Iran Silent on Nuclear Deal Breach as Diplomacy Intensifies

(Bloomberg) -- Iran appeared to have at least temporarily backed away from its ultimatum on breaching the 2015 nuclear deal, as European nations made last-ditch efforts to salvage what remains of the multilateral accord and avert a slide toward war.

Iran’s atomic energy organization had said the country would probably exceed the cap on stockpiles of low-grade uranium on Thursday, as it pushes back against crippling U.S. economic sanctions imposed after the Trump administration unilaterally exited the agreement more than a year ago.

But by 6:30 p.m. local time, there was no word from Tehran that it had done so.

A European Union diplomat said remaining parties to the deal were “scrambling” to find a solution. Whether they had been successful could become clear after a meeting in Vienna on Friday of the commission that governs the deal, known as the Joint Comprehensive Plan of Action or JCPOA, the diplomat said, asking not to be named because of the sensitivity of the issue.

Unnamed diplomats were cited by other media as saying that Iran was still short of the 300-kilogram cap on stockpiles of low-grade enriched uranium that would put it in violation for the first time of the accord designed to prevent it developing a nuclear weapon.

Iran’s ambassador to the United Nations, Majid Takht Ravanchi, wouldn’t say if Iran had violated the deal yet but said European nations weren’t working quickly enough to guarantee Iran could continue to trade with them despite U.S. sanctions.

Tensions in the Gulf soared after the U.S. stopped granting waivers to buyers of Iranian oil in May. President Donald Trump says he wants to negotiate a new deal that would also restrict Iran’s missile programs and support for armed proxies around the region, but Iran has refused to talk while its economy and -- more recently -- its leaders are under sanctions.

Iran’s downing of an American drone last week in disputed circumstances brought the Middle East to the cusp of war, with Trump calling off planned retaliatory airstrikes minutes before the action was set to start.

Iranian President Hassan Rouhani on May 8 said his nation would withdraw from parts of the 2015 deal unless Europe provided an economic lifeline within 60 days.

He said that Iran would no longer comply with the 300-kilogram uranium cap and a 130-ton limit on stocks of heavy water after the U.S. revoked waivers allowing it to send excess heavy water to Oman and ship out surplus enriched uranium in exchange for natural, or yellowcake, uranium.

The U.K., France and Germany have designed a financial mechanism to enable trade with Iran to continue despite the threat of American penalties, but have so far been unable to launch it. On Wednesday, European nations said they were finalizing the vehicle -- known as Instex -- and there was speculation an announcement could come on Friday in a bid to convince Iran to stay within the deal.

“Personally, I don’t think it will be enough,” Ravanchi told reporters in New York on Thursday. “It took them more than a year to put this in place, and it’s still not operational. It’s as if you have a beautiful car, you enjoy looking at it, but there’s no gas inside. So all you can do is look.”

Speaking to reporters in Vienna, another Iranian official said that Instex would only work if it was funded by European purchases of Iran’s oil.

He said any Iranian breach of the 2015 uranium cap shouldn’t rule out further diplomacy, calling on European nations to be “patient.” But he warned that any EU move to reimpose sanctions would “be the end of the JPCOA,” and could force Tehran to begin the process of leaving the Non-Proliferation Treaty. Oil exports should return to their level in April 2018, before the U.S. pulled out of the deal, the official said.

Iran eliminated some 97% of its enriched uranium to comply with the nuclear agreement. It previously had enough material to build more than a dozen bombs. While Iran has always said its program is civilian, world powers pursued the deal because they doubted that claim.

The Iran crisis is overshadowing a Group of 20 summit in Japan, where the deal’s remaining signatories are expected to hold a series of meetings, according to a person familiar with the thinking of the U.K. government. The person said that while the U.K. agrees with the U.S. that the nuclear deal isn’t deal -- because it doesn’t deal with ballistic missiles or Iran’s destabilizing actions in the wider region -- it is a foundation to build on.

French President Emmanuel Macron said he’ll seek to persuade Trump to reconsider some elements of his “maximum pressure” policy on Iran in order to give talks a chance while the two leaders are in Japan.

“I’d like to convince Trump to open a window and give negotiations a chance, maybe to go back on some decisions, maybe on sanctions” and then to work out a way to negotiate the nuclear issue, Macron said.

--With assistance from David Wainer, Tim Ross, Boris Groendahl and Gregory Viscusi.

To contact the reporters on this story: Ladane Nasseri in Dubai at lnasseri@bloomberg.net;Golnar Motevalli in Tehran at gmotevalli@bloomberg.net

To contact the editors responsible for this story: Lin Noueihed at lnoueihed@bloomberg.net, Mark Williams

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