Iran Nuclear Talks Face Challenges Heading to May Meeting

Diplomats face a battle against time and precedent as they look toward the next round of talks with Iran on its nuclear program.

The negotiators broke a 15-month stalemate after 10 hours of “constructive” talks in Istanbul on April 14 and agreed to reconvene in Baghdad May 23. Squeezed by U.S. and European Union sanctions, as well as Israeli and American talk of a military strike to prevent it from acquiring atomic weapons, Iran dropped upfront demands and the talks focused almost exclusively on its nuclear program, according to two Western diplomats involved in the negotiations.

The talks risk a repeat of previous failures, with tensions contributing to a jump in Brent crude prices this year. In Israel, Prime Minister Benjamin Netanyahu yesterday criticized the outcome as giving Iran more time to continue enriching uranium, the process capable of producing fuel for a nuclear bomb.

“The real challenge will come in the ensuing rounds of talks, where these principles of engagement will have to translate into concrete steps,” Trita Parsi, president of the National Iranian American Council and author of a new book, “A Single Roll of the Dice: Obama’s Diplomacy with Iran,” said in an interview. “This applies to the West as well, whose ability to lift sanctions will be as instrumental for keeping diplomacy alive as Iran’s willingness to curb its enrichment activities.”

View of Talks

The talks were called “constructive” by the two lead negotiators, Saeed Jalili, Iran’s nuclear envoy, and the EU’s foreign policy chief, Catherine Ashton. She leads the P5+1 group of five permanent United Nations Security Council members -- Britain, China, France, Russia and the U.S. -- plus Germany.

The P5+1 group hailed Iran’s willingness to talk even though the negotiations didn’t yield any new promises. The process that led to next month’s talks in the Iraqi capital mirrors those on December 2010 in Geneva, where the parties agreed to reconvene the following month in Istanbul. The January 2011 gathering in Turkey broke down without agreement after Iran set conditions to resume talks, including recognition of its right to enrich uranium and the lifting of sanctions.

“My first impression is that Iran has gotten a freebie,” Netanyahu said yesterday during a meeting with U.S. Senator Joseph Lieberman, according to a text message from the prime minister’s office in Jerusalem. “It has five weeks in which it can continue enrichment without any limitation, any inhibition.”

No ‘Stalling’

Asked about Netanyahu’s remarks, U.S. President Barack Obama said the international community won’t let Iran try to use the negotiations to stall for time.

“We’re not going to have these talks just drag out in a stalling process,” Obama said at a news conference in Cartagena, Colombia, at the end of the Summit of the Americas. “But so far at least we haven’t given away anything”

An EU oil embargo against Iran will go into effect July 1, and coupled with U.S. sanctions against the country it may cause output to decline by as much as 950,000 barrels per day in Iran, the second-largest producer in the Organization of Petroleum Exporting Countries, according to an April 12 report by the International Energy Agency.

Oil Markets

Brent crude for June settlement dropped $1.15 to $120.06 a barrel in London at 10:02 a.m. The contract had traded as high as $125.28 per barrel a month ago, up from $105.97 at the end of 2011.

“Anything that gives the overall impression, rightly or wrongly, that the crisis is not as acute as it was a few weeks ago will probably have a psychological impact on the oil market,” said Bruno Tertrais, senior research fellow at the Foundation for Strategic Research in Paris, in a phone interview.

The oil sanctions will add to economic woes such as a halt of international money transfers to Iranian lenders, including the central bank, carried out by the leading worldwide financial messaging service, known as Swift, effective March 17.

The government in Tehran is grappling with as much as a 63 percent drop of the rial on unofficial markets even after the central bank announced a devaluation of 8.5 percent at the official rate in January and authorities cracked down on black- market transactions.

‘Positive Atmosphere’

A delay in the EU ban on Iran oil imports would “make a good deal of difference” by promoting a “positive atmosphere” for further progress in the follow-up talks next month, Russian Deputy Foreign Minister Sergei Ryabkov, the government’s top official at the negotiations, said yesterday in a phone interview.

A lifting of sanctions won’t be on the agenda until there are concrete moves to assure the international community about the intent of Iran’s nuclear program, a senior U.S. official said after talks April 14 on condition of anonymity because the gathering was private.

“The Iranian negotiators have made clear that they won’t give something for nothing -- they want, and probably need, at least a symbolic reward with respect to sanctions in order to deliver,” said Suzanne Maloney, Iran specialist at the Brookings Institution in Washington. “In the current environment, all sides have an incentive to invest in the process, if only to avoid the appearance that diplomacy has come to a dead end.”

Military Action

Obama said a month ago that although the window for diplomacy is “shrinking,” there is “still time and space” for diplomacy and sanctions before considering military action to stop Iran from acquiring nuclear weapons.

The meeting in Istanbul wasn’t about what may or may not happen militarily, the senior U.S. administration official said, while reiterating Obama’s warning and that all options remain on the table.

Iran is enriching uranium to the 20 percent level at an underground facility at Fordo, near Qom. While the amount of highly enriched uranium and the Fordo facility were discussed, among other issues, what steps would be taken on those matters weren’t part of the Istanbul talks, according to two Western diplomats who spoke anonymously.

Further stockpiling of 20 percent enriched uranium “poses a growing threat” that some will be diverted for further enrichment for weapons use, the Institute for Science and International Security, a research group in Washington, said in an April 10 report. Civilian nuclear power plants require 5 percent low-enriched uranium. Iran says it is developing nuclear technology solely to generate power and for medical purposes, such as isotopes for cancer treatments.

‘Sustained Process’

Ashton, Jalili and other diplomats who briefed reporters after the talks stressed the same points: The parties cooperated and made progress in moving to a “sustained process” of step- by-step negotiations with reciprocity for actions to alleviate international concerns about Iran’s nuclear program while granting the country its right to atomic technology.

Jalili stressed that Iranian Supreme Leader Ayatollah Ali Khamenei has declared that the development of nuclear weapons is forbidden under Islamic law.

“The fatwa of the supreme leader is a clear and significant reminder for disarmament, it creates great opportunity for international cooperation,” he told reporters through a translator at the conclusion of the Istanbul talks.

Framework for Proposals

Iran’s state-run Press TV said the talks showed that Obama has rejected calls by his “warmongering” presidential rivals and realized that he “could not tie the fate of the region and the world to the fantasies of some extremist Republicans.”

The two sides assigned Helga Schmid, the EU’s deputy foreign policy chief, and Ali Bagheri, the deputy nuclear negotiator for Iran, to draft a framework for proposals to be taken up at the Baghdad gathering. The agenda for May 23 is “very promising” and “a number of areas for further discussion as a matter of priority” have been identified, Russia’s Ryabkov said.

There is a “grave risk” that Iran is using the negotiations to buy time while seeking to ward off pressure, said Michael Singh, a former senior Iran adviser on the National Security Council under former President George W. Bush who is now a senior analyst at the Washington Institute for Near East Policy.

“U.S. officials’ briefing after the talks were conspicuously vague about the details of what is being asked of Iran,” Singh said. “Allowing the talks to stretch indefinitely into the future would be a mistake.”

To contact the reporters on this story: Emre Peker in Ankara at epeker2@bloomberg.net; Indira A.R. Lakshmanan in Washington at ilakshmanan@bloomberg.net

To contact the editors responsible for this story: Andrew J. Barden at barden@bloomberg.net; John Walcott at jwalcott9@bloomberg.net

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