Obama Moves to Prevent Rift With Allies Over Iran Deal

Nov. 25 (Bloomberg) -- Bloomberg chief Washington correspondent Peter Cook explains the details of the nuclear accord reached by world leaders with Iran to limit its nuclear program in exchange for reduced sanctions. He speaks on Bloomberg Television’s “Bloomberg Surveillance.”

President Barack Obama moved to keep a deal with Iran over its nuclear program from being undermined, as Senate Majority Leader Harry Reid said lawmakers would weigh whether new sanctions are needed.

“We cannot close the door on diplomacy,” Obama said during a speech today in San Francisco. “Tough talk and bluster may be the easy thing to do politically,” though it is not right for national security. The agreement reached over the weekend will place the first real constraints on Iran’s nuclear program in a decade, he said.

Reid said today that members would “take a look at this to see if we need stronger sanctions” after the Senate returns from its Thanksgiving holiday break on Dec. 9.

Obama’s aides have been calling lawmakers urging them to hold off passing more sanctions against Iran. The president spoke by phone with Israeli Prime Minister Benjamin Netanyahu, who called the six-month interim deal with Iran “an historic mistake.”

The agreement among the U.S. and other world powers with Iran provides a foreign policy achievement for a president whose standing has been damaged by the flawed rollout of his health-care law. Any political boost may be limited because the accord is temporary and the negotiating partner isn’t trusted by the U.S. public.

Photographer: T.J. Kirkpatrick/Bloomberg

The Iranian nuclear deal terms partially fulfill a promise U.S. President Barack Obama made in his 2008 presidential campaign in which he declared his willingness to negotiate directly with leaders of pariah nations. Close

The Iranian nuclear deal terms partially fulfill a promise U.S. President Barack Obama... Read More

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Photographer: T.J. Kirkpatrick/Bloomberg

The Iranian nuclear deal terms partially fulfill a promise U.S. President Barack Obama made in his 2008 presidential campaign in which he declared his willingness to negotiate directly with leaders of pariah nations.

Diplomatic Breakthrough

For now, the deal averts the risk of another U.S. military action in the Middle East and represents a breakthrough in relations between the U.S. and Iran 34 years after the Islamic revolution broke ties.

Obama and Netanyahu spoke for about a half hour yesterday. The Israeli leader is sending a team to Washington to consult with U.S. officials about the next phase in the talks, according to a text message today from his office. A comprehensive accord must dismantle Iran’s “military nuclear capability,” Netanyahu said in the message.

What the Deal Means for the Next Six Months

In his conversation with Netanyahu, Obama “underscored that the United States will remain firm in our commitment to Israel, which has good reason to be skeptical about Iran’s intentions,” Josh Earnest, a White House spokesman, told reporters traveling with Obama.

Schumer ‘Disappointed’

Some Democratic lawmakers with significant Jewish constituencies have joined in criticism of the agreement, including Senator Charles Schumer of New York, who said he was “disappointed” by a deal that “does not seem proportional.”

Schumer, the Senate’s third-ranking Democrat, said in a statement yesterday that it’s now “more likely” that Democratic lawmakers will join Republicans in passing legislation to impose more sanctions on Iran. Obama warned in announcing the deal that such a step might either disrupt the agreement or distance the U.S. from allies needed to maintain the remaining sanctions.

Photographer: Abir Sultan/Pool via Getty Images

Israeli Prime Minister Benjamin Netanyahu said Israel has “the right and obligation” to defend itself and won’t allow Iran to develop the capability to build atomic weapons. Close

Israeli Prime Minister Benjamin Netanyahu said Israel has “the right and obligation” to... Read More

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Photographer: Abir Sultan/Pool via Getty Images

Israeli Prime Minister Benjamin Netanyahu said Israel has “the right and obligation” to defend itself and won’t allow Iran to develop the capability to build atomic weapons.

Reid, a Nevada Democrat, said Senate Foreign Relations Committee Chairman Robert Menendez and Banking Committee Chairman Tim Johnson will study the issue and hold hearings if necessary.

“If we need work on this -- if we need stronger sanctions -- I am sure that we will do that,” Reid said in an interview on the “Diane Rehm Show,” which airs on NPR.

Six-Month Window

Menendez, a New Jersey Democrat, said he expected any legislation would provide a six-month window, the time span of the interim agreement, before taking effect.

