JCPOA's Uncertainty Exacerbates Iran's Worsening Economic Problems

The Joint Comprehensive Plan of Action (JCPOA) agreement between Iran and the P5+1 was, at the time, widely believed to be a turning point for the Iranian economy, but this has not borne out. Even though it is just one piece of a complex iranian economic situation, the JCPOA is so significant that uncertainty over the fate of the deal has curtailed potential progress. With the shale oil boom keeping the price of petroleum significantly below previous highs, and even minimum budgetary breakeven expectations, Iran’s leading industry is on unsteady ground. The French oil company Total signed a significant oil deal with Iran, but many other firms in the oil industry, and in other sectors, remain hesitant. Boeing and Airbus have committed to major deals, but despite this, Iran’s economic outlook has not improved as expected. Much was made of the stream of foreign trade delegations in Iran following the implementation of the JCPOA, but there has not been a rush to invest in Iran. Substantial geopolitical risks, in addition to pre-existing issues, remain unaddressed, in large part due to uncertainty over the fate of the JCPOA, which faces a considerable test next month.

In May, President Trump will decide whether he wishes to certify Iran’s compliance with the JCPOA under the Iran Nuclear Agreement Review Act, or to refuse to certify, and to withdraw the United States from the accord. He has attempted to be the “anti-Obama” whenever possible - at least rhetorically - but is often hamstrung by either a failure to act decisively, or by the various distractions and domestic and foreign political dilemmas. With pressure on Trump building as the Mueller investigation continues, he will feel increasingly cornered and is likely to lash out in some manner. This is just as likely to be in the form of an angry Twitter rant as in anything substantive, but leaving the Iran Deal remains a realistic possibility. Trump has demonstrated a stubborn persistence on several issues, and the relative ease of an executive decision means there are fewer barriers between him and nullifying the United States’ involvement in the JCPOA, as much for domestic appeasement as over legitimate grievances with the deal.

The Iranian economy has faced a series of hardships in recent years; many self-made. Iran’s ongoing economic mismanagement has led to significant protests - most recently this past winter when nationwide demonstrations rocked the country - but so far such events have lacked any momentum and do not present a serious threat to the government. On April 9th, the Iranian government took a bold - and perhaps desperate - step to halt the slide of the Iranian rial by setting a new “official” exchange rate with the American dollar. At the same time, the government also outlawed the use of any other (black market) rate. Following the 35% drop in value in a week, any further instability would be dangerous for a regime facing an already restive populace.

While alluring as a potentially large and lucrative market, Iran remains as risky, if not more so, than other developing countries. Much of this is due to the uncertainty as to what President Trump may do in May, but other domestic and regional issues, including the IRGC’s influence in important commercial sectors, and the ongoing conflict in Syria, are also important. For firms wishing to invest in Iran’s potentially lucrative modernization, the decision over the JCPOA’s fate will signal either a cautious yellow light, if the deal is upheld, or a steadier red light, if President Trump yet again refuses to certify the accord. Refusal to certify the deal for a third time makes not only American firms, but also European and Asian ones, much more wary of doing business in a country that exposes them to American censure. Congress would be likely to further sanction Iran, increasing barriers to trade and business. Further prolonged uncertainty over the fate of the deal and the implications for the Iranian economy and populace puts additional pressure on an already strained Iranian financial system.

Questions about the Iranian Nuclear Weapons Archive

Yesterday, Israeli Prime Minister Benjamin Netanyahu made a dramatic announcement about a daring Israeli intelligence operation to steal over 100,000 documents from a secret Iranian nuclear weapons archive. The documents confirm what we have known for years, and what the IAEA has known since 2011 - that Iran had a nuclear weapons program. Netanyahu did not provide a straight answer on whether Iran continues to have an active nuclear weapons program—something that would clearly violate the JCPOA—or if Iran paused the program at some time. The IAEA has said that Iran's program is not active.

The reaction to Netanyahu's press conference was predictable. Once again, I find myself disappointed as the good questions, the PMD agreement questions, remain an afterthought.

