we will see.
There is not going to be any drastic change in the months ahead in the overall shape of U.S.-Iranian relations. There is going to be nothing approaching an alliance between Tehran and Washington, even though that actual term sometimes gets used by those who fear, you know, too much of a U.S.-Iranian relationship and for that reason have opposed this agreement.
Even if the agreement is successful in terms of its implementation, and even if some of this other dialogue takes place on other issues, we are unlikely to see a restoration of full diplomatic relations between U.S. and Iran for years. I would look, as an exemplar on this, the experience with China, in which several years transpired between the time President Nixon made his historic visit to Beijing and diplomatic relations between the United States and the People’s Republic were finally established under President Carter in the late 1970s.
There will continue to be domestic political resistance, both in Iran and in the United States, against going too far too fast with regard to this relationship. And on the U.S. side, that would be all the more true if a Republican wins the White House in 2016, with adamant opposition to this agreement that’s just been signed being campaign baggage that would be awfully hard to discard.
In the meantime, there is not going to be any drastic change in Iranian behavior in the Middle East. And there’s been a lot of obfuscation on this particular point because opponents of the deal, of course, have tried to use this subject as an argument against the deal, including this whole notion of additional resources that would be used to be – for regional troublemaking.
Now, even if we just take unquestioned – and there is plenty of grounds to question it; we can get to this in the discussion period if you want – but if we take as unquestioned the most negative assumptions about nefarious behavior, destabilizing the region, all the stuff you hear again and again about Iran and the region – even if you take that as a starting point, there are still are the logical inconsistencies with that line of argument that you have to deal with.
Number one, of course, is that if indeed Iran really is up to that much no good, all the more reason to make sure they don’t have a nuclear weapon, which is what this agreement is all about. And secondly, and very importantly, you know, the sanctions we’re talking about that will be relieved, were all distinctly and expressly imposed because of the nuclear issue – expressly for the purpose of inducing change in Iranian nuclear policy and to get them to agree to something different, which they just did.
So if we were to leave sanctions in place – those sanctions in place because, well, we don’t want you to have the resources to do something else, that means everything we said before about the purpose of these sanctions was a lie. And anyone who’s concerned about U.S. credibility and using a tool like sanctions to influence the Iranians or anyone else needs to think really carefully about that before you say, oh, well, let’s keep them in place anyway, even though they were supposed to be about the nuclear policy.
The subject of domestic economic needs – and Iran has already been mentioned; I’m not going to go into that – but I would also note that the Iranians, they are not bookkeepers who in deciding what they’re going to do in Syria or Yemen or someplace else in the region check the balance to see how many rials they have in their bank account to determine what their policy is going to be.
And I might note that if indeed that was what they were doing, this is a rather different image from the usual one of Iran – of a less-than-rational set of actors, all the sets of reasons that we – you know, we don’t want them to have a nuclear weapon, they don’t think like us, they don’t have the cost-benefit calculations like we do. So it’s rather strange to now hear the argument that, well, they’re going to look at that bank account balance and that’ll determine how much they’re going to do in Syria, how much they’re going to do someplace else.
And finally, related to that, if indeed it were true that they were bookkeepers like this, and the amount of resources they had determines their regional policy, then we should have seen a pattern when all these tough sanctions went into effect a few years – I mean the banking and oil sanctions, the really tough ones – of a reduction in Iranian regional activity, doing less in the Arabian Peninsula or the Levant. And I don’t think anyone has ever come up with any evidence to suggest that that’s the case. It isn’t the case.
The Iranians in the past and the Iranians in the future are going to make their decisions about what they’re doing in the region based on other interests they have – political connections in the Levant, balance of power in the Persian Gulf region, that sort of thing. They are going to continue to respond to things that happen – civil wars in Syria and Yemen, nasty terrorist groups arising in Iraq – and they will react. And it’s not going to depend on how many rials they have in their bank account.
Now, it’s not just the Iranians who are the – creating the facts on the ground here. Other players can as well. And when other players create facts on the ground, the Iranians are going to react if they believe if affects their interests. Israel, for example, has within its power to stir up something new with Hezbollah. Hezbollah, of course, also does, although right now they are rather bogged down in Syria and do not want a new war with Israel any time soon. And I would not be surprised if we find in the newspaper tomorrow or some other day that more Iranian scientists have gotten bumped off, because then the Iranians would have to respond, of course. And those sorts of responses would be described as terrorism, just as they have in past attempts to exercise the same sort of reprisal for that sort of event.
Opponents of this deal will also not give up trying to undermine it in other ways. And I would expect in the weeks and months ahead anything that the Iranians do regionally that can be described as supporting the whole concept of increased nefarious troublemaking will be played up to the hilt. And also anything that can be described as an Iranian violation or noncompliance with the agreement of course will get enormous attention, I don’t mean just by the IAEA, I mean in the public discourse in this country and other countries as well. And all of that is going to sustain a political environment in which it’s going to be very difficult for either Tehran or Washington to go very far or go very fast in this relationship.
So in summary, as a matter of diplomacy and pursuit of U.S. interests, there are indeed very good reasons – and I agree with Nabeel on this – to build on the agreement with a broader dialogue, but the political reality is that we should expect this to be a very slow process. Thank you.
AMB. SCHMIERER: OK, Paul, thank you, again, very much. Sara, I’ll turn to you now.
DR. MATTAIR: May I ask, if any of you have written questions, please send them up soon so I can take a look at them. Thank you.
SARA VAKHSHOURI, Founder and President, SVB Energy International
Ladies and gentlemen, it’s a pleasure to be here today. And I would like to thank the council for hosting and organizing this program, and for inviting me to be part of this distinguished panel.
Well, I’m going to speak about the energy consequences and implication of the deal. I remember almost three years ago that EU announced their decision to put Iranian oil under embargo and stop importing oil from Iran, everybody were thinking that how deducting 500,000 barrels of Iranian crude oil from the market is going to affect the prices.
The EU oil embargo was followed by complementary sanctions on Iranian crude oil transportation and insurance. And Iranian crude oil dropped to half of its previous level, nearly 1 million barrels a day. But unlike the expectations of many of the oil analysts and experts, the prices of crude oil didn’t increase hugely. And today we are standing here with different reality in the market. The prices are not anymore above $100, but in the range of $50 to $60 per barrel and people are worried that if the sanctions are removed from Iran and Iranian oil is back into the market into its full capacity, how the prices are going to react.
Last year that the prices of crude oil were starting to drop, many interpret this as an initiative by Saudi Arabia to put further pressures on Iran. However, ironically, this kind of work in favor of Iran because in the past few years that Iranian oil revenue was dropped by half because of simply their export was dropped by half and also they didn’t have access to the cash, they start to be creative and open door for new sources of income. So their economy showed more resilience to the low oil prices.
However, the oil investors that they were – in the climate of above-$100 per barrel were – they had lots of different options for investment from unconventional resources in United States to recently energy-reformed country of Mexico. They all start to once again look into conventional, low-cost resources of Persian Gulf. Iraq, Saudi Arabia and Iran are three of them, hosting most of the unconventional low-cost oil reserves in the world.