“We’re going to come up with a new round of sanctions that really defines the end game,” Senator Lindsay Graham, a South Carolina Republican who is critical of the accord, said today on CNN. “The end game is to dismantle. The end game should stop enrichments.”

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Earnest said a move by Congress to impose new sanctions “would actually undermine the international coalition that we built.” The administration is urging members of Congress to “act strategically,” he said.

David Cohen, U.S. Treasury Under Secretary for terrorism and financial intelligence, maintained that additional action by Congress isn’t necessary.

“Iran knows, the world knows, that Congress stands ready to impose new sanctions if the Iranians do not follow through on this deal or if we don’t get a comprehensive agreement in six months,” Cohen said today on Bloomberg Television. “So I don’t think it is necessary, at this point, for Congress to act.”

The U.S. will continue to enforce the core sanctions, including those on oil and financial transactions, he said.

Potential Effects

The potential implications of legislation to boost penalties against Iran is unclear, because several measures that lawmakers have discussed wouldn’t take effect until after the interim agreement expires. Congressional sanctions legislation also typically includes provisions permitting the president to waive the law.

The accord reached in Geneva broke a decade-long diplomatic stalemate, setting limits on Iran’s nuclear program in exchange for as much as $7 billion in relief from sanctions over six months.

Iran agreed to curtail its nuclear activities and in return won an easing of some curbs on oil, auto parts, gold and precious metals. The deal, which is reversible, releases some of Iran’s oil assets and allows it to keep exporting crude at current levels.

Oil Reserves

The Persian Gulf nation has the world’s fourth-largest proven oil reserves. Brent crude, the benchmark for half the world’s crude, slid as much as 2.7 percent today. Brent for January settlement decreased 42 cents, or 0.4 percent, to $110.63 a barrel at 12:14 p.m. on the London-based ICE Futures Europe exchange after falling to $108.05. West Texas Intermediate for January delivery fell 88 cents, or 0.9 percent, to $93.96 a barrel on the New York Mercantile Exchange.

The terms partially fulfill a promise Obama made in his 2008 presidential campaign, during which he provoked criticism from Democratic primary rival Hillary Clinton and Republicans for declaring his willingness to negotiate directly with leaders of pariah nations.

Polls taken before the deal was announced suggest the framework fits the mood of a U.S. public weary of wars in the Middle East after unpopular military interventions in Iraq and Afghanistan.

Americans by 64 percent to 30 percent said in an ABC-Washington Post poll taken Nov. 14-17 they would support lifting some economic sanctions on Iran in return for restrictions on the country’s nuclear program that made it “harder” to develop weapons. The public backed such a deal even though 61 percent said they were “not confident” it would prevent Iran for developing nuclear weapons.

Approval Rating

The same poll showed Obama’s approval rating at 42 percent, with 55 percent saying they disapproved. That’s compared with the president’s 51 percent approval rating in a May ABC/Post poll. The decline in his approval ratings are matched by a rise in opposition to his health-care law, according to the poll.

Jim Manley, Reid’s former press secretary, said the agreement isn’t likely to provide much political boost for the president.

“I’m not convinced the American people as a whole are paying much attention” to Iran, Manley said.

Biggest Challenge

Obama’s biggest challenge may come from the closest U.S. ally in the Middle East.

The administration’s diplomatic outreach to Iran has created “a significant rift in the U.S.-Israeli relationship,” Aaron David Miller, a vice president at the Wilson Center, a Washington policy group, said yesterday.

Miller said Netanyahu and Obama see Iran in fundamentally different ways and that their differences could deepen “once the administration gets into selling the agreement because it will have even more of a stake in protecting and selling it.”

Investors showed no concern that the agreement could hurt Israel. The country’s TA-25 Index (TA-25) fell 0.2 percent to 1,350.13 after a gain yesterday. The yield on the government’s 4.25 percent benchmark bond due 2023 fell six basis points yesterday, or 0.06 percentage point, to 3.56 percent and didn’t move at all today.

Miller was among the analysts who said they expect Israel will continue to lobby Congress to implement tougher sanctions.

“There’s zero space in Congress to give Iranians the benefit of the doubt,” Miller said. “Statements by Khamenei about ‘rabid dogs’ isn’t going to help matters,” Miller said, referring to a comment the Iranian Supreme Leader Ayatollah Khamenei made about Israel.

To contact the reporters on this story: Mike Dorning in Washington at mdorning@bloomberg.net; Margaret Talev in Washington at mtalev@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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