U.S. Won’t Ease Oil Sanctions at Iran Nuclear Talks

Negotiators headed to Baghdad for a second round of talks on Iran’s nuclear program won’t be giving Iran the relief it is seeking from oil and financial sanctions hobbling its economy, according to Obama administration officials and Western diplomats.

Instead, the U.S. and the five other major powers that will hold talks tomorrow with Iran in the Iraqi capital have agreed on confidence-building measures they may offer in response to Iranian concessions, said several U.S. officials and Western diplomats who spoke on condition of anonymity because of the sensitivity of the issue. The five other countries represented at the table are the U.K., France, Germany, China and Russia.

U.S. and European Union sanctions aimed at the No. 2 producer in the Organization of Petroleum Exporting Countries are crippling Iran’s ability to export and get paid for crude, its leading source of revenue. The U.S. and European Union are in no hurry to ease that pressure before their concerns about Iran’s nuclear program are addressed, Obama administration officials and Western diplomats said.

The six powers are willing to offer Iran something: assistance to its civilian nuclear program and an easing of restrictions that have blocked it from getting spare parts for civilian aircraft, U.S. officials said.

“This is a reciprocal process. It’s very difficult for the U.S. to get an Iranian concession now and give a U.S. concession in three months,” said Trita Parsi, author of “A Single Roll of the Dice: Obama’s Diplomacy with Iran.”

“In order for them to get something they have to give something,” said Parsi, president of the National Iranian American Council.

2009 Offer

State Department officials said the offer may be similar to a failed 2009 plan to take Iran’s stockpile of 19.75 percent uranium and process it into fuel rods that would be sent back to Iran for use in the Tehran Research Reactor, which makes medical isotopes.

While medium-enriched uranium is needed to make medical isotopes to treat cancer patients, it also can be enriched further to weapons-grade levels. The international community wants Iran to halt its 19.75 percent enrichment and ship out its stockpiles -- steps that Iranian officials have signaled in recent weeks they are willing to consider.

EU foreign policy chief Catherine Ashton has said the six nations engaged in talks hope Iran will offer concrete proposals responding to concerns that its nuclear program is a cover for a weapons effort. Still, U.S. officials and Western diplomats said no one expects Iran to address all concerns about its nuclear activities in this meeting.

Additional Sanctions

U.S. financial sanctions on nations that fail to reduce significantly their Iranian oil imports will go into effect on June 28 as planned, as will a July 1 oil embargo blocking Iranian crude from entering the EU, the officials said. In voice vote late yesterday, the U.S. Senate approved a bill to impose additional financial and energy-related sanctions on Iran.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, said added sanctions may help convince Iranian leaders “that the costs of pursuing this weapon outweigh any perceived benefit.”

Israeli and U.S. leaders have raised the threat of military action against Iranian nuclear sites if the Tehran government fails to take steps to assure the world that it is not seeking to develop nuclear weapons or the capacity to do so.

Some observers of the negotiations, including Israeli Prime Minister Benjamin Netanyahu and numerous U.S. lawmakers, have said they believe Iran is using negotiations to buy time to advance suspected efforts to acquire a nuclear weapons capability.

‘Clear Demands’

Iran “wants to destroy Israel” and “the world’s leading nations must show determination and not weakness,” Netanyahu said yesterday in a text message sent to reporters. “They don’t have to make concessions to Iran. They must make absolutely clear demands.”

Netanyahu said Iran “must stop all enrichment of nuclear material, it must get rid of all nuclear material that has already been enriched, and it must dismantle the underground nuclear facility at Qom,” the site of a once-secret facility known as Fordo where Iranians have been producing medium- enriched uranium.

While Iran insists its program is solely for civilian energy and medical research, it has refused to comply with demands for greater transparency from the United Nations Security Council and inspectors from the International Atomic Energy Agency.

Staying Tough

Mark Dubowitz, a sanctions specialist who has advised Congress and the Obama administration, told Congress last week he worries that Iran’s supreme leader Ayatollah Ali Khamenei will play for time “by dangling some incremental nuclear concessions before the negotiators, such as the cessation of 20 percent uranium enrichment.”

“This concession will be portrayed as an important confidence-building measure, putting pressure on the administration and its partners for a similar gesture in return,” Dubowitz said in testimony before the House Foreign Affairs Committee.

During the May 17 hearing, Dubowitz urged lawmakers who have supported tighter sanctions to pressure the administration not to offer “too much relief for too few concessions.”

At the same hearing, Mark Wallace, president of United Against Nuclear Iran, a New York-based advocacy group, said Congress should send a strong message to the administration by passing stronger sanctions on Iranian banking, insurance, disclosure and shipping.

Verifiable Concessions

Wallace urged lawmakers to make sanctions more “airtight” and said the administration can be more aggressive about enforcing an economic blockade on Iran and pressing EU allies “to not walk back those very important steps that they’ve taken.”

Dubowitz, executive director of the Washington-based Foundation for Defense of Democracies, warned that U.S. and EU negotiators may be tempted to offer “sanctions relief in the shadows.” In an interview, Dubowitz said that might take the form of turning a blind eye to discounted Iranian oil exports for struggling EU nations, such as Greece, or setting a lower standard for compliance with some U.S. sanctions.

Obama administration officials and Western diplomats said they have no plans to ease oil sanctions unless Iran dismantles illicit aspects of its nuclear program.

Iran would have to demonstrate significant verifiable concessions before the U.S. and European Union would consider easing penalties that have crippled Iran’s ability to export oil, the officials said. Iran earned about $100 billion from oil exports last year, according to International Monetary Fund.

Halting Enrichment

While Iranian officials have claimed in state-run media reports that the international community has accepted Iran’s right to enrich uranium, U.S. officials and Western diplomats say the six nations are demanding a halt to all domestic enrichment by Iran.

Three Obama administration officials said no decision has been made on whether a lower level of uranium enrichment, as much as 3.5 percent, might be acceptable in the future if Iran were to comply with the Nuclear Non-Proliferation Treaty and allow full transparency to dispel suspicions about a covert atomic bomb program.

Parsi said in an interview he believes the administration is maintaining a tough bargaining position to strengthen its hand with Iran and with Congress, which is likely to oppose any softening of the penalties.

“Instead of presenting a hypothetical American concession in return for a hypothetical Iranian concession, the White House is keeping quiet publicly,” Parsi said. “They’ll go to table, and then come back to Congress and say this is what we got. If they get something significant, it’s easier to spin it as a win and not focus on what they give away.”

To contact the reporter on this story: Indira A.R. Lakshmanan in Washington at ilakshmanan@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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