Saudi Arabia at this point don’t have any significant plan for increasing its production, just there’s not enough demand for that and Saudi at this moment is looking for more gas resources to extract. Iraq is tackling with ISIS, or IS, and many investors have already left Iraq. So this leaves Iran a good option for investment at the time that the prices of oil are about $50 to $60 per barrel and the cost of production of oil in Iran is about $2 to $7 per barrel. And if you add the maintenance – production, maintenance cost will reach to maximum $10.
Iranians, also, they start to revise and reform their investment upstream contract and regulations with the hope to make it more attractive for the investors to come to Iran. However, all of this, of course, it depends to the sanctions removal, because there are massive sanctions on investment in Iran. But how about Iranian oil production and supply in the market?
We are expecting that Iran can increase its crude oil production up to 800,000 barrels per day within the next six to 12 months. Our expectation from sanctions removal on Iran’s oil export is something between three to eight months from the time that the deal start to implemented and Iran start to – going through the details of the deal and follow the fact sheets and regulations. But we should not forget that Iran already has about 40 million barrels of oil and liquid condensate – oil and condensate blend – on the sea that are ready to release immediately.
But again, the lower oil prices ironically create space for Iran, not limiting Iran. Because of the low oil prices, the prospect of unconventional oil production in United States and North America, also the other part of the world, the projections of the growth have been reduced. So many experts are expecting that next year we are going to have less growth or less production of shale oil. Although many agree that the shale oil production showed much more resilience to low oil prices than it was expected. So Iranian crude oil by next year is not going to affect sharply the prices in the market, but of course is going to help the prices to remain low.
But what this means for Iran-Arab relation? Of course, Iran-Arab relationship is very complex and it’s varied depending from country to country cases. There are countries like Oman, Kuwait and UAE, mostly Dubai, that they have a close relationship with Iran and they benefit from economic – could benefit from economic and energy cooperation with Iran after the sanction removal. There are countries like Saudi Arabia, that they have a deep mistrust toward Iranian intention about themselves – toward Iranian intentions on them – on Saudi Arabia.
If the sanctions are removed on Iran which we are expecting to be removed, Iran can increase their crude oil production up to 4.2 million barrels by 2020 and will add – they can add additional 1 million barrels of condensate. So totally they are going to have about – above 5 million barrels of crude oil by 2020 and their export – gas export capacity is going to increase by 10. So they will have enough gas to export as gas or convert it to electricity to their GCC neighbors.
Many countries in GCC, Arab neighbors of Iran, are major producer of oil. And they are highly dependent on their oil revenue. On the other side, their consumption of oil is increasing. So having another source of supply, like Iranian gas, could theoretically free some of their export capacity and let this country to export further oil. And this could, of course, help their economy. In the case of Saudi Arabia, there is a high potential for energy cooperation between Iran and Saudi Arabia, again, theoretically because any export needs trust. But at this point, Saudi Arabia is planning to increase its petrochemical capacity and they’re using liquid fuel in their petrochemical refineries.
Having United States shale oil and shale gas increase, U.S. petrochemical factories are benefiting from gas feedstock. And they could compete with the prices of Saudi petrochemical products in the market. So if Saudi can have access to massive gas resources of Iran, they could use natural gas instead of a liquid fuel in their petrochemical, being able to complete with U.S. product in the market. They could also use Iranian gas into their power generation and instead of burning fuel – liquid fuel, they could burn gas for producing electricity.
But of course, we cannot imagine at this point that Saudi Arabia and Iran – I mean, Saudi Arabia could commit for 30 years gas supply for Iran. It’s kind of like a marriage. You need to have a basic trust to commit into 30 years of commitment. On electricity specifically, it’s very highly sensitive for Saudi Arabia to rely on Iranian electricity if there’s not enough trust.
But at this point, there are some elements of thaw between the relationship – Iran-Saudi relation. King Salman cautiously welcomed the framework of the negotiations and the agreement. And we think that although – I mean, this deal is going to, of course, strengthen the position of moderating parties and groups in Iran, and the moderators in Iran historically were engaged in building a constructive relation with Saudi Arabia. Former President Rafsanjani, that is a big supporter of the current president Rouhani, is the key person who bridged the gap between Iran and Saudi after the Islamic Revolution.
Although the change of leadership in Saudi Arabia kind of indicates that Iranian government lost their foothold in the Saudi government, but we think the crown prince is – would be – the current crown prince of Saudi Arabia, Muhammad bin Nayef, would be the key player in bridging the gap between Saudi and Iran, as he’s a very realistic political player.
I agree with the previous speaker, Paul, that having a – I mean, having a deal or not having a deal, how much Iran has in its pocket is not going to change its strategy in the neighborhood. But having a deal and having Iran coming out of the isolation and integrate more into the global energy and economic system will create higher incentive and more vulnerability for Iran to engage in more reactionary activities in the region.
Imagine if Iran has gas pipelines to its neighbors. It has gas export, long-term commitments for supply of energy, economic integrations. So having Iran out of isolation, of course, will create more responsible and more accountable behavior from this country and, of course, will reduce Iran’s incentives for acting – I mean, creating tension in the Middle East.
So just to wrap up what I was trying to say is there are a lot of ground and common interests between Iran and Arab world and particularly its Arab neighbors and GCC members. Energy is a big, of course, source to start. The economy of many of the GCC countries could benefit from the gas imports from Iran. Iran is going to increase its gas production hugely and exporting it to its neighbor would be the best option.
And I, in my opinion, think having Iran out of the isolation and engaging more into the political and economic – global political and economy will create a more responsible Iran. Of course, having investment and technology and foreigners investing in this country, and vice-versa, will have different outcome from what we were witnessing from the past few years.
Well, I’m looking forward to your questions. Thank you.
DR. MATTAIR: Well, thank you to the panelists. And I have some good questions here from the floor. But may I begin with one or two of my own. On the terms of the deal itself, could we talk a little about that?
The president said that in year 13 of this deal Iran’s breakout capacity would be – would be shortened. Is there any panelist who can talk about that? For example, you know, in reading the terms of this deal I see that Iran will not enrich uranium beyond 3.67 percent for 15 years, and Iran will ship out all spent fuel from the Arak reactor for 15 years. So if those two pathways are closed for that length of time, how could their breakout capacity be shortened by year 13? Any idea about that?
DR. MILLER: Tom, shortened relative to what it would be during the terms of the agreement – in other words, shorter than a year. And the reason is that at that point in time Iran would be able to put more advanced centrifuges into Natanz. And the combination of those as they – as they grow in number would allow them a breakout capability that would shorten the time from the one year it would be during that first 10 years.
And over time, that – while the centrifuges would be vulnerable at Natanz to potential attack, the numbers and sophistication of them would allow them a breakout capability that would shorten back towards the – over time, back down from one year toward the numbers that we face today. The big difference, of course, even if they achieve that shorter breakout, would be that the verification provisions – including inspection of suspect sites, would still be in place.
DR. MATTAIR: So if they violated the terms of the agreement and started enriching beyond 3.67 percent with their advanced centrifuges, they could create enough fuel faster, and that would – that would diminish their breakout time?
