Obama Says U.S. Loses Nothing by Waiting on Iran Talks

U.S. President Barack Obama defended offering Iran “modest” relief on sanctions in exchange for progress on nuclear talks and urged Congress to hold off on imposing more economic penalties.

“We can dial those sanctions right back up” if Iran doesn’t live up to an agreement, Obama said today at a White House news conference. “If we’re serious about pursuing diplomacy, then there’s no need for us to add new sanctions on top of the sanctions that are already very effective and that brought them to the table in the first place.”

Obama made his comments amid criticism from lawmakers and objections by Israeli Prime Minister Benjamin Netanyahu to a potential deal between world powers and Iran in Geneva talks, which are scheduled to resume next week. Secretary of State John Kerry and other administration officials are lobbying lawmakers to pause in acting on legislation adding to sanctions.

“At this time, I see no reason to let up the pressure,” Pennsylvania Democratic Senator Bob Casey said today in a statement, reflecting the president’s challenge in gaining support even from his own party.

Until Iran agrees to suspend all uranium enrichment and take other measures demanded by the United Nations Security Council, Casey said, “I will urge my colleagues on the banking committee to move forward with a package of additional sanctions.”

Limited Relief

Kerry said last week that negotiators in Geneva were very close to an agreement that would grant Iran limited sanctions relief in return for curtailing key nuclear activities. The goal is a first-step accord that would keep Iran from getting closer to a nuclear weapons capability during subsequent talks toward a comprehensive agreement to guarantee that Iran’s activities are exclusively peaceful.

In Vienna, UN nuclear monitors reported today that Iran has stopped installing machinery to boost production capability at its uranium-enrichment facility even as the stockpile of its most sensitive nuclear material grew to a record. The Persian Gulf nation also slowed construction of a heavy-water reactor at Arak, according to inspectors from the International Atomic Energy Agency.

Iran hasn’t given a reason for the slowdown, which diplomats interpreted as a positive signal from the government. The unilateral action could be reversed.

Military Option

Netanyahu has advocated further increasing sanctions pressure on Iran until it agrees to irreversibly give up its uranium enrichment operations, which could be used to produce fuel for nuclear weapons if the nation were to break out of international monitoring. Israel also wants construction terminated on a reactor at Arak, which could provide plutonium, an alternative route to a weapon.

Obama said an attempt to resolve the Iranian nuclear issues through negotiations is better than the alternative of military action.

“No matter how good our military is, military options are always messy, are always difficult, always have unintended consequences,” Obama said.

Sanctions have reduced Iran’s oil revenue to “about $40 billion to $45 billion” a year, from as much as $120 billion a year, Kerry said today on MSNBC. In addition, that money is frozen in banks under banking sanctions, he said. Iran was the sixth-largest oil producer in OPEC last month, according to data compiled by Bloomberg.

Brent crude for December settlement, which expired today, climbed 1.3 percent to end the session at $108.54 a barrel on the London-based ICE Futures Europe exchange.

‘Modest Relief’

The administration has been briefing U.S. lawmakers in the attempt to get them to hold off on additional sanctions. Some members of Congress and Netanyahu said that last week’s talks in Geneva gave Iran the promise of relief without forcing an end to Iran’s uranium enrichment.

“We would provide very modest relief” at the margins of sanctions while leaving in place core sanctions on oil, banking and finance, Obama said. That approach allows the U.S. “to test how serious are they,” while if Iran isn’t serious “we will have lost nothing.”

“Let’s see if this short-term Phase One deal can be completed to our satisfaction” that Iran is not advancing its program, he said. “We can buy some additional months” in terms of Iranian breakout capacity.

‘Don’t Agree’

Sanctions advocates including Israel say they worry that any easing may lead to the sanctions regime unraveling beyond the limited measures, easing economic pressure on Iran for further concessions.

Kerry, describing a phone call this morning with Netanyahu, said “we just don’t agree” with the Israeli leader that further sanctions at this point would force Iran to agree to give up all uranium enrichment activity.

Speaking on MSNBC’s “Morning Joe” program, Kerry said that action by Congress now would risk the progress made in Geneva. Iran “may interpret the congressional reaction of wanting to increase sanctions as bad faith on our part, and unwillingness to in fact negotiate, and it may drive the hardliners even more into a commitment that they have to have the weapons,” Kerry said.

Iran is negotiating with a group known as the P5+1, made up of the five permanent members of the UN Security Council -- the U.S., U.K., France, Russia and China -- plus Germany.

Before it's here, it's on the Bloomberg Terminal.