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Nuclear Envoys Look to Iran Deal as Netanyahu Goes to Moscow

Israel's Benjamin Netanyahu & Russia's Vladimir Putin
Benjamin Netanyahu, Israel's prime minister, left, speaks as Vladimir Putin, Russia's president, listens during a meeting in the Kremlin in Moscow on Nov. 20, 2013. Photographer: Sasha Mordovets/Getty Images

Nov. 20 (Bloomberg) -- World powers are seeking to end a decade-long dispute over Iran’s nuclear program in face of Israeli objections to a proposed interim deal, as the U.S. said it will continue strictly enforcing oil and banking sanctions.

Foreign ministers from the U.K. and Germany, two of the six nations negotiating with the Islamic Republic over its nuclear program, expressed optimism that an accord may be reached in talks that resumed in Geneva today. U.S. diplomats said disagreements persist and it’s not certain they can reach a deal this week.

“The differences that remain between the parties are narrow and I believe they can be bridged with political will and commitment,” U.K. Foreign Secretary William Hague said today, citing “an historic opportunity to build agreement on how to curb nuclear proliferation.”

The Geneva talks resumed following a 10-day break since the last negotiations failed to seal an accord and diplomats returned to their capitals to consult leaders. Lawmakers in both the U.S. and Iran have criticized the proposed deal, urging a tougher stand and fewer concessions by their side.

“We will not allow this agreement, should it be reached -- and I say should it be reached -- to buy time or to allow for the acceptance of an agreement that does not properly address our core, fundamental concerns,” U.S. Secretary of State John Kerry said today in Washington.

An U.S. official involved in the talks dismissed concerns expressed by Israeli leaders and some American lawmakers that the sanctions regime weakening Iran’s economy will collapse if any trade bans are lifted now as part of a first-stage deal.

Oil Sanctions

The official, who asked not to be named because of the sensitivity of talks, said the U.S. will continue to vigorously enforce penalties for violations of most restrictions, which will remain in place. Those include sanctions on Iran’s oil exports and banking transactions.

The Obama administration doesn’t expect companies to rush back into Iran because of concerns about remaining restrictions and the difficulty of doing business there, the official said. Long-term economic benefits will come only from a comprehensive deal that ensures that Iran’s nuclear program is peaceful, the official said.

The U.S. and the European Union have imposed dozens of sanctions on Iranian trade and financial transactions in the past few years, including on energy, ports, insurance, shipping, automotive, gold and other industries.

The International Monetary Fund last week said Iran needs to “tackle high inflation and restore economic growth.” The IMF projects 42.3 percent consumer price inflation in Iran this year, up from 30.5 percent in 2012.

‘Right Deal’

The accord under consideration would deliver Iran limited sanctions relief in exchange for a verified halt to some elements of its nuclear work. The initial deal would last six months, during which negotiations would continue over a comprehensive accord intended to ensure that Iran won’t make a nuclear weapon. The Islamic republic denies it wants one.

Iranian Foreign Minister Mohammad Javad Zarif and European Union foreign policy chief Catherine Ashton met privately today in Geneva, before wider talks among Iran and six powers. Diplomats from Iran and members of the United Nations Security Council -- the U.S., U.K., France, China and Russia -- plus Germany, are expected to run at least through Nov. 22, organizers said.

“The last round of nuclear talks with Iran showed that a diplomatic resolution is possible,” German Foreign Minister Guido Westerwelle said in a statement from Berlin. “We can succeed at the Geneva talks beginning today to take important first steps.”

‘Peaceful Solution’

Israeli Prime Minister Benjamin Netanyahu, a critic of the proposed agreement, flew to Moscow today for a meeting with Russian President Vladimir Putin. The Jewish state has said it may consider a preemptive strike on Iran’s nuclear facilities if diplomacy fails to ensure Iran can’t make nuclear weapons.

“I want to clear up any doubts -- we want a peaceful solution, a diplomatic solution,” Netanyahu told reporters after his meeting. “Israel has a lot to lose from not reaching a solution. But it has to be a real solution.”

Israel believes “a better agreement” is possible than the offer proposed by the six powers in Geneva, Netanyahu said.

Iran’s Supreme Leader Ayatollah Ali Khamenei, in a speech to the Basij militia today in Tehran, denied that Iran is a global threat and accused Israel of being “a rabid dog” spreading lies about the Islamic Republic. He also said his country wants normal relationships with other countries.

‘No Enmity’

“We want to have friendly relations with all nations, even the U.S.,” Khamenei said on state-run television. “We have no enmity with any country.”

UN monitors verified last week that Iran had halted expansion of its most sensitive nuclear work after Hassan Rouhani became president in August. Iran’s declared nuclear facilities are monitored by the UN’s International Atomic Energy Agency to ensure that materials aren’t diverted to weapons use.

While French Foreign Minister Laurent Fabius helped delay an accord at the last meeting by insisting that there be a pause in construction of the Arak light-water reactor, IAEA monitors reported Nov. 14 that Iran had already stopped building key elements at the facility.

“No major components, such as the control-room equipment, the refueling machine and reactor cooling pumps had been installed,” the IAEA said. Iran and the IAEA signed their first deal in six years on Nov. 11 that gives investigators wider access to Iranian facilities.

Enrichment Right

Iran also has offered to compromise over demands for recognition of its right to enrich nuclear material. There’s “no necessity for its recognition as a right,” because it’s self-evident in the international nonproliferation treaty, Zarif said on Nov. 17, according to Iran’s state-owned Iranian Students’ News Agency. Article 4 of the treaty says countries have an “inalienable right” to nuclear technology.

The Obama administration says the Nuclear Non-Proliferation Treaty gives no explicit right to enrichment, though officials have said it would be possible to navigate terms for Iran to maintain a domestic program, as long as it is verifiably for peaceful purposes only.

To contact the reporters on this story: Indira A.R. Lakshmanan in Geneva at ilakshmanan@bloomberg.net; Jonathan Tirone in Geneva at jtirone@bloomberg.net

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

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