DR. MILLER: That’s right. And they don’t need to go to the intermediate level of 19 percent or so in order to do that. They could arrange the cascades in a way that allowed them to go to a highly enriched uranium more rapidly. It would be visible. It would be visible even without the inspection regime that we’re talking about as part of this – as part of this agreement, which will continue.
And it would take time for them to do that. And so it’s not as if they could suddenly arrange a very rapid breakout capability. And in addition, it would require them to do work on metallurgy and weaponization, which should have been by that time fully stopped for well-more than a decade because it – as you know, we believe it’s been stopped for a number of years as of today.
DR. MATTAIR: OK, thank you. Another issue that really wasn’t discussed too much today – and it’s another technical issue, but maybe we could clarify it a little bit – is the sequence of decisions that have to be taken from this day forward. So for example, there will be a Security Council resolution drafted soon, and maybe even voted on soon, that would specify how sanctions are going to be lifted and when and why. But it wouldn’t be implemented for 90 days. First, you’d have to have an IAEA certification that Iran is complying. And also during that period of time, you’d have the congressional review.
Now, let’s say – current estimates are that there’s not enough support in the Congress to override a presidential veto, because it would take two-thirds of each house. Now, let’s say that’s wrong. Let’s say that’s wrong. Let’s say a presidential veto was overridden. How would that affect implementation of the agreement – how would that affect the Security Council vote and how would that affect implementation of the agreement by others? Anyone? Yes.
DR. VAKHSHOURI: Well, something that Iran made clear is that they are – I mean, that is what they’re talking that, like, we see U.S. as one system, not like Congress, president, administration. But this still is between U.S., other European – five other countries and Iran.
So in my opinion, if even the Congress override and, like, the deal breaks from our perspective here in Washington, D.C., there are other countries – like European – that if they’re convinced that Iran is complying they’re going to start removing their own sanctions from their own sides. And then it’s just U.S. remains and sanctions and in U.S. jurisdictions. And then we have companies – European companies coming and putting pressures, or just what happens that it happened during the ILSA sanction, which Total and other European companies, they’re just entering Iran.
DR. MILLER: I’ll add as well, that it – first of all, and perhaps most obviously, it would be devastating to the credibility of the United States. And that would have broader and longer-term repercussions. The Iranians would have a choice and the EU would have a choice. The Iranians have stated that they will – they will – if other parties do not adhere to the provisions of the agreement, then they will not adhere to provisions, and they can do so either selectively or on whole. So they would have a decision about what aspects not to adhere to, because presumably U.S. sanctions would remain in place and perhaps even be increased.
The EU and other parties would have a choice. And I personally believe that there’s no doubt that the sanctions regime that has been in place would fall apart and our ability to persuade countries that have been – desired to be significant consumers of Iranian oil, including partners like India as well as those in the P5, would want to – would be likely to purse arrangements for oil from Iran. And we would find ourselves, in my view, very isolated.
DR. PILLAR: Just – I agree with all that. Just to be very clear, you know, that congressional scenario would kill the deal. I mean, it would – it would deny the administration the ability to uphold the U.S. end of the deal, and so would not only kill the Comprehensive Joint Plan of Action, it would kill the Joint Plan of Action, the preliminary deal that was reached in November 2013, and under which Iran has been subject to these various restrictions now for more than a year and a half. It would all be dead.
And Jim’s absolutely right, for the Iranians it means we are released from all of our obligations. So we’d be going back to before the negotiations even began, with the major difference, as was pointed out, that the Europeans and others would not be signing up to the same sort of sanctions regime that we had before.
DR. MILLER: No sanctions, no limitations on their program, no verification.
DR. MATTAIR: Right. So in other words, that’s one of the – that’s an alternative scenario to the passing of the deal.
DR. PILLAR: That’s the alternative scenario, if Congress were to do that, yes.
DR. MATTAIR: Right, right. All right, here’s a – one more thing before I come to these questions. And I still have to read them, so, you know, Jim, I was going to ask, because we were in Riyadh together a couple of months ago, I was going to ask you what you would say to critics of the deal who say that this undermines the United States ability to use force in the future on this issue. But you said three times that we have that on the table. So can you talk – we touched on this in my first question, but just give us a scenario of a violation and the kind of U.S. military response that would be conceivable.
DR. MILLER: Tom, obviously the use of military force should be a last resort, not just in this case but in general. And if we can achieve our aims without that – without that use of force, it is less costly, less risky and more likely to be sustainable over time. So let me – let me stipulate that.
At the same time, the threat of the use of force and the credible threat of the use of force, I think can be an important part in making clear to the Iranians not just during the course of this agreement but long term that if they were to make a choice to pursue not just nuclear enrichment but a nuclear weapon capability, that they would be subject to the use of force.
Now, the question of when is an infraction serious enough to make that the case? I think it – obviously it would require a judgment by the president and it would require consultation – it would – should involve consultation with our partners and allies. At the point at which we believed it was inevitable that the only effective way to prevent Iran from achieving a nuclear weapon was the use of force, in my judgment, that’s the time the use of force would be both appropriate and necessary.
DR. MATTAIR: OK, and one more for you. You know, we had a couple of panelists who envisioned the possibility now of moderation of the Iranian regime and greater opportunities for negotiating, maybe, some resolutions to issues in Syria, for example, which is a key one. Are you still – are you really convinced that you expect much more aggressive, subversive behavior by Iran in the region, or do you think that that is a plausible scenario that we should be pursuing? You know, for example, Putin evidently called Obama yesterday or the day before to talk about cooperation on Syria. So is that a realistic prospect?
DR. MILLER: First of all, opening of diplomatic channels is a positive. So let me – let me stipulate that up front. The ability to have direct conversations and not – and not talk only through intermediaries is useful and ought to help reduce the prospects for misunderstanding and miscalculation in the future. It’s positive, and if that is extended in time and broadened over time that would be – that would be – that would be a good thing.
Second, in terms of the – in terms of the deal and how it relates to this broader agenda of a lessening of tensions and rapprochement even, I think Paul’s initial point on this is fundamental, and that is that the nuclear deal should stand on its own, not based on an expectation that it will be the start of a new age of U.S. and GCC-Iranian relations.
And third and finally, nothing would make – nothing in this area would make me more pleased than if the Iranians made a calculation that because over time, as Sara referred to, that they became more intertwined with the local regional economies and the global economy that it was in their interest to behave less like they have in the recent past. That would be surprising to me, but the U.S. should be open to that possibility and be prepared to go down that path as well.
I think the far more likely is that due to both its domestic political considerations and its current strategy, not a new strategy, that it will put somewhat more resources into the areas that I talked about. And while the bulk of them will go to the domestic economy, somewhat more resources into those areas is something that we should expect and we shouldn’t have that reflect back to say that means they have not acted in good faith, that means we shouldn’t have a deal. No, we should say that’s what we thought was very likely, in my view, others could say plausible, and we should be prepared for that.
My view is that there – the best way to encourage their positive behavior in the region is to ensure that our partners in the region are capable of blocking any nefarious behavior they may pursue, whether directly or through proxies. But, at the same time as we do that we should be open to the possibility of a more positive relationship over time. It’s just that that’s not where I would bet in the near term.
DR. MATTAIR: Yes, Nabeel.
