5 Questions: Sanctions Expert Richard Nephew on Cancellation of Iran Nuclear Deal

Richard Nephew recalls watching President Donald J. Trump’s May 8 announcement that the U.S. would be pulling out of the Iran nuclear deal. As the former principal deputy coordinator for sanctions policy at the U.S. State Department and lead sanctions expert for the team that negotiated the 2015 agreement, Nephew’s mood “was pretty grim,” he said. “It was not a good few minutes.”  

Not that he was surprised by the president’s decision. “He was inevitably going to withdraw the U.S.” said Nephew, now a senior research scholar at Columbia’s Center on Global Energy Policy. “He earnestly believes he can negotiate a better agreement than anyone else, and it’s clear that he wants to dismantle Obama’s foreign policy.”

Under the 2015 agreement, formally known as the Joint Comprehensive Plan of Action, or JCPOA, the U.S. and its allies waived certain economic sanctions in return for Iran’s agreement to limit its nuclear activities and permit regular inspections of its nuclear facilities. The sanctions that were waived, and may be reinstated after scheduled periodic reviews, affect `investments in oil and gas, transportation, insurance and banking, and imports and exports of equipment and materials. Other sanctions prevent Americans from doing business in Iran and bar foreign companies that do business with Iran from doing business in the U.S.

Nephew’s book The Art of Sanctions, A View from the Field, published in December by Columbia University Press as part of the Center for Global Energy Policy Series, is about how sanctions work and how to measure their effectiveness.

Q. How will pulling out of the deal affect the U.S.?

A. Oil prices may go up, but not as much as some pessimists expect because production in the U.S. and Saudi Arabia and other places will help us compensate. Boeing will lose a contract to sell Iran some $20 billion in civilian aircraft, although the company downplayed the impact. What worries me most is that this desire to get out of JCPOA as fast as possible is going to imperil our real interest, which is restraining Iran’s nuclear program. It takes away our ability to deal with a threat to our national security.

Q. What is the impact on our relations with other countries?

A. Administration officials have said the U.S. will impose sanctions on European and Asian companies doing business in Iran. There could be a reaction if we sanction countries too broadly. We would not only lose their business here, but possibly also lose our ability to do business in those countries. Longer term, my biggest concern is that countries perceive it is now in their interest to diversify away from the U.S. or to build in protections when they do business with the U.S., which will have a negative impact on our economy. We are leveraging the U.S. economy for foreign policy and we can overdo it.

Q. Is there any way the deal can survive without the United States?

A. It will only continue if the Europeans support it economically, so the Iranians can keep the business benefits they signed up for. But I don’t see the Europeans being able to keep enough of their companies in to retain those benefits, which then reduces the pressure on Iran to stay in the agreement.

Q. How realistic are the Trump Administration’s requirements for negotiating a new agreement?

A. Any American would agree with all of them in principal. We obviously want to stop Iran from sponsoring terrorism, stop it from intervening in Yemen, in Syria, things like that. But it’s hard to believe the Iranians would accept even half of the 12 requirements, which are so extreme as to be implausible. For example, we’re going back to our old position that Iran can no longer have a uranium enrichment program, ever. This isn’t a way to start negotiations. I don’t think we’re going to get an agreement that satisfies the Trump Administration or the current Supreme Leader of Iran.

Q. So what happens now?

A. We should not dismiss the possibility of this becoming an armed conflict -- a real, live regional war, especially if we are essentially forsaking the diplomatic route. This is all happening in the context of Israel firing on Iranian and Hezbollah positions in southern Syria, and Yemeni Houthis lobbing missiles against the Saudis. And without JCPOA, Iran could be two-to-three months away from having a nuclear weapon, increasing the risk of conflict as a result. If they get to less than two-to-three months from having a nuclear weapon I don’t think the Israelis and the Trump Administration would stand by.