The IAEA, in their report about Iran's PMDs, stated that "all the activities contained in the "Road-map" were implemented in accordance with the agreed schedule". The organization effectively gave a thumbs up to Iran, saying that things are ok from the past, and that we can move forward. The new documents raise questions about what the IAEA okayed, what they knew about Iran's nuclear weapons research, and what the separate agreements referenced in the Road-map include. Did the IAEA agree to let Iran store its previous work? Was the IAEA aware that work had been saved? Did the IAEA order Iran to destroy their research? The PMD report, released in 2015, is very detailed, but without the original documents (from both the IAEA and Iran), it is nearly impossible to compare the report to what Netanyahu revealed yesterday.

While the focus of the JCPOA critics rancor about PMDs has mostly revolved around the Parchin agreement, all of these issues are important, and any obfuscation by Iran and/or the IAEA would be of interest. As I noted in 2015, the IAEA is facing a crisis of confidence; if they cannot be trusted to do their job, what is their utility?

It does not help that many critics are either lazy or deceitful. Then Representative and current Secretary of State Mike Pompeo, along with Senator Tom Cotton, claimed that they had not heard about side deals when they met with IAEA Director-General Yukiya Amano days after the accord was signed. The "Road-map" containing the reference to these side deals is noted explicitly in the text of the JCPOA, and they were all announced and made public on days before this meeting.

There are real and serious questions to ask, but instead, superficial questions, gross insinuations, politicking, and deceptive bombast are all the critics seem able to come up with.

IRGC and Other Iranian Cyber Activities

Earlier this week the US government publicly went after the IRGC. President Trump's Nowruz statement on Monday was mainly about the evils of the IRGC rather than the holiday itself. On Friday Deputy AG Rod Rosenstein announced indictments for a number of Iranians with the IRGC for hacking.

A third incident, the naming of John Bolton as the new national security adviser to President Trump can also be seen as an anti-IRGC move, given Bolton's belligerence towards the regime and his affinity for the Marxist cult the MeK.

Whether this is coincidental or not is hard to discern, given the chaotic and disjointed nature of the administration and so it is the hacking announcement that interests me most.

A few years back I'd noticed a series of pro-Iranian bots tweeting about the Iranian Supreme Leader Ayatollah Khamenei's "Letter to the Youth in Europe and North America". I wrote about this in detail noting how the bots and message evolved. It was not particularly sophisticated, did not gain much traction, but polluted trending and other hashtags on various social media. Another followup campaign titled "Powerful_Iran" was covered by the BBC.

The hacks and bots seem connected, and are clearly linked to the regime in some manner, but the details are unclear. The distinction between the more skilled hackers and the Twitter bots makes me curious about the Iranian cyber programs, how they are set up, who runs them, and if there are multiple organizations or factions running them. I would be surprised if the recently indicted hackers are directly responsible for the older bot networks, but I'd also not rule it out.

Obama Appeasing Iran?

The Iran Deal has been litigated to death; mostly on social media, but also in the media. Recently, Politico published a new article by Josh Meyer with new allegations about the Obama administration appeasing Iran via lenience towards Hezbollah. The article is long, but can be summed up as such: the DEA had a task force targeting Hezbollah's drug trafficking operation and related activities and there was an unwritten order from the top down (the author insinuates from the very top) to let Hezbollah off the hook as the possibility of a deal with Iran was of greater concern.

As expected, this has led to the usual suspects re-litigating the Iran Deal, and, per usual, the ratio of substantive commentary to ad hominem attacks is unfavorable. This is not worth spending much time on, as the quality of arguments from both sides tend to be limited, though it should be noted that the allegedly mighty "echo chamber" has chimed in vociferously against their usual opponents.

As I noted in the past, the "echo chamber", portrayed by the right as a well-oiled and effective machine, was most active during a period when support for the Iran Deal dropped by 50%. The focus, unfortunately, has been based on the usual tired tropes rather than anything substantive.

One argument worth mentioning is from Ilan Goldenberg. A former Obama official and pro-JCPOA intellectual, he asked Meyer a simple question: 'do you have any proof that any of this is explicitly because of the Iran Deal'. Goldenberg acknowledges flaws in the Obama approach to Iran, and that Meyer's background investigative work is great, but points to this failure to produce anything explicitly linking the two. Meyer has not yet responded.