DR. KHOURY: I think we should – is this on? Can you hear me? Yeah. I think we should consider two things. In the overall Saudi-Iranian rivalry that I talked about earlier, Iran is winning. Iran is ahead in that regional – in the struggle for power in the region. It does not need to do anymore than it is already doing.
If we look at Syria, despite four years of that bloody civil war there, Iran has certainly supported, but it has not committed a large number of forces. It has supported other ways. And it will not, unless it comes to encircling that I spoke of, of the Alawites and the Assad regime and particularly protecting that border between Syrian and Lebanon which is very important to them. But that’s a defensive posture rather than an aggressive posture.
If you consider Iraq, there again they’ve committed some advisers, probably fewer than the American advisers who are there. They haven’t really overdone it. In Yemen they have not committed any forces on the ground. They are supportive, but they are supportive mainly politically of the Houthis. So I wouldn’t focus on overly aggressive Iranian behavior. I would try to make sure that they’re not pushed to a corner anywhere where they need to become more aggressive.
And for that matter, the elephant in the room which hasn’t yet been discussed is the Israeli unhappiness with the agreement. I spoke of the Saudi unhappiness, but Israel is unhappy. I think the threat has somewhat receded of Israeli unilateral action against Iran, but it’s still there. And it is one that one has to consider because theoretically – and this is something we’ve been thinking about for the past several years – is that if Israel decides on a military strike against the Iranian installations and Iran retaliates in a big way, the U.S. is in there.
The U.S. will be then committed to a war to Iran, whether it wants it or not. And so that threat has to be addressed. In my opinion, I don’t think the Israelis are likely at all to do it at this point. Two years ago, maybe, but at this point – and certainly after this agreement, they’re unhappy but I don’t think they’ll do anything about it. But still, that’s something that could cause considerable aggressive Iranian behavior should it happen.
DR. MATTAIR: Sara, about domestic Iranian politics. This deal enhances Rouhani. Does it – does it give Rouhani more to say about other portfolios other than the nuclear portfolio? Does it – does it increase his influence on matters such as Syria, Iraq, which are really not his portfolios now? And would that lead for potential for cooperation on resolving them?
DR. VAKHSHOURI: Well, of course. I think that this deal already strengthened the position of the moderators in the Iranian government. And something I agree with Nabeel is after the deal Iran’s position have been strengthened even more toward Saudi Arabia because the unity against Iran in GCC gets weakened after the deal. And there are more Arab neighbors around Iran that they want to have cooperation or get closer, or they will be less eager to engage in anti-Iran unity that we were seeing a few months ago.
With regard to the outside policy of Iran, I’m not really in a position to answer this question. But with regard to energy, I know that they already started to expanding their energy activities in Iraq and in Yemen, particularly. They are trying to build refineries, they are trying to supplying oil and perhaps electricity in the near future. And something that is matter is that the prosperity of particularly Iraq is very important for Iran.
And there has been some arguments that maybe there is going to be a unity or united between Saudi and Iran against Iraqi oil production, because that’s the major production is – major game-changer in the market in the future will be massive Iraqi production. But I don’t think this is going to happen because the prosperity of Iraq is really important for Iran. So on the side of energy politics and how energy diplomacy of Iran, I think they have already started and they are trying to strengthening their influence in these countries – the mentioned countries.
DR. PILLAR: Tom, if I may comment on your specific question. It is well-known that, you know, the running of foreign policy, including regional policy, in Iran does not work along clean bureaucratic lines and the foreign ministry does not control everything. The Revolutionary Guard has, you know, specific portfolios and influence in areas of importance to Iran and to us.
Nonetheless, and in another respect in which Iranian politics tend to work a lot like politics elsewhere, Rouhani and Zarif have had to observe the principle that you need to choose which bureaucratic fights to pick and which ones to fight. And they have placed enormous stakes on this nuclear deal in terms of the time and the effort and the attention. If that is a success for them, that gives them a basis for extending their influence at least somewhat more in areas that have not really been their province so far.
This is not going to be a matter of wholesale seizing of whole accounts from the IRGC. There’s always going to be a give and take inside Tehran, as there is a give and take in other governments. But it will involve an expansion of their involvement and their influence in other regional matters, more so than we’ve seen hitherto.
DR. MATTAIR: Well, thanks. That’s what I was looking for. And you know, we’ve touched on some – you know, in the conversation up here we’ve touched on themes that are – that are in the questions from the audience. Let’s see. Let’s talk about Saudi Arabia and the GCC first, and then – and then go to Israel, because we have questions on each of these subjects.
Can – maybe Nabeel, maybe you can talk more about how each one of the GCC countries see this deal and how they react to this deal? I mean, there is one very specific question here which is on the nuclear issue, and then there are questions about their policies in the region. But the question on the nuclear issue is: Do you think it will encourage or discourage Saudi Arabia from developing its own nuclear weapons program?
DR. KHOURY: Well, I hope it discourages Saudi Arabia because I think they’re unhappy but they really did not have any credible alternatives to suggest to the U.S. But it would be very hard to imagine if right at the conclusion of this agreement with Iran, Saudi Arabia were to launch a nuclear program unrestricted and potentially going towards weaponization. It would be very hard to expect the U.S. and Europe, the P5+1, to look aside and ignore a move like that by Saudi Arabia.
I think at this point they would – they would make some noises, they would try to get some compensation for their unhappiness over the deal. But I don’t think they would go for a nuclear weapon themselves. I think both they and the Israelis at this point would have to give that some time – at least a year or two – to see if the implementation of the agreement begins to take effect seriously. So I think that would delay any aggressive moves on either of their parts.
The reaction from Iran – from Saudi Arabia has been somewhat muffled disgruntlement, polite acceptance of it. Saying yeah, well, it’s better than war. We’ll see how it goes. So you can tell they’re unhappy but they’re not outright coming out full-thrust against it. Only Israel has – Netanyahu and John Boehner, identical twins on this issue – they have come out vociferously against it. But I – you know, again, Boehner will try on the Hill and I think he will fail to derail the agreement. And Netanyahu will try to support him. I don’t think he would do anything on the ground. I don’t think he would take military action, but he would try to support the movement against the deal here in the U.S. And again, I expect that to fail.
The other Arab countries – as you can expect, Oman is happy with the deal, is happy with the fact that they have tried to, although they’re GCC members, to be somewhat neutral, specifically on Yemen, for example. They did not join the war effort against the Houthis. And they have mediated. And this is a vindication of their mediation. So they’re happy with the result. UAE, Kuwait, I think, kind of they follow the lead of Saudi Arabia – not that happy. But I think the UAE and Kuwait can both look forward to good relations with Iran to come out of this. So they will look on the positive side of this.
The Iraqis, I think, are generally happy – certainly the Shia majority and the government. And Hezbollah in Lebanon – I think people who identify with Iran – the Iranian people have been reacting very positively. And so Arabs in the region who identify with Iran are also looking at this as a victory for Iran, a victory in the sense that they are going to be removed from the sanctions list and they are going to be looked at more positively in the international community, not to mention that the financial windfall is going to be significant. So I think there is – the Arab world is split along lines that you would expect, but there is more support – more positive than negative outlook on this agreement, I think.
