Obama Defends Iran Dealmaking Amid Dispute Over Relief

Photographer: Brendan Smialowski/AFP via Getty Images

U.S. President Barack Obama has said the proposed first-step accord would “buy some additional months” by slowing Iran’s ability to break out from nonproliferation safeguards. Close

U.S. President Barack Obama has said the proposed first-step accord would “buy some... Read More

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Photographer: Brendan Smialowski/AFP via Getty Images

U.S. President Barack Obama has said the proposed first-step accord would “buy some additional months” by slowing Iran’s ability to break out from nonproliferation safeguards.

The Obama administration is on the defensive days before Iran nuclear negotiations are scheduled to resume in Geneva, as critics in Israel and in the U.S. Congress say Iran would concede too little and gain too much from an easing of international economic sanctions.

President Barack Obama plans to brief Senate leaders and top members of committees with jurisdiction over the issue tomorrow as part of the administration’s effort to hold off congressional action on further sanctions and give the negotiators more time.

Administration officials say they’re close to a first-step agreement that would constrain Iran’s nuclear activities while letting the Islamic Republic continue to produce limited amounts of low-enriched uranium under international monitoring for civilian power reactors. The talks between Iran and six world powers are scheduled to reconvene Nov. 20.

The U.S. officials have declined to disclose their estimates of the value of the proposed sanctions relief or describe the restrictions Iran would accept while negotiations continue on a comprehensive deal. That’s enabled opponents of the deal to frame the debate with their own numbers and worst-case predictions of how fast Iran could create a nuclear weapon.

Estimates ‘Exaggerated’

Some U.S. lawmakers and an Israeli cabinet member have said Iran would reap at least $20 billion in benefits from a partial easing of sanctions. Such figures are “inaccurate, exaggerated and not based in reality,” State Department spokeswoman Jen Psaki said last week.

Among those invited to meet with Obama tomorrow are the chairmen and top Republicans on the Senate banking, foreign relations, armed service and intelligence panels, Caitlin Hayden, a spokeswoman for the National Security Council, said today in an e-mail.

Israeli Prime Minister Benjamin Netanyahu, who has criticized the proposed agreement as “the deal of a century” for Iran, said over the weekend that any easing “would endanger the whole sanctions regime that took years to make.”

“You’re going to get investors, companies and countries scrambling one after the other to try to get deals with Iran, because economies and prices work on future expectations,” Netanyahu said in an interview aired yesterday on CNN’s “State of the Union” program.

Uranium, Plutonium

The proposal on the table in Geneva would cap the quality and quantity of Iran’s enriched uranium and the centrifuges used to make it, and also pause the construction of a heavy-water reactor at Arak, according to diplomats informed about the negotiations. If the reactor becomes operational, Iran could in time extract plutonium from it as an alternative to using highly-enriched uranium if it were to make nuclear weapons.

In return, the U.S. would ease sanctions on petrochemicals, gold, autos and civilian aircraft parts, and Iran would be permitted access to about $3 billion in frozen assets, according to the diplomats, who asked not to be named discussing the closed-door talks.

The Obama administration says core sanctions on oil and banking would remain in place. The oil sanctions alone are costing Iran as much as $5 billion a month in lost revenue, according to U.S. Treasury statistics.

Rounding Up

Israeli Strategic Affairs Minister Yuval Steinitz contends that Iran would gain $20 billion or more in sanctions relief under the proposed deal. He initially was quoted saying Iran would reap $20 billion to $40 billion. In a later interview with Israel Radio, he said the benefit would be $20 billion.

Steinitz said the U.S. administration estimates the value of sanctions relief at $7 billion to $8 billion over the six months of a first-step deal, a number he said he doubled to produce a full-year figure and then rounded up because “the jump to $20 billion isn’t that big.”

American advocates of tougher sanctions, such as Republican Senator Mark Kirk of Illinois, also have said Iran would gain as much as $20 billion from the pending deal without giving up enough in exchange. Lawmakers have cited figures calculated by Mark Dubowitz, a sanctions advocate at the Foundation for Defense of Democracies in Washington.

