Iran Digest: Week of January 8-15, 2016

Iran Digest

AIC’s Iran digest project covers the latest developments and news stories published in Iranian and international media outlets. This weekly digest is compiled by Communications Associate Alexander Benthem de Grave and Research Associate Bradford Van Arnum.

U.S. - Iran Relations

Iran’s Swift Release of U.S. Sailors Hailed as a Sign of Warmer Relations

A crisis over the seizing of two American patrol boats in the Persian Gulf was averted Wednesday when Iran returned the craft and released their crews as Pentagon officials struggled to explain how the boats had ended up near a major Iranian naval base.

Their quick release was hailed by the Obama administration as an unintended benefit of the new diplomatic relationship with Iran established by the nuclear accord negotiated between Tehran and the United States and five other nations in July. The accord is expected to go into effect next week, ending the oil and financial sanctions imposed on Iran over the past decade, and giving it access to around $100 billion in frozen funds.

Thanking the Iranians for their cooperation, Secretary of State John Kerry said Wednesday that “we can all imagine how a similar situation might have played out three or four years ago.” (The New York Times)

Iran Case Tests Congress's Power to Meddle in Court

Federal courts are supposed to apply laws passed by Congress. But can Congress dictate the outcome in a particular case, the way it did when it essentially told the federal district court in New York to rule for victims of terrorism trying to collect $2 billion from the Iranian government?

The U.S. Supreme Court will take up this question Wednesday in Bank Markazi v. Peterson -- and it’s legally tricky as well as politically sensitive. Since just after the Civil War, the Supreme Court has struggled to articulate a principle of judicial independence that would prohibit a law dictating the result of a particular case while recognizing Congress’s power to dictate outcomes through substantive law. After the U.S.-Iran nuclear deal, this old issue has a new context. Iran won’t be too happy if the court lets Congress get away with breaking the usual legal rules, including state immunity, to seize the country’s money. (Bloomberg View)

Regional Politics

Nuclear Pakistan reiterates backing for Saudis over Iran

Pakistani army chief Gen. Raheel Sharif has reiterated that any threat to Saudi Arabia's territorial integrity will evoke a response from Islamabad. Sharif made the remarks Sunday in a statement after Saudi Deputy Crown Prince and Defense Minister Mohammed bin Salman called on him in the garrison city of Rawalpindi, adjacent to the capital.

Salman earlier arrived in Islamabad, making him the second top Saudi official to visit Pakistan in a week amid growing tension with Iran over Shiite cleric Nimr al-Nimr's recent execution. The prince is also expected to meet with other Pakistani leaders. The visits came after Saudi Arabia and several of its allies announced the severing or downgrading of diplomatic relations with Shiite powerhouse Iran. Pakistan has already participated in the conflict in Yemen, which many describe as a proxy war between Iran and Saudi Arabia. (CBS News)

Iran scorns 'nouveau-riche' critics after UAE tweet

Iran's foreign minister said on Wednesday that the "arrogant nouveau-riche" should stay out of diplomacy after the United Arab Emirates mocked his criticism of Saudi Arabia's human rights record.

The barbed comments on Twitter by Mohammad Javad Zarif and UAE Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan underline the strains between the two Gulf countries, who are economic partners but political rivals.

The United Arab Emirates has strongly backed Saudi Arabia in a diplomatic dispute with Tehran that erupted when Saudi Arabia executed a prominent Shi'ite cleric on Jan. 2 and Iranian protesters stormed the Saudi embassy in Iran. Riyadh broke off relations with Tehran, and the UAE downgraded ties. (Reuters)

Nuclear Accord

Iran Measures Up To The Nuclear Deal

Despite another round of drama, Iran is actually meeting the terms of the nuclear deal hammered out in Switzerland last summer by the United States-led P5+1 Group.

Some of the biggest requirements of the deal are actually being met. Iran shipped nearly its entire fissionable stockpile, over 12 tons of enriched uranium, to Russia last month. Iran is mothballing thousands of centrifuges necessary to enrich uranium for an atomic bomb. And Iran has supposedly removed the core of its heavy water reactor at Arak, and filled it with concrete. That reactor could have produced plutonium for the other type of atomic bomb.

For these actions, Iran stands to get almost $60 billion released back to itself. Some Iranian citizens will be removed from U.S. government blacklists, Europe will allow trade in software, gold and metals, and transportation equipment, and Iran will be allowed to rejoin the international banking system and sell oil on the open market, which is presently glutted. (Forbes)

Rouhani races to implement nuclear deal with eye on Iran elections bounce

The Iranian president, Hassan Rouhani, is pulling out all the stops to speed up the implementation of a landmark nuclear deal to bring home tangible relief from sanctions before parliamentary elections in February.

The moderate president, who is facing his first major public vote of confidence two years after assuming power, wants Iranians to feel the impact of his diplomacy as early as this month.

Iran has already started to roll back its nuclear programme, including unplugging thousands of centrifuges, as required under the Vienna nuclear agreement.