DR. MATTAIR: Well, of course there are differences across the GCC, but there are differences of opinion even within a single GCC country. I mean, Rich and Jim and I in Riyadh heard differences of opinion from different Saudis about the nuclear deal. So they’re not monoliths. No one of those countries is monolithic.
But what we also know is that they’re as concerned about the geopolitical implications of the deal as they are the technical implications – the technical details of the – of the deal. And they’re concerned that – they’re concerned that the United States wanted the deal so much that it will acquiesce in Iranian aggression in the region.
So that takes us to the relationship that we have with GCC countries and the kinds of promises that were made at Camp David and how to bolster their conventional defenses. Can someone talk about that, what we’ve agreed to and how that’s – how that will reinforce and protect the relationship of partners that are doubting us?
DR. MILLER: Tom, I’ll be glad to go over the list again. I want to refer back to it to make sure I don’t list it differently than I did before.
DR. MATTAIR: You did. You did.
DR. MILLER: But I did go over it. So it was cooperate more on counterterrorism especially against Daesh and al-Qaida, protect critical infrastructure, strengthen border and aviation security, combat money laundering and terrorist financing and interdict foreign fighters. And as I suggested, already efforts underway on cybersecurity, air and missile defense and maritime security as well, that in my view should be bolstered.
So those are – some of those go back not just years but decades, and particularly on missile defense, and have been very challenging to take cooperation to the next level, not just arms sales, which have occurred, of course, but cooperation. And so I’ll just say for myself, I’d like to see greater GCC cooperation, sharing of information, and that will provide more effective ability to do maritime interdiction when necessary, to do air and missile defense and, for a very challenging area, to improve the posture on cybersecurity and counterterrorism as well.
DR. MATTAIR: All right. And there are the questions about the U.S.-Israeli relationship and the Israeli reaction to all of this. Let’s see. Nabeel, you doubted that Israel would take overt military action against Iran – against Iran. But, Paul, you’re suspicious about potential for other Israeli action. So would you – would you be surprised if something broke out between Israel and Hezbollah before the summer’s over?
DR. PILLAR: I would not be surprised. I was – I was – I’m not predicting it. I’m not even saying it’s even likely. And certainly Israeli policymakers have, you know, many other considerations to bear in mind. And there would be a lot of domestic political costs for the Israeli government if they got involved in a – you know, a new Hezbollah war. That would all weigh very heavily on them.
All I’m saying is – this was part of a larger point that it’s not just up to Iran or just up to Iran and the United States in terms of how these Iranian-related issues we’re discussing today play out, that other actors – and Israel certainly is one of the more important ones – have a piece of the action, whether it’s a matter of intentional decisions to go to war or simply, you know, weighing the risks in a way that makes possibly an accidental outbreak of, say, new hostilities with one of the other actors, such as Hezbollah, more likely than it otherwise would have been.
And to the extent that it may have the – in the views of the Netanyahu government a, shall we say, bonus effect of undermining the viability of the nuclear agreement and it’s continued implementation, that would not be a disadvantage in the view of that government. I’m not saying – but again, I do not predict that would happen. I’m not even saying that would be the primary motivation if it does happen. It might just be a matter of doing things a little riskier rather than less riskier than they might otherwise have done.
DR. PILLAR: And I agree with Nabeel. I think the bolt from the blue Israeli attack on Iran is unlikely for the time being.
DR. MATTAIR: All right. Can anyone comment on this: Is it really – is it really the possession of a nuclear weapon by Iran that bothers Israel, or is it the way that would increase Iran’s freedom of movement on the ground in the region and the way it could challenge Israel on the ground throughout the region that bothers Israel the most? And is there – is there – is there a way for the United States to address those concerns through increased defense relationships with Israel?
DR. PILLAR: I’d be happy address the first part, and I’m sure Jim would have something to say on that very last point, since a lot has been done.
There certainly is in Israel – and I’m talking about the population not just the government – and understandable concern about a possible Iranian nuclear weapon. I mean, just as a matter of geography, as a matter of hateful rhetoric and everything else we can all sympathize with that concern. That is not the main motivation for the position that the Netanyahu government has taken. If that were the main motivation, they’d be supporting this agreement rather than opposing it. When you simply compare it with the alternative of no agreement and everything that implies as we – Jim and I discussed in response to your earlier question about if Congress shoots it down.
The Israeli government does not want to see Iran as an unfettered competitor for influence in the Middle East. You know, it’s a – it’s a large country, you know, the other big country besides Turkey that’s a non-Arab country. And it’s not only a competitor for influence in the Arab world and elsewhere in the region, but it’s one that will continue to be highly critical of Israeli policy in a way that does not get restrained by any relationship with the U.S., as it true, I would suggest, with the Gulf Arabs who, you know, rein in their rhetoric about Israel party because of the nature of their relations with us.
The Netanyahu government also looks to Iran as – as the specter of the Iranian threat as one of the main rationales for sustaining major U.S.-Israel security cooperation and support. It also does not like the idea of any U.S.-Iranian cooperation on anything because that undermines the whole concept that Israel is the only worthwhile partner for the United States on anything in the Middle East.
And last but not least, and we – all we have to do is look at the rhetoric virtually any day coming from Mr. Netanyahu and his government, the Iranian threat is the all-purpose go-to diverting topic whenever something else comes up, like the occupation of Palestinian territories, that they don’t want to talk about. The response always is, but the real problem in the Middle East is Iran, and especially its nuclear program.
That gets lost to the extent that an agreement like the one that was just signed becomes successful. By every indication, those are the motivations. And what is of most concern to the Israeli government, again, just consider the alternatives between this agreement and no agreement. And if the motive really was an Iranian nuclear weapon the Israeli policy would be the opposite of what it is.
DR. MILLER: If I could, I’d add to that. Forty years ago, arguable even 30 years ago, Israel could realistically fear a combination of Arab states that could come together and pose a conventional military threat to it. That is far less foreseeable today, including vis-à-vis Iran, including vis-à-vis the GCC. The existential threat to Israel in the region, in my view, is an Iran with a nuclear weapon. Their leadership has not accepted Israel’s right to exist. And whatever you think about prudence prevailing in the event of a crisis or in the event that Iran were to get to that capability of having a nuclear weapon, if you’re an Israeli you’ve got to take that very – in my view, you’ve got to take that very seriously.
I do think it’s true that an Iran with a nuclear weapons capability would be likely to act out in ways that were dangerous to Iran and that would –
DR. MATTAIR: Dangerous to Israel?
DR. MILLER: Excuse me, yes.
DR. PILLAR: Dangerous to Iran too.
DR. MILLER: The second-order effect would be very dangerous to Iran as well, I agree with Paul on that point. But my answer to your question is it A, or is it B? Yes. It’s both of those. And those to me are legitimate security concerns for Israel.
DR. MATTAIR: Any comments here?
Well, here are a couple of questions about business. So, Sara, maybe you could take these. Who are the countries and companies that are going to be benefiting the most from the successful implementation and the successful lifting in sanctions? Let’s say in the, you know, U.S. trade embargo is going to stay. No matter what, that’s not being lifted. So can you talk about who’s going to be there, what kinds of capital and technology they have and how effectively they’re going to rehabilitate the energy infrastructure, et cetera?