Oil Production

Representative Ed Royce, a California Republican who heads the House Foreign Affairs Committee, said at a hearing that the deal would provide “immediate and significant sanctions relief, with reportedly as much as $50 billion in frozen oil revenues being released.” He didn’t cite the source of such reports.

Advocates of imposing tougher sanctions, rather than easing them even temporarily, have been using a 10-day break in the negotiations to try to toughen or derail the deal. The critics say the Islamic Republic shouldn’t be permitted to make any fissile material that can be further enriched to fuel a nuclear weapon. Iran says it has the right to conduct enrichment for peaceful purposes.

Iranian President Hassan Rouhani won election in June with a tone of moderation and a pledge to seek an easing of the sanctions that have crippled the country’s economy.

Iran, which was the second-largest oil producer in OPEC before the oil sanctions took effect in July 2012, has dropped to sixth place, according to data compiled by Bloomberg.

Buying Time

West Texas Intermediate crude had its sixth weekly decline last week, the longest stretch of losses in 15 years, as rising U.S. supplies countered speculation that the Federal Reserve will continue its economic stimulus. Today, WTI for December delivery decreased 92 cents, or 1 percent, to $92.92 a barrel at 1:15 p.m. on the New York Mercantile exchange.

Obama has said the proposed first-step accord would “buy some additional months” by slowing Iran’s ability to break out from nonproliferation safeguards and enrich uranium enough to make a nuclear weapon if it decided to do so.

Psaki last week said the divergence between the U.S. and Israel is only on “a tactical level.” The Obama administration, she said, thinks “we need a first step that halts Iran’s programs. Give us time to negotiate this long-term agreement.”

Israel thinks “we should just keep upping the pressure on Iran to get them to capitulate all at once to a long-term agreement,” Psaki said.

Sowing Doubts

In closed-door briefings on Capitol Hill last week, Secretary of State John Kerry asked lawmakers to hold off on more sanctions, saying that acting now could split the U.S. from the five other powers negotiating with Iran -- China, France, Germany, Russia and the U.K. -- or sow doubts in Tehran about the U.S.’s ability to deliver a deal. Kerry declined to say how Iran’s nuclear program would be constrained or detail plans for easing sanctions, according to participants in the meetings.

Robert Einhorn, a member of the U.S. negotiating team until earlier this year, urged members of Congress to refrain from imposing further sanctions for now, arguing that more difficult “choices will have to be faced if their actions inadvertently undercut the best opportunity we’ve had in years for resolving the Iran nuclear issue peacefully.”

“What if new sanctions make it politically impossible for Iran to accept the kind of deal we need?” Einhorn, a nonproliferation specialist and senior fellow at the Brookings Institution, a Washington public policy organization, wrote in a commentary last week.

‘Diplomatic Leverage’

Many members of Congress have said they doubt that Iran can be trusted to uphold its end of the bargain and are frustrated that the administration hasn’t shared more information about the talks.

“Rather than forfeiting our diplomatic leverage, we should increase it by intensifying sanctions until Iran suspends its nuclear and ballistic missile programs,” Kirk said in a letter to Obama last week. It also was signed by Republican Senators Marco Rubio of Florida, John Cornyn of Texas and Kelly Ayotte of New Hampshire.

Some Democrats, including Senator Dianne Feinstein of California, chairman of the Senate Intelligence Committee, have backed the administration’s plea to hold off on imposing more sanctions. Still, even senior Democrats such as Senate Majority Leader Harry Reid of Nevada have expressed skepticism about an interim deal.

“The administration has done a particularly unimpressive job of working the Hill on this issue,” said Suzanne Maloney, an Iran analyst at the Brookings Institution in Washington. “By contrast, the proponents of sanctions have been very engaged.”

To contact the reporters on this story: Indira A.R. Lakshmanan in Washington at ilakshmanan@bloomberg.net; Terry Atlas in Washington at tatlas@bloomberg.net

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

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