But the lifting of sanctions will only come into effect after “implementation day”, an unknown date when the UN nuclear watchdog verifies that Tehran has taken all other necessary steps. (The Guardian)

Iran 'fills Arak nuclear reactor core with concrete'

Iran has removed the core of its Arak heavy-water nuclear reactor and filled it with cement, according to the country's Fars news agency. The fate of the reactor was one of the toughest sticking points in Iran's long nuclear negotiations last year.

Under the terms of the deal, Iran agreed the heavy-water reactor would be reconfigured so it was not capable of yielding material for a nuclear weapon. The removal of the core is one of the final steps required by the deal. It will bring Iran closer to the relief from economic sanctions negotiated in exchange for changes to its nuclear industry.

Iran denies that any of its nuclear activity is geared at developing weapons, and says the 40-megawatt, heavy-water plant at Arak is used to produce isotopes for cancer and other medical treatments. Behrouz Kamalvandi, the spokesperson for Iran's atomic energy agency, told the Etemad newspaper Iran "has met its commitments under the July nuclear agreement earlier than expected". (BBC)

Women of Iran

The Woman Shaping Iran’s Oil Future

Raised in a pistachio-farming family in tradition-minded southern Iran, Elham Hassanzadeh, 31, earned her law degree and Ph.D. in the U.K. on scholarships. She literally wrote the book on Iran’s natural gas industry since the 1979 Islamic revolution—it was published last year by Oxford University Press. She has returned to Iran to head a consulting firm, Energy Pioneers, based in Tehran and London, that’s at the vanguard of Iran’s all-out push to lure back foreign investors after the expected lifting of sanctions in coming months.

Iran is counting on Western technology and hoping to raise $100 billion in overseas financing to double its oil and gas production in the next five years. Hassanzadeh is building a business by parlaying a deep knowledge of Iran’s energy resources, close ties to government technocrats and industry leaders in Tehran, and high-level contacts at major oil companies, law firms, and investment houses in the West. (Bloomberg Business)

International Trade

Oil up after eight-day rout; worries remain Iran will add to glut

Oil rebounded on Thursday, snapping an eight-day rout, as investors covered short positions but the market settled not far from 12-year lows on worries Iran may add barrels to a glutted global market sooner than expected.

Global crude benchmark Brent broke below $30 a barrel, its lowest since 2004, for a second straight day before rebounding. It also settled off the day's highs, after the U.S. State Department indicated a key Iranian nuclear reactor had been destroyed, as per conditions for lifting sanctions against Tehran's oil exports.

"While the end of sanctions aren't finalized, we'll now be entering a world of even more supply," said Tariq Zahir at Tyche Capital Advisors in Long Island, New York. (Reuters)

German trade delegation led by Gerhard Schroeder headed for Iran

Former German Chancellor Gerhard Schroeder is heading a trade delegation for an unofficial three-day visit to Tehran. According to the team’s announced schedule, Schroeder is to meet Secretary of Iran's Supreme National Security Council Ali Shamkhani on Monday.  

The former chancellor will also hold talks with Iranian Foreign Minister Mohammad Javad Zarif, Oil Minister Bijan Namdar Zanganeh,Trade Minister Mohammad Reza Nematzadeh and the Governor of the Central Bank of Iran, Valiollah Seif.

The 27-person group is mostly made up of representatives from German companies and the country’s economic sector. (PressTV)

Why Investors will Continue to Avoid Iran

Iran must attract foreign investment if it is to become a dynamic force able to play a part in the world economy. For years, international sanctions, coupled with the structural problems of the Iranian market, have prevented any foreign capital from coming into the country. Now that a nuclear deal has been reached and sanctions are being lifted, Iran has high hopes that foreign investment will give the economy the boost it needs. The Iranian economy has been stagnant for a long time. Despite all efforts, the best that policy-makers and decision-makers have achieved is to remove the minus symbol from the country’s growth index.

In all these years international sanctions was the excuse given for failing economic growth. Sanctions made it difficult — if not impossible — for foreign capital investment in Iran. It was these sanctions that forced Iran’s foreign partners to put their wallets in their pockets and leave Iran, even though the Iranian market provided many opportunities. But now that the international climate for potential partners is experiencing a resurgence, the fundamental problems of Iran’s economy are clear, making investment a risky business. For this reason, foreign investors remain wary about entering the Iranian market. (IranWire)


What Iran's 'Fast' Release of U.S. Sailors Tells Us

By Cassandra Vinograd

That was (relatively) quick. Ten American sailors detained by Iran were released after a night in the Islamic republic's custody — a fast outcome following a frenzy of diplomacy but overall very little fuss.

There are at least two key takeaways from the quick resolution of what some feared could develop into an international incident. First, that both the Obama administration and Iranian government are keen to avoid jeopardizing a high-stakes nuclear deal agreed on last year.

"Clearly the United States and Iran now have a mutual interest in maintaining some kind of relationship that will keep this whole thing from being derailed," said Gary Sick, an Iran expert at Columbia University who formerly served on the National Security Council. "They have every reason in the world to avoid a crisis. Neither the United States government wants it nor Iran wants it."

News that the sailors had been seized prompted an almost-immediate response from Republicans that the incident proved the deal — aimed at curtailing Tehran's nuclear program in exchange for lifting crippling international sanctions — should be abandoned.

Read the full article.