What does a new JCPOA mean for the Middle East?
By David Hamilton
Deputy Secretary-General of the European External Action Service (EEAS) Enrique Mora and Iran's chief nuclear negotiator Ali Bagheri Kani wait for the start of a meeting of the JCPOA Joint Commission in Vienna, Austria November 29, 2021. EU Delegation in Vienna/Handout via REUTERS
The revival of the Joint Comprehensive Plan of Action (JCPOA) seems to be imminent. Despite a “pause” in negotiations earlier in the month and Russian demands that U.S. and European sanctions do not affect its trade with Iran, a final deal is close to completion. On March 23, Iranian Foreign Minister Hossein Amirabdollahian stated that a deal was closer than ever while American and European diplomats also expressed optimism. If a new deal is signed in the near future, it could have significant effects throughout the Middle East and the world.
The new nuclear deal is reported to significantly resemble the original JCPOA that was signed in 2015. The deal is expected to be phased, with the release of prisoners, enrichment, and the unfreezing of cash being the first issues to be addressed. Initially, Iran would be required to suspend uranium enrichment above five percent purity, later to be lowered to the original 3.67 percent cap set by the JCPOA. Currently, Iran is enriching uranium to as high as 60 percent purity, while 90 percent purity is needed for weapon-grade uranium. Other early phases include the unfreezing of Iranian assets in foreign countries, including $7 billion stuck in South Korean banks, and the release of U.S. and European prisoners held in Iran. After these initial measures, the main sanctions-lifting phase would begin with the issuing of waivers on Iranian oil sanctions. There have also been discussions within the Biden administration to remove the Islamic Revolutionary Guard Corps (IRGC) from the Foreign Terrorist Organizations (FTO) list in exchange for Iran promising to de-escalate in the region. This last aspect has yet to be agreed upon.
As a result of any new deal, Iran’s development of a nuclear weapon would be significantly slowed and give the world more time to respond should it progress down that road. This renewed reality would present a golden opportunity for further regional dialogue and rapprochement. In fact, numerous diplomatic engagements have been ongoing in the region for months that have seen the United Arab Emirates (UAE) and Saudi Arabia seeking to repair relations with Qatar, Iran, and Turkey, as well as strengthening ties with Israel. A renewed nuclear deal would present a significant opportunity, as it would address a top concern among Arab states and Israel by making it more difficult for Iran to build a nuclear weapon. Regional leaders could take advantage of the moment to usher in a new era of cooperation and collaboration rather than conflict.
Despite representing an opportunity to engage in dialogue with Iran, the opposite seems to be happening. For example, bilateral talks between Iran and Saudi Arabia have stalled after four rounds of meetings in Iraq that began last year. Iran’s foreign minister accused Saudi Arabia of sending “mixed messages.”
The UAE and Israel have also expressed concerns to U.S. officials, demanding that they be provided with security guarantees should the nuclear deal be revived. Among the security guarantees, they requested are a regional security strategy, increased funding for missile defenses, greater intelligence sharing, and the relisting of the Houthi rebels in Yemen on the FTO list.
Gulf nations and Israel have expressed concerns that a renewed deal with Iran would unfreeze billions of dollars that Iran could use to increase funding for the IRGC and regional proxies, including the Houthis, Hezbollah, and Iraqi militias. These groups have a history of targeting Israel and the Gulf nations. In August 2021, Hezbollah fired 19 rockets at Israel. The Houthis have also significantly increased attacks on Saudi Arabia and the UAE, using drones and missiles to strike airports, oil facilities, and ports.
Indeed, the lifting of sanctions on Iran could unfreeze as much as $40 billion stuck in China, South Korea, India, Iraq, Japan, and Europe. Moreover, a new deal would allow Iran to begin exporting oil to the world. Iran is believed to have the capacity to export as much as 2.4 million barrels per day, while the Brent Crude benchmark currently stands at about $120 per barrel. This would provide Iran with billions of dollars per year. Although this would help drive down the price of oil, which has skyrocketed since the Russian invasion of Ukraine, the funds could also be used to further destabilize the region unless assurances to the contrary are made by Iran. However, as has already been mentioned, Iran has so far refused to publicly commit to de-escalation.
Israel is especially concerned, as it has been working to combat the IRGC presence within Syria. On March 13, the IRGC fired a dozen missiles at Israeli “strategic centers” in the Iraqi Kurdish capital of Erbil. This was in response to Israeli airstrikes in Syria that killed two IRGC commanders the week before.
Unless the United States makes security guarantees to its regional allies and Iran commits to de-escalation, tensions are likely to continue to rise. Nations across the region, as well as the United States, should take recent events into account. All powers involved should try to stand in the others’ shoes. Doing so would help each side understand the others’ actions and could help lead to more fruitful negotiations to bring about a greater peace in the region.
It is no secret that the economic dependency on oil has created an unequal power imbalance in the region creating the divide from oil-rich countries to oil-poor countries. Countries that are considered to be 'oil-dry' do not produce crude oil and do not have a source of production and export of oil. To fully understand how the countries in the region are truly related to each other and to the world's oil production, it's important to know which countries do not have oil reserves.
Moreover, to understand the severity of which economies will be affected and how this impact can potentially shock the region as a whole, it's important to know which countries have oil reserves, how much oil is produced, and their importance to the global economy.