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Iran Nuclear Deal Takes Shape, Powers Poised to Expand Ties

Photographer: Ilia Yefimovich/Getty Images

Susan Rice, U.S National Security Adviser, gives a speech to the press at the Palmachim Airbase in Rishon LeZion, Israel on May 9, 2014. Rice was in Israel last week, where she tried to show Prime Minister Benjamin Netanyahu Washington’s determination to prevent a nuclear-armed Iran. Close

Susan Rice, U.S National Security Adviser, gives a speech to the press at the Palmachim... Read More

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Photographer: Ilia Yefimovich/Getty Images

Susan Rice, U.S National Security Adviser, gives a speech to the press at the Palmachim Airbase in Rishon LeZion, Israel on May 9, 2014. Rice was in Israel last week, where she tried to show Prime Minister Benjamin Netanyahu Washington’s determination to prevent a nuclear-armed Iran.

Diplomats will start drafting a final accord this week to resolve a decade-long standoff with Iran that would rescind oil and banking sanctions in return for limits on the Islamic Republic’s nuclear program.

The five days of scheduled talks in Vienna will be the longest round of haggling since November, when diplomats agreed to a temporary accord. U.S., Russian and Iranian officials have said drafting should begin this week to meet a July 20 target.

“The parties to the negotiation are somehow condemned to succeed,” Francois Nicoullaud, a policy analyst and France’s former ambassador to Iran, said in an interview. “On the Western side, there is no real Plan B.”

A stream of diplomats, including the Austrian and Swedish foreign ministers, and international companies have headed to Iran over the past few months. Six hundred energy companies attended a Tehran investment conference last week. Russia and Iran are negotiating multiple technology and energy trade agreements.

Dealing With Iran

“Everyone understands that failure can have great consequences,” said Ariane Tabatabai, a nuclear security researcher at Harvard’s Kennedy School of Government. “The Iranian leadership wants a deal and so does the White House.”

While President Barack Obama has given the talks only a 50 percent chance of success, negotiators led by European Union foreign policy chief Catherine Ashton and Iranian Foreign Minister Mohammad Javad Zarif have raised hopes by showing willingness to compromise.

Modified Reactor

Iran agreed to modify a reactor in Arak to lower its plutonium output, which could be used in nuclear weapons, and has offered greater access for International Atomic Energy Agency inspectors. The U.S. has stepped back from demands that Iran cease all uranium-enrichment activities.

IAEA officials are meeting with their Iranian counterparts today in Vienna as follow-up to a February arrangement granting inspectors wider access, the agency said in an e-mail. As part of that deal, Iran offered more detail about development of dual-use detonators that can be used used for petroleum exploitation and nuclear weapons.

“I doubt that the Western parties will seek to exploit the possible-military-dimension issue to cause a train-wreck,” said the U.K.’s former IAEA ambassador, Peter Jenkins, in an e-mail interview. “On the contrary I can imagine them accepting some Iranian explanations.”

Israeli Talks

The top U.S. negotiator at the talks, Wendy Sherman, joined National Security Adviser Susan Rice last week in Israel, where they tried to show Prime Minister Benjamin Netanyahu Washington’s determination to prevent a nuclear-armed Iran.

Netanyahu, who called the Geneva deal a “historic mistake,” has insisted the Islamic Republic’s nuclear program be dismantled to stop Iran from building a nuclear weapon.

That view isn’t shared by Israel’s former head of nuclear energy, who said Iran is a decade away from a nuclear bomb.

“The main issues are still ahead of us, but it is definitely possible to be optimistic,” said Uzi Eilam, the former head of the Israel Atomic Energy Commission, in an interview published in Israel’s Ynet. “I am not sure that Iran wants the bomb -- it could be enough for them to be a nuclear threshold state.”

Iranian Hardliners

In Iran, hardliners continue to oppose the talks. Opponents rallied last week in Tehran under the banner, “we’re worried,” and criticized the Geneva deal as being “weak.” Some Iranian lawmakers have tried to censure Foreign Minister Zarif for recognizing the Holocaust.

“The big issue facing the two sides is not the technical details, but how each side will handle selling the deal back home,” said Vali Nasr, dean of the Paul H. Nitze School of Advanced International Studies at Johns Hopkins University.

Unresolved issues include Iran’s enrichment capacity, sanctions relief and the direction of future nuclear research and development in Iran, said Ali Vaez, senior analyst at International Crisis Group.

“Some issues will be left until the last minute,” Vaez said. “We can judge the progress by what proposals the two sides bring to the table.”

Setting enrichment limits is still one of the thorniest issues, according to Ferenc Dalnoki-Veress, a nuclear physicist analyzing non-proliferation at the James Martin Center in Monterrey, California. Rather than capping the number and types of machines that Iran uses, officials should focus on regulating output, he said.

‘Upper Limit’

“Improved centrifuges are like faster vehicles making it easier to get to the final goal,” Dalnoki-Veress said in an interview. “It is important to set an upper limit to the goals that Iran can reach rather than the number of centrifuges.”

The U.S. Congress, which has already passed dozens of sanctions against Iran, has threatened to mete out more punishment if negotiations fail.

That hasn’t stopped Iran and Russia from forging trade ties. China has also vowed to boost defense cooperation with Iran.

“Russia and Iran didn’t start working on the deals because they expected the failure of talks,” said Sergey Batsanov, a former Russian arms-control diplomat. “Russia has its own long-term interests -- to capitalize on good relations now and secure its positions in the Iranian market later.”

To contact the reporters on this story: Jonathan Tirone in Vienna at jtirone@bloomberg.net; Kambiz Foroohar in New York at kforoohar@bloomberg.net

To contact the editors responsible for this story: Andrew J. Barden at barden@bloomberg.net; Alan Crawford at acrawford6@bloomberg.net Leon Mangasarian, Eddie Buckle

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