Iran to Ramp Up Nuclear Work as France Tries to Salvage Deal

(Bloomberg) -- Iran said it was unlikely to reach a much-anticipated agreement with Europe in time to avert another Iranian retreat from the limping nuclear deal, but gave European powers two more months to try to keep the accord alive.

While President Hassan Rouhani said his country would unveil on Thursday further plans to ramp up its atomic activities, the extension offered to European leaders signaled he was in no rush to scuttle the 2015 accord that’s been foundering ever since the U.S. pulled out a year ago. Europe will use that time to try to find a way around punishing American sanctions on Iran’s oil exports, the backbone of its economy.

“What we see here is a continued effort by Tehran to show the world, Europe in particular, but also the U.S., that it means business when it says it has means to resist, to strike back, to retaliate,” said Adnan Tabatabaei, Iran analyst and chief executive of Bonn-based Centre for Applied Research in Partnership With the Orient. At the same time, “we see again this notion of reversibility,” Tabatei said, “and with that Iran wants to show that it is not giving up” on the accord just yet.

Tehran has warned for weeks that if the European Union, a partner in the multilateral agreement, couldn’t work out a mechanism by Sept. 6 that would allow Iran to export oil, it would embark upon the third and most significant stage of its plan to gradually scale back its commitments. On Wednesday, Rouhani said he didn’t expect a resolution by the deadline, according to comments he made at a cabinet meeting that were relayed to reporters.

‘Significant Acceleration’

He didn’t spell out what elements of the accord his country would abandon, but said the measures would represent a “significant acceleration” of Iran’s atomic work.

In recent months, Iran has broken restrictions on the size and purity of its enriched uranium stockpile. Abolfazl Hasanbeygi, a member of the Iranian parliament’s national security commission, said new measures could include enriching uranium to 20% or above.

“It is unlikely that we’ll reach an outcome with Europe either today or tomorrow,” Rouhani said. “Europe has a two-month opportunity to return to its commitments, for talks and to reach an agreement.” Europe has promised Iran that it will be able to restore some exports, and was working on securing waivers from the U.S., Iranian government spokesman Ali Rabiei later told reporters.

Rouhani and French President Emmanuel Macron have been scrambling over the past week to agree on a proposal that would give Iran de facto waivers from strict U.S. sanctions through a $15 billion line of credit that would help to restore oil exports.

U.S. Go-Ahead

Such an arrangement would require American approval to work, and President Donald Trump had signaled support for such a lifeline to relieve the hardship ordinary Iranians have suffered since the U.S. quit the nuclear agreement last year and reimposed tight sanctions that have hammered the Iranian economy.

But when French Finance Minister Bruno Le Maire was in Washington trying to sell the plan, a senior U.S. administration official termed it a non-starter.

And on Wednesday, U.S. Special Representative for Iran Brian Hook said Washington planned to intensify its “maximum pressure” campaign against Tehran until it changed its behavior, and was not looking to grant trade waivers.

Rouhani took a jab at the U.S. resistance.

“In the U.S. there are hardliners, neocons and racists who do not want the relationship between Iran and the U.S. to be right, and whenever we move forward in this regard, they spoil it,” he said. “The U.S. exit from the nuclear deal was the result of this triangle of radicalism inside the White House,” he said, in an apparent reference to Trump, Secretary of State Michael Pompeo and National Security Adviser John Bolton.

Trump says he wants to force Iran to negotiate a broader agreement that also restricts Iran’s missile program and curtails its support for militant groups in the region. Iranian politicians think his position is weakening, said Tabatabaei, the analyst.

Following a recent visit to Iran, “my impression is that among the political elite, they think that Trump will be in an even weaker position in the fall of this year and the more time Iran has, the weaker Trump will be, the more necessary it will be for him to make concessions to Iran that go beyond the current discussion of waivers,” he said.

As ministers in Tehran were laboring to salvage the deal, maritime officials said they were working to release the seven crew members of a U.K.-flagged oil tanker Iran impounded in mid-July, and send them home.

The tanker was seized after British forces took into custody an Iranian vessel near Gibraltar on suspicion it was carrying oil to Syria in violation of European sanctions, a charge Tehran has denied. The Iranian ship has since been released.

The tit-for-tat seizures have been part of a series of aggressive measures that threatened the security of crude shipments going through the Strait of Hormuz, a Middle East waterway that is the world’s most important oil chokepoint.

On Tuesday night, Iran’s Revolutionary Guard Corps seized seven fishing vessels with 24 foreign crew in the Gulf of Oman, saying they violated fishing boundaries, the Guards’ Sepah News portal reported.

©2019 Bloomberg L.P.

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