DR. VAKHSHOURI: Well, I think that all type of companies could – all type of companies could benefit from the sanction removal – European, in particular, Asian companies. Iran has a young population that they’re consuming all type of goods – so any manufacturer of good, tourism, energy, industry. Something that is significant in this deal is that the U.S. subsidiary – the subsidiaries of U.S. companies outside of the U.S. can do investment in Iran.
So this is a slight difference. We talked to some oil companies. They think that if Iran’s compliance goes successfully and the sanctions are removed, they might be able to within the next two, three years go to Iran and invest – start investing in Iranian energy industry. So I think that everybody could benefit from this type of business, European mostly.
But something that always engaged my mind, and I would like to ask a question from audience or the panelists, is – just because I’m engaging in business and I always thing – what if there was a business opportunity between Iran and Israel? Could that be the groundwork for, you know, just – it’s money and profit at the end of the day, added to the pocket of countries. Do you – can anyone can imagine that, like, there would be, like, Israeli businessmen in Tehran? I’m just asking a question, theory.
DR. KHOURY: They already know the lay of the land.
DR. VAKHSHOURI: (Laughs.)
DR. KHOURY: Yeah, I think – I think this – long term, the relation – there is a very positive relationship between Israel and Iran long term. Right now, it looks like a pie in the sky – the enmity, the hostility, the mutual suspicion. But when you think in terms of business, economics, even regional interests – ultimately their interests coincide. They just have to get beyond this phase that they’re in right now. So I don’t think we’ll see it anytime soon, but I think ultimately yes.
DR. VAKHSHOURI: Because there are so many points like – I’m sorry – for instance, Iran is really in need of water desalination. And this is a technology that, like, Israel is a master of, like, water desalination. So there are so many interesting economic benefits that theoretically the two sides could work on it as just a starting point of – these are all theories.
DR. MATTAIR: Well, but then we have – yes, I’ll – I’m going to – we don’t have a mic, but I’m going to come to the floor in just a second. But this is about the nature of the regime. And there’s a question here about what are the prospects for successful implementation of the deal having an impact on the – on the Iranian population such that it brings about a change in the nature of the regime? Is that a possibility through elections or through –
DR. VAKHSHOURI: I mean, this – well, I think that the change in regime or change in the government, that’s something that don’t see just necessarily economic prosperity is going to bring a change in the regime. But imagine if Iran is outside of the isolation and we have lots of, like, foreigners in Iran, investment, long-term mutual interest between Iran and all these, like, Western companies or foreign companies. Of course there – certain behavior’s going to be changed. But I don’t see the necessarily as a cause for a regime change or a massive behavior change, no.
DR. MATTAIR: OK. Before – go ahead.
DR. MILLER: You know, interaction with the West and increased with the rest of the world does have internal political effects. They are very slow. They are very gradual. It’s nothing that’s going to, you know, overthrow this regime. I would agree with that.
This is one of the dynamics that is often cited, I think appropriately, as a basis for opposition by hardliners within Iran to the agreement and to possible increased relations with the West that may stem from the agreement, given that the hardliners do not want to see that kind of political evolution. So I think there is that sort of resistance. But to the extent that actually increased relations – whether it’s economic or diplomatic or both – can take place despite that kind of hard line opposition on both ends, there will be a gradual political set of effects.
DR. VAKHSHOURI: I just want to add something here, is that, I mean, I don’t know, I’m not a polling company or know about it exactly, but some think that do really Iranian people want a regime change or not? There were, like, Iranian people going and voting, people inside Iran, most of them they went and vote for the current president. So I don’t know if – I mean, again, this is like an energy expert.
I’m not, like, doing really political opinions, but do really Iranian people are looking for political change? People were dancing and happy in the streets for the negotiations. The deal happened and no one really – I mean, majority of Iran and inside Iran, they never questioned that, OK, now we have a deal and we want a regime change, you know? People were just happy, celebrating. They were thanking their foreign minister. So I don’t know even if there’s any inside Iran among most of the people in Iran there is that intention. I mean, I don’t know about that. But it doesn’t – the signs, particularly since President Rouhani, we don’t see that massive sign for, like, regime change. And also – yeah, I mean.
DR. PILLAR: I agree. There isn’t an appetite for a new revolution. I mean, there are desires for change of the sort that will bring about economic improvement, and lifestyles in Iran and during the history of the Islamic Republic have already loosened up, you know, a great deal over the last three decades. But most Iranians are not hankering for a new revolution and all the disorder that that would bring.
DR. MATTAIR: OK. We were supposed to have a microphone. We don’t. We have – you know, we’re transcribing this, so if you’re going to ask a question make sure it’s loud enough to be heard. And please tell me if you don’t hear it, OK? Yes.
Q: Mike Kutsig (sp). I worked on agriculture for many years.
I just wanted to – I just wanted to comment on what Sara said, which makes a lot of sense. I mean, Israel and Iran had good relations before 1979. But what I think – what I know now from a study that was done by Chatham House in London is that Iran will run out of water in 30 years. They will be out of water completely. Israel has solved the water problem. There’s another water problem there, one can say that through desalination, through recycling, through all kind of use that problem has been solved. And certainly other countries in the region are using that besides trickle irrigation. So what you said is partly a possibility.
The other thing, if I may comment a moment, the Iranian people want closer relations with the United States. They’re not happy – I don’t think they’re happy with the regime at all. And certainly 2009, the slaughter and the putting down of that, was very indicative of a very powerful and heinous dictatorship. Thank you and thanks for your comments.
DR. MATTAIR: Anyone else from – Ben? Here you go, Ben.
Q: Thank you very much.
I agree with a lot of what has been said about the potential for some kind of Israeli-Iranian rapprochement. There’s a big obstacle in the way, but it’s an obstacle that can be resolved. There will never be a full rapprochement with either Iran or the Arabs until the Palestinian issue is resolved. The Palestinians have kind of been slow-walking their way to statehood, through international law, International Criminal Court, so on and so forth.
Look at what happened in the dispute between Israel and the Palestinians in FIFA over the treatment of the Palestinian athletes. That was resolved through negotiation between the Palestinians and the Israelis. We’re going to be seeing more of this. And Israel at some point has to accept that it cannot be integrated fully into the region until a Palestinian-Israel resolution is resolved in a way that’s acceptable not only to the two sides, but to the region and to the international community.
DR. MATTAIR: Any other comment or questions from – yes, you had one back here.
Q: Hi. I’m with the Arab-American Institute.
I was just wondering – I’ve seen reports from, you know, different countries and businesses lining up to sort of do business with Iran. Is the United States missing an opportunity here with companies that aren’t able to do that? Or should the United States be doing more in terms of trying to actually maybe open up trade and things like that with Iran?
DR. MATTAIR: Well, you know, as Sara was saying, you know, it looks as if foreign subsidiaries of U.S. companies are going to be able to do business.
DR. MATTAIR: Sara, why don’t – you should answer that. You should answer it.