There is in fact evidence that Obama's administration appeased Iran specifically because of the Iran Deal negotiations. We have it on the record that Secretary of State John Kerry and/or President Obama himself blocked the release of the updated Iran 1951-1954 Foreign Relations of the United States (FRUS) up until the inauguration of President Trump in January 2017 (it was then discreetly released in the summer) The belief is that the ongoing nuclear negotiations were sensitive and releasing more information on the 1953 coup in Iran which the United States, Britain, and various Iranians were involved in, would be a literal deal breaker. For whatever reason this appeasement continued years after the deal was signed.

While it is unclear how far the administration went to facilitate the deal, how much leeway they gave Iran, Hezbollah, and Iran's other proxies, there is at the moment, little substantial and attributable evidence of appeasement aside from the FRUS incident.

New CIA/State Department Docs on the 1953 Iran Coup (Part 7)

This is part 7 of my series on the new CIA and State Department docs on the 1953 Iran Coup. 

So many questions still remain about the successful and unsuccessful Iranian coups in August, 1953. Many of them may never be answered, including the curious question why John Kerry's State Department delayed the release of the updated FRUS collection.

It has been established that Kerry himself, heavily involved in the Iran nuclear talks, was vehemently opposed to the release, even up to the inauguration of President Trump. President Obama may have also been involved, but this isn't clear from the record.

In 2014 the delay was credited to the sensitivity of the ongoing nuclear talks, yet through 2017, almost two years after the nuclear agreement was finalized, they still worked to keep it from being released. What were they concerned about?

Others have theorized that this was because of the hidden British role in the 1953 coup attempts, or perhaps details over the United States role. I have argued that this doesn't make sense as (despite the reporting on this release) the role of the United States, and the UK has been well-known for decades. Two different American presidencies admitted a role (Clinton, and Obama), and the CIA formally acknowledged its role in 2013.

I asked:

What would be more infuriating for the regime, to show that the US was involved (which is what they are already furious about), or that major regime figures, or their direct influences played a role in fomenting the coup?

As the evidence shows, the role of Ayatollah Kashani, was exactly as I theorized, and perhaps even more damning than I expected. His work collaborating with key coup figures like Zahedi, encouraging quietist clerics to back the Shah, working to make his own coup as early as September 1952, hints that this is what Kerry (and Obama?) hoped to keep hidden from the Iranian public. There was backlash on Twitter especially from Iranian reformists who tweeted about the "Kashani Coup", demanding removing his name from a Tehrani street.

Others may still argue that the details of role of the United States and Britain are the reason why Kerry was so concerned about the release. However, the documents are still classified in key points, so these details are obscured. Additionally, the declassification review was completed in 2014, so there were no changes made to this latest edition. It would not have been the case that Kerry personally went in and classified British or American involvement in the coup.

Did Kerry not know what was in the documents? Was he mistaken in thinking parts that remain classified were to be released? Or was he protecting the Iranian regime, trying to keep them from being insulted by proving a direct connection to the coup which the regime and its apologists point to as the source of Iranian/American animosity?

There will be a part 8 and probably 9, but they won't happen until I thoroughly read sections 1, 2 and 4. 

New CIA/State Department Docs on the 1953 Iran Coup (Part 6)

This is part 6 of my series on the new CIA and State Department docs on the 1953 Iran Coup. 

One of the problems I noticed when I was writing a term paper on Mossadeq and relations with the United States during my MA was how incomplete the record was. There were massive gaps at key moments, leaving so many questions unanswered. There were times when the FRUS collection skipped hundreds of cables, for example 3898 (April 4, 1953), to 4027 (April 15, 1953). It would be inconceivable for there to have been zero communications for 11 days, and the gap of 127 in the cable order seems to indicate that there were in fact a ton missing. 

When I visited the National Archives I was able to find a few important ones, yet still many gaps were left. The release fills more of the gaps, yet most of the relevant documents I found at the Archives are not included in the new release. There is one exception, cable #348, dated August 16. I wrote about it at the time, identifying it as the most interesting cable of those that I had found at Archives that weren't in FRUS. 

