Iran Says Nuclear Talks ‘Constructive’ as Sides to Meet Again

(Bloomberg) --

Iran said talks in Vienna on Tuesday aimed at restoring its 2015 nuclear deal with world powers had been “constructive,” but stuck to its demand that the U.S. first remove all sanctions for real progress to be possible.

Speaking after the discussions, lead Iranian negotiator Abbas Araghchi said diplomats will meet again in the Austrian capital on Friday to continue negotiations. But he said Tehran had rejected a “ridiculous” U.S. proposal to release $1 billion of frozen Iranian oil revenues in exchange for Iran suspending its production of 20% enriched uranium.

Iran has about $7 billion in payments for oil shipments to South Korea locked in accounts in the East Asian country by U.S. banking sanctions.

The snub signaled how far apart the two main protagonists are -- Iran is insisting that Washington must first guarantee the full removal of sanctions for it to scale back its enrichment activity, while the Biden White House has ruled out any “unilateral gestures.”

Robert Malley, the U.S. special envoy for Iran, is leading discussions for his government.

Officials had gathered at the city’s Imperial and Grand hotels in the most serious effort yet to end an impasse that has fueled instability across the Persian Gulf region since then-U.S. President Donald Trump abandoned the multinational pact in 2018 and reimposed sanctions.

Iranian and U.S. representatives weren’t expected to speak directly in Vienna, reflecting the deep distrust they have to overcome.

Tehran breached some of the key enrichment limits on its nuclear program imposed by the 2015 deal more than a year after Trump withdrew from an accord championed by his predecessor, Barack Obama. Tensions threatened to spiral into open conflict, sparking attacks on shipping in the Persian Gulf and fueled the war in Yemen, including escalating strikes by Iran-backed rebels on Saudi Arabian oil facilities.

Iran was one the first countries in the Middle East to sign the nuclear Non-Proliferation Treaty in 1968, but the 2015 accord was designed to limit its atomic activities to civilian purposes amid western concerns of a possible military element.

Three European nations helping to broker the talks -- Germany, France and Britain -- weren’t expecting a major positive development on Tuesday, partly because of Iran’s insistence on U.S. sanctions being removed in a single step, said a European official who declined to be named because of the sensitivity of the matter.

Oil rebounded as the chances of a breakthrough were seen by analysts as slim, reducing the odds that crude flows from Iran would pick up further in the near term.

Oil Shipments

A second European official said it’s important that progress is made before the end of May, referring to a 90-day deadline that Iran and the International Atomic Energy Agency agreed to on Feb. 22 in order to preserve the continuity of inspections data and give talks a chance. The official, who also asked not to be identified, put the probability of concrete action toward restoring the nuclear agreement before June at greater than 50%.

Iran holds presidential elections that month, which could push its politics further toward hardline conservatives emboldened by the standoff with the U.S.

“Iran’s demand for verifying sanctions relief could become a serious obstacle,” said Ali Vaez, director of the Iran Project at the International Crisis Group. Unlike Tehran’s nuclear activity, which is monitored by the United Nations, there’s no established procedure for ensuring effective relief from the penalties, he said.

“The parties are not going to Vienna to waltz, but they might end up dancing around the main issues,” he said.

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