DR. VAKHSHOURI: Of course I agree with you. I mean, there’s a lot of great potential for American businesses. They haven’t been into Iran really for the past almost 30 years, I mean, directly and significantly. Iran is a big consuming market from goods to energy investment. And already we know that there are many oil companies interested in Iran because of different reason, low production cost, because there are not so many accessible oil resources for development. Most of the resources are gas.
The complexity of the rock in Iran is very simple, so there is lots of interest among all of the international oil companies to go and invest in Iran. And we know that American – there is a huge interest. They announced it too, American international oil companies, to go to Iran. But they have to be in compliance with U.S. regulations and then they will lose the competition. I mean, previously because of the Iran Sanctions Act they were, like, Chinese, Japanese, Indian companies or European companies. They just easily took the place of American companies. If American companies were in Iran, it would be a hard competition for other companies.
Something I would like to add is about the Revolutionary Guard and hardliners that if they’re really sad about the deal and they don’t – they are not happy with the deal, I think they are – actually benefit from the deal, because the removal of the sanctions will be partially the removal of some of the Revolutionary Guard commanders and some of the entities that they will be lifted from this coming out of the sanctions, and again they can resume their businesses. So I think that this is not necessarily a case that Revolutionary Guard is, like, truly against that deal.
DR. MATTAIR: Well, that’s not a monolith either. You know, they’re –
DR. VAKHSHOURI: Yes, exactly, that’s true.
DR. MATTAIR: Yes.
Q: I’m interested to hear what the panel thinks about the lifting of the arms embargo in five years, and the purchasing of ICBMs, because those both seem to be major sticking points that quite a lot of politicians have brought up.
DR. MILLER: So the provisions call for the lifting of a conventional arms embargo in five years and lifting of a ballistic missile technology embargo in eight years. Nothing in the provisions call for the transfer of ICBMs to Iran. But I would note that Iran is making – in its own indigenous work has made significant process on space launch with two different space launch vehicles – the Safir and the Simorgh vehicles. And so it is moving towards a capability that will effectively give it that long-range missile capability, even with this in place.
My view is that while it’s – it was a great addition to the prior framework to get a five-year extension for conventional weapons and an eight-year for ballistic missile, the ballistic missile is going to have relatively minor impact because of how far Iran has proceeded indigenously. And on the conventional side, I think it will have modest impact. Good things to achieve. I support them. I’m glad that we got them.
But I wouldn’t overestimate their impact in the near term – in the near-term nor when they expire, compared to the other provisions of the agreement in being able to have the restrictions on the Iranian nuclear program and the verification in place, not just for 10 or 15 years, but indefinitely. To me, those are – those are, while useful, are not as important as the core provisions of the agreement.
DR. PILLAR: I agree with all that. And I just want to add a couple of things. The main legitimate reason why this became an issue toward the end of the negotiations is that this was a subject mentioned in one of the U.N. Security Council resolutions that is now outdated and has to be revised or addressed somehow. And in the existing U.N. Security Council resolution, the conventional arms embargo as well as the restrictions on missile technology were all part of the sanctions related to the nuclear program, you know, along with pistachios and caviar and banking and everything else, you know?
So it is very understandable – or at least unsurprising that the Iranians themselves, and of course then the Russians and Chinese, said, look, this whole deal is supposed to be about lifting nuclear-related sanctions in return for the restrictions that the Iranians accepted. And therefore, the Iranians made a – in my judgment, a significant concession in going along with the five year, eight year thing as a compromise. And fortunately because you can just count years, there’s a basis for splitting the difference and having a compromise.
And just to accentuate what Jim said, you know, the indigenous capabilities – both on missiles and also conventional arms – are such that the embargo even when it expires isn’t going to make a whole lot of difference. Tony Cordesman who, you know, studies these things quite closely I think had a good formulation the other day. He said: This is not an arms race that’s about to take place. He was saying, despite the indigenous capabilities, it’s an arms race that the Iranians have already lost. And he was referring to the overall military balance with regard to the Saudis and the UAEs and, you know, not to mention the Israelis on the other side of the region.
So it’s – this was a necessary compromise. It came up because it’s in the U.N. Security Council resolutions. But I don’t think we should be too worried about, you know, how it came out.
Q: We witnessed at the end of the negotiation it was kind of fractured between Russia and China and the other members of the 5+1, especially – I mean, especially about the lifting arm embargos. What can be the benefit for Russia, especially? I mean, for Russia and China, because they were kind of persistent to lift the arm embargos and they were in the same page.
OK. My question is that what’s the – we witnessed that it was kind of fractured between China and Russia and the other member of 5+1, especially on the arm embargoes, because it seems there is kind of benefit for Russia. And I would like to know what is it exactly? Thank you.
DR. MILLER: By the principle of Occam’s razor I guess I’d say while there are geostrategic calculations, Iran is going to have $150 billion worth of sanctions relief in its pocket. And my guess is that Russia and China would be interested in arms sales sooner rather than later, and in being able to increase what they already – what they already have under consideration. So there’s a self interest. And I think that in addition, as part of – overall as part of the negotiation, it’s unsurprising to see them in general siding – going in a way that is intended to protect Iran’s interest as well more broadly.
DR. KHOURY: Let me comment on that as well. I agree with Jim. I think the – we have to consider. I mean, although I’m, you know, positive on the agreement and what one could build with it, you have to consider that the 150 billion (dollars) and the increasing yearly income that’s going to be generated in Iran as a result of the lifting of the sanctions could go either way. So if relations do not improve between Iran and the U.S. and between Iran and Saudi Arabia, and the wars and conflicts in the region keep getting worse, then the conventional weaponry of Iran will improve, certainly.
I mean, I think just as in the U.S. the president and others are saying, well, after this agreement if it doesn’t go well all options that were – that existed before still exist, the Iranian internal dialogue must be going along the same lines, that if this doesn’t go so well for them, the same options they had before will be on the table again for them in a few years. I never considered – personally, I’m one of those who never considered the nuclear weapon to be the real threat or the menace from Iran, but more the conventional one. And on that, I disagree a bit with Paul on that. I don’t think they’re losing the race.
If you count, you know, tank for tank and F-16 for MiGs or whatever, yes, you can say Saudi Arabia and allies are ahead. But in terms of real fighting power on the ground, in terms of influence in the region, Iran is winning, not Saudi Arabia. But, look, Saudi Arabia has to throw all its might and all its weapons and all its bombs against the barefoot soldiers of the Houthis in Yemen. And not necessarily winning, except, perhaps, carving out an enclave in Aden for President Hadi to be able to return. But they’ve been humiliated by the Houthis before in 2009 and ’10. In Iraq, in Syria and in Lebanon, Saudi influence is far less than that of Iran’s.
So you know, you have to look at both sides of this. If things go well in the relationship and in terms of conflict resolution, then we are headed towards a positive outcome five, 10 years from now. But if not, then Iran’s conventional weaponry will have improved and their ability. Rocketry is the main thing, whether Hezbollah or Iranian forces. Rocketry is what they depend on. They don’t depend on air force and so on. So there is – you know, this could go well or it could go badly. And the conventional weaponry, and therefore the missiles – whether they have them or don’t have them, whether they go to longer range missiles – that’s very important.
DR. MATTAIR: Could I ask you, Rich, to say just a few words about how this started and the role that Oman played, since you were, in fact, the ambassador during that time and you were receiving the American diplomats who were engaged in that?