The number of documents withheld makes it nearly impossible to determine the precise nature of the events leading up to the coup. While we have a rough estimate, we do not know why the decision was made, how they did it, what else happened between the 16th and 19th of August, which third parties were involved and how involved they were.

The decision to overthrow Mossadeq appears to have been made April 2, 1953. Unfortunately there is no record of the meeting between Roosevelt and Dulles of this, yet an April 4th memo references the meeting. 

Moving forward, there are documents "released" yet entirely classified, namely those detailing the coup plans. The June 1st "Summary of Operational Plan" for example is completely classified, and no details are provided other than the date, location, classification, and where the copy of the file is located.

Other documents like monthly reports are also mostly redacted, 64 years after the fact.

Important files from the CIA have been published, yet we know there are also important pieces missing. The best example is as follows. Document 285, and 286, both dated 19 August, 1953. The file number for 285 is TEHE 737.1 and 286 is TEHE 742.1. The order again is sequential so TEHE 738-741 are not public. What is striking here is that the first one is almost despondent and scrambling to salvage the situation. The second is short and victorious. What happened between the two telegrams? 

Even the rundown of what happened after the coup is littered with classified material that hasn't been released. 

These details are vitally important, and yet still the full truth is withheld. The likelihood that the relevant parties are alive today is slim, why do they still wish to keep this information secret?

(I also highlighted the line about Communism. The Foreign Policy piece tried to make a big deal about the oil angle, yet as this document clearly shows, the Americans WERE interested in ideology. Whether what Roosevelt said is true or not, it is clear that Dulles/Roosevelt/etc wanted to hear about how this saved Iran from Communism.)

Part 7 will be about Kerry and Obama's decision to delay publication of this volume.

New CIA/State Department Docs on the 1953 Iran Coup (Part 5)

This is part 5 of my series on the new CIA and State Department docs on the 1953 Iran Coup. 

The role of clerics in the 1953 Iranian coup is both difficult to determine, and a sensitive topic. The regime has ties back to the Iranian clerics, and one of the myths they work to perpetuate is that foreigners meddled in Iranian affairs. This is helped by American (read CIA) incentives to claim omnipotence and competence in masterminding a coup. Both parties have reasons to minimize clerical involvement. While the events between 15 and 19 of August 1953 are difficult to determine for reasons I will discuss later, there are several important events involving clerics that bear mentioning.

Of the clerical elements, Ayatollah Kashani is the most relevant. He was the speaker of the Iranian Majles (parliament), and for a time an ally of Mohammad Mossadeq, before becoming a bitter enemy. His worldview bears striking similarities to Ayatollah Khomeini as I pointed out in part 3 of my series.

A CIA source reported in September 1952 that Kashani was planning a coup to remove Mossadeq. This was before their big falling out in December 1952.

In early April 1953 Kashani supported the idea of a Zahedi-led coup, but at the same time didn't want to appear as though he was overly supportive in case things didn't work out.

Kashani did not give up his hopes for a coup. In mid April 1953 he was approached by another representative of the Shah about collaborating on a coup, and rather than turning them down, he made his own suggestions on how to best do it.

Another mid April memo from Waller of the CIA to Roosevelt notes the nature of the relationship between Kashani and Zahedi, and Kashani and two major clerics in Iran, Ayatollahs Boroujerdi and 

Behbehani. Boroujerdi was Ayatollah Khomeini's teacher, and forbade him or any others from political activities. This memo notes an "understanding" that they would "bolster the shah". While this sounds overtly political in nature, the difference is that historically the clergy had supported the monarchy, and in turn received protection. While it is a bit of a departure from the normal, it is more of an affirmation of the perceived threat to the Shah that Mossadeq posed.

Interestingly the documents leading up to the coup after April make less mention of Kashani. At the same time, key pieces are redacted or not included so there is no way to know how involved he would have been in the plans. It is entirely possible that he was a key piece, or that he was uninvolved.

Part 6 will be about the events leading up to the coup in August, and the problems resulting from incomplete records from both the State Department and CIA.