Trump likely to reimpose Iran sanctions, give companies 6 months’ grace

Trump likely to reimpose Iran sanctions, give companies 6 months’ grace

Officials also say Europeans gave in to many of US president's demands in last-minute burst of diplomacy ahead of official announcement on nuke deal

US President Donald Trump gestures as walks on the South Lawn upon his return to the White House in Washington from Cleveland, Ohio, on May 5, 2018. (YURI GRIPAS/AFP)
US President Donald Trump gestures as walks on the South Lawn upon his return to the White House in Washington from Cleveland, Ohio, on May 5, 2018. (YURI GRIPAS/AFP)

WASHINGTON — While US President Donald Trump has kept his decision on whether to leave the Iran nuclear deal secret from even most White House staff, officials say he is most likely to pull out and reimpose sanctions on Tehran, while giving companies that are currently doing business with the Islamic Republic a six-month grace period to gradually scale it down.

Trump is preparing to tell the world whether he plans to follow through on his threat to pull out of the landmark nuclear accord with Iran and almost certainly ensure its collapse. There are no signs that European allies enlisted to “fix” the deal have persuaded him to preserve it.

In a burst of last-minute diplomacy, punctuated by a visit by Britain’s top diplomat, the deal’s European members gave in to many of Trump’s demands, according to officials, diplomats, and others briefed on the negotiations. Yet they still left convinced he is likely to reimpose sanctions and walk away from the deal he has lambasted since his days as a presidential candidate.

Hanging in the balance Tuesday was the fate of the 2015 nuclear deal struck by the United States, Iran, and world powers that lifted most US and international sanctions against the country. In return, Iran agreed to restrictions on its nuclear program making it impossible to produce a bomb, along with rigorous inspections.

An immense web of sanctions, written agreements, and staggered deadlines make up the accord. So Trump effectively has several pathways to pull the United States out of the deal by reneging on its commitments.

Under the most likely scenario, Trump will allow sanctions on Iran’s central bank — intended to target its oil exports — to kick back in, rather than waiving them once again on Saturday, the next deadline for renewal, said the individuals briefed on Trump’s deliberations. Then the Trump administration would give those who are doing business with Iran a six-month grace period to wind down business and avoid breaching of those sanctions.

Ayatollah Ali Khamenei waving to the crowd as he delivers a speech during Labor Day at the workers’ meeting, April 30, 2018. (AFP PHOTO / Iranian Supreme Leader’s Website / HO)

Depending on how Trump sells it — either as an irreversible US pullout, or one final chance to save it — the deal could ostensibly be strengthened during those six months in a last-ditch effort to persuade Trump to change his mind. The first 15 months of Trump’s presidency have been filled with many such “last chances” for the Iran deal in which he’s punted the decision for another few months, and then another.

Other US sanctions don’t require a decision until later, including those on specific Iranian businesses, sectors, and individuals that will snap back into place in July unless Trump signs another waiver. A move on Tuesday to restore those penalties ahead of the deadline would be the most aggressive move Trump could take to close the door to staying in the deal.

If the deal collapses, Iran would be free to resume prohibited enrichment activities, while businesses and banks doing business with Iran would have to scramble to extricate themselves or run afoul of the US. As they braced for an expected withdrawal, US officials were dusting off plans for how to sell a pullout to the public and explain its complex financial ramifications, said the officials and others, who weren’t authorized to speak ahead of an announcement and requested anonymity.

The three EU members of the deal — Britain, France, and Germany — were insistent from the start that the deal could not be reopened. After all, it was the US that brokered the agreement in 2015 and rallied the world behind it. But all that was under president Barack Obama, whose global legacy Trump has worked to chip away at since taking office.

So the Europeans reluctantly backed down, only slightly at first, agreeing to discuss an “add-on” agreement that wouldn’t change the underlying nuclear deal, but would add new restrictions on Iran to address what Trump had identified as its shortcomings. Trump wanted to deter Iran’s ballistic missile program and other destabilizing actions in the region. He also wanted more rigorous nuclear inspections and to extend the deal’s restrictions on Iranian enrichment and reprocessing, rather than let them phase out after about a decade.

High Representative of the European Union for Foreign Affairs and Security Policy Federica Mogherini, left, and Iranian Foreign Minister Mohammad Javad Zarif attend a final press conference of Iran nuclear talks in Vienna, Austria on July 14, 2015. (Joe Klamar/AFP)

Negotiating an add-on agreement, rather than revising the existing deal, had the added benefit of not requiring the formal consent of Iran or the other remaining members: Russia and China. The idea was that even if they balked at the West’s impositions, Iran would be likely to comply anyway so as to keep enjoying lucrative sanctions relief.

Although the US and the Europeans made progress on ballistic missiles and inspections, there were disagreements over extending the life of the deal and over how to trigger additional penalties if Iran were found violating the new restrictions, US officials and European diplomats have said. The Europeans agreed to yet more concessions in the final days of negotiating ahead of Trump’s decision, the officials added.

Building up anticipation for the big reveal, Trump announced on Twitter he would disclose his decision at 2 p.m. (9 p.m. Israel time), with an announcement set for the Diplomatic Room of the White House. With uncharacteristic discipline, he kept the decision confined to a small group within the White House National Security Council, leaving even many of his aides guessing what he had decided.

There was at least as much guessing in Iran, where many are deeply concerned about how Trump’s decision could affect the already struggling economy. In Tehran, President Hassan Rouhani sought to calm nerves, smiling as he appeared at a petroleum expo. He didn’t name Trump directly, but emphasized that Iran continued to seek “engagement with the world.”

“It is possible that we will face some problems for two or three months, but we will pass through this,” Rouhani said.

US President Donald Trump, flanked by members of faith-based communities, signs a proclamation declaring a National Day of Prayer during an event in the Rose Garden at the White House, May 3, 2018. (Mark Wilson/Getty Images, via JTA)

Even Trump’s secretary of state and the UN agency that monitors nuclear compliance agree that Iran, so far, has lived up to its side of the deal. But the deal’s critics, such as Israel, the Gulf Arab states, and many Republicans, say it’s a giveaway to Tehran that ultimately paves the path to a nuclear-armed Iran several years in the future.

Iran, for its part, has been coy in predicting its response to a Trump withdrawal. For weeks, Iran’s foreign minister had been saying that a re-imposition of US sanctions would render the deal null and void, leaving Tehran little choice but to abandon it as well. But on Monday, Rouhani said Iran could stick with it if the European Union, whose economies do far more business with Iran than the US, offers guarantees that Iran would keep benefiting.

It is far from clear that Europe can credibly provide that assurance. Even with the deal in place, Iran complained constantly that European banks and businesses were staying away out of fear they’d be punished by the United States. The global financial system is so interconnected and so dependent on New York that it’s nearly impossible to conduct business that doesn’t touch the US financial system. That gives Trump incredible leverage if he threatens that anyone doing business with Iran will be cut off from the United States.

For the Europeans, a Trump withdrawal would also constitute dispiriting proof that trying to appease the mercurial American president is an exercise for naught.

It was not clear what led Trump, whose aides hadn’t expected him to make a decision until week’s end, to move up his decision to Tuesday. But on Twitter, he targeted former secretary of state John Kerry, who led Obama’s efforts to broker the deal and has been making the case publicly and privately for its survival.

“Stay away from negotiations John, you are hurting your country!” Trump wrote.

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