AMB. SCHMIERER: Yes, but of course I wasn’t talking about it.
DR. MATTAIR: Can you talk about it now?
AMB. SCHMIERER: Yeah, I can talk about it now.
What’s interesting to contemplate, considering the various comments, the main – this kind of all got started when we were trying to get the hikers out of Iran, which we successfully did, during my tenure. And it was with the facilitation and mediation of the Omanis. And what was interesting to me, although of course, we – I, the ambassador, and we, the Americans – were not engaged directly with the Iranians at that time, but we were talking to the Omanis who were, obviously engaged.
And what was interesting is as it played out was that there were two kind of dynamics. And I would – I think all the panelists have sort of referred to them. And I would encourage people to keep these two dynamics in mind as we look at where things might go with Iran. One was a complete lack of confidence in the U.S. In other words, from the Iranian point of view, the U.S. didn’t have credibility or was not seen to be trustworthy.
So one of the things that we had to do, and it was kind of subtle and it was, you know, in ways that were not high level, but enough to convince the Iranians that the U.S. was willing to be a reasonable and a reliable interlocutor. And so they would talk about Iranians that we were holding. And of course, we were trying to get the hikers out of Iran. And I think through a number of ways we were able to show them that the relationship didn’t have to be entirely based on animosity, but that, you know, we were willing to be fair and reasonable with Iranians and we expected them to do the same with Americans at kind of the personal level. And so I think ultimately that convinced them to at least pursue what we were trying to achieve.
The second, and I think this is very important because I think you always hear references to the Iranian bazaar, is there was always an effort to try to look for quid pro quos or linkage and to try to get things that weren’t associated with the issue at hand associated in a way so that they could resolve other issues. And we were very, very determined and very clear that there would not be linkage, there would not be a quid pro quo, that we had principles that we will treat people fairly, and we expect our people to be treated fairly, but we will not compromise any of our principles, or we will not do things in a kind of a bazaar, meaning in the kind of quid pro quo tradeoff way. And that took a while, I think, to sink in.
So I think those two kind of tendencies or proclivities of Iran in their view towards us, I think we made some progress. And I think in those two regards that did help ultimately the effort to launch an actual dialogue, which has resulted in the deal. So I guess I would just say that it’s important that we continue to build on the sense that, one, we are trustworthy and reliable, that we will behave – that we will operate on a – sort of an individual and humanistic level in a fair way and, two, that we will stick to our principles and that we will not compromise for expediency. And I think if the Iranians continued to be convinced of those two approaches, that that gives the potential for positive developments going forward.
So it’s interesting to hear the various comments. And of course it’s been – I’ve learned a lot just hearing what the colleagues had to say. But to put that into perspective of my experience, I’m hopeful that what we’ve accomplished in terms of dialogue and sort of clearing of the air in these recent years might be something that we could build on going forward.
DR. MATTAIR: Thank you.
Well, we’ve had someone from the defense community, someone from the intelligence community, two people from the American diplomatic community and an energy economist. And I don’t know how we could have covered the bases better than that. So thank you very much to the panel. And thank you for coming. And we will be publishing the transcript in the next issue of the journal. So you should look for that. And it will also be live-streamed, if you want to go back and watch it again. I mean, it will be – the video will be archived on our website so you can watch it later if you want to. Thank you very much, everyone. (Applause.)
Former Under Secretary for Policy, U.S. Department of Defense
President, Adaptive Strategies, LLC
Board of Directors, The Atlantic Council
Senior Fellow, Atlantic Council’s Rafik Hariri Center for the Middle East
Former Director of the Near East South Asia Office of INR at the State Department
Non-resident Senior Fellow, Center for Security Studies, Georgetown University
Non-resident Senior Fellow, Brookings Institution
Contributing Editor, The National Interest
Former CIA analyst
Founder and President, SVB Energy International
Former Ambassador to Oman, Member of the Board, Middle East Policy Council
Executive Director, Middle East Policy Council
Iran and the Arab World: Implications of the Nuclear Negotiations
Experts praise recent nuclear deal but see challenges to developing productive bilateral relationship
WASHINGTON, July 16, 2015 - The Middle East Policy Council’s 81st Capitol Hill Conference convened a diverse panel to assess the recent Iranian nuclear deal. The panel also provided insight on its impact on regional power dynamics, cooperation with the United States and oil and natural gas markets. While the panel praised the deal – particularly in light of the lack of a viable alternative – they voiced caution that it would mark the beginning of a broadly transformed relationship between Iran and the United States. In fact, the consensus was that the near term would feature limited change in Iranian behavior, but that opportunities for progress could exist in addressing Syria’s civil war and within regional energy markets.
The panelists included James Miller (Former Undersecretary for Policy, U.S. Department of Defense); Nabeel Khoury (Senior Fellow, Atlantic Council’s Rafik Hariri Center for the Middle East); Paul Pillar (Non-resident Senior Fellow, Center for Security Studies, Georgetown University); and Sara Vakhshouri (Founder and President, SVB Energy International). Richard Schmierer, former U.S. Ambassador to Oman and member of the Board of Directors, Middle East Policy Council, moderated the event. Thomas Mattair, executive director, was a discussant. More specific remarks from the panelists:
• James N. Miller provided context on the recently signed Joint Comprehensive Plan of Action (JCPOA), arguing that it provided the necessary safeguards and verification to detect cheating and prevent a rapid, surprise Iranian nuclear breakout. He also argued that diplomatic channels and military pressures should remain in place to provide future pressure on the Iranian regime to comply and possibly change behavior in the region that collides with U.S. interests.
• Nabeel Khoury urged the U.S. to build on the agreement and develop diplomatic cooperation with Iran, with particular focus on resolving the conflict in Syria. He views Syria as draining increasing resources from the Iranian regime, a fact that combined with the intractable dynamics on the ground today in Syria, suggest that a more unified front between the U.S. and Iran could yield tangible results.
• Paul Pillar highlighted further areas where U.S. – Iranian cooperation could be fruitful including Iraq (on pushing back ISIL and speaking with a unified voice to leadership in Baghdad) and Afghanistan (by returning to a pre-2001 model of cooperation). He strongly advocated the removal of sanctions (doing otherwise would erode U.S. credibility) and challenged the assumption that greater financial resources would further Iran’s nefarious behavior, noting that the tightening of sanctions produced this outcome just a few years ago.
• Sara Vakhshouri explained how the Iranian economy exhibited more resilience than expected to lower oil prices. She also highlighted investment opportunities in Iran, as production and operational costs in Iran are around $10/barrel currently, with the global price of oil hovering between $50 - $60/barrel. She suggested the possibility of greater energy trade with Iran’s neighbors – including the GCC states who could benefit from imported oil & gas to free up their output for export rather than domestic consumption - but that this would take a foundation of mutual trust first.
An edited video by speaker, including a full transcript from the event will be posted in a few days at www.mepc.org and published in the next issue of the journal Middle East Policy. The full video from the event is already available on the Middle East Policy Council website.
Contacts: For interviews or other content associated with this event, please contact Grace Elliott – (202) 296 6767 – [email protected].