Iran at a Crossroads: Choosing Between the JCPOA and the IRGC

The signing of a new U.S. sanctions law against Russia, Iran, and North Korea, which imposes significant restrictions on the Islamic Revolutionary Guard Corps (IRGC), forces the Islamic Republic to choose between the Joint Comprehensive Plan of Action (JCPOA) and maintaining the capabilities and privileges of the IRGC domestically while continuing its military activities abroad. Since the signing of the nuclear agreement on July 15, 2015, part of Iran's leadership has viewed the JCPOA critically, accusing Obama’s administration of hostility towards Iran and the Rouhani administration of actions contrary to the 'spirit' of the nuclear agreement under Trump. Iran hoped to gain support from major European countries in facing the increasing pressures from the new U.S. administration. The joint statement on July 27 from the U.S., Germany, the UK, and France, which deemed the recent Simorgh missile launch as contrary to UN Security Council Resolution 2231, disrupted Iran's calculations in this regard. The repeated actions of the four global powers on August 2 and the sending of a letter to the Security Council regarding Iran's missile activities, labeling them as threatening, just hours after the new sanctions law was signed by the U.S. President, demonstrated that despite recent significant trade agreements between French companies Total, Peugeot, and several German and Italian companies with Iran, European support for the nuclear agreement is not unconditional. A simple commercial glance at the trade values of European countries with the U.S., compared to their trade with Iran, makes it clear that finding the superior option for Europe between Washington and Tehran is not difficult; Germany exported $114 billion to the U.S. in 2016, while France's share was $57 billion in goods and services to the U.S. In the same year, Germany's exports to Iran were less than €3 billion, and France's exports were less than €2 billion, which respectively accounted for about three percent and five percent of their exports to the U.S. In addition to having very important trade relations, the U.S. and Western Europe are military allies in the European Union and have extensive security and intelligence cooperation, while collectively viewing the Islamic Republic as a common security threat in the region. The contradiction of U.S. sanctions with the nuclear agreement: The Islamic Republic claims that the imposition of unilateral U.S. sanctions is contrary to the comprehensive nuclear agreement of 2015 and UN Security Council Resolution 2231. Iran hoped to gain support from major European countries in facing the increasing pressures from the new U.S. administration. The joint statement on July 27 from the U.S., Germany, the UK, and France, which deemed the recent Simorgh missile launch as contrary to UN Security Council Resolution 2231, disrupted Iran's calculations in this regard. According to U.S. laws, the nuclear agreement with Iran is a 'political commitment' whose implementation can be suspended, and thus is not considered binding. According to the U.S. State Department, the nuclear agreement with Iran is definitely not an executive agreement or treaty, while Iran's interpretation and that of many media outlets seem to consider it as an executive agreement. Unlike a treaty, which requires a two-thirds vote from the Senate for the U.S. to join, political agreements, like the nuclear agreement with Iran, do not require Congressional approval and thus lack legal obligation and commitment. The approval or imposition of sanctions unrelated to the nuclear agreement by the U.S., including sanctions against the IRGC's extraterritorial activities, combat or test missile launches, human rights violations, and arming or financing armed or terrorist groups, does not violate UN Security Council Resolution 2231 either. The U.S. Congress extended the Iran Sanctions Act (ISA) of 1996 for ten years on December 1, 2016, with a vote of 419 in the House of Representatives and 89 in the Senate, and subsequently, Obama signed the Congressional bill into law. As the overseer of the implementation of the nuclear agreement, the UN Secretary-General prepares and publishes a report every six months that includes violations or confirmations of countries' commitments, and so far, none of the U.S. sanctions against Iran announced or implemented after July 15, 2015, have been identified in UN reports as violations of the nuclear agreement. As part of the oversight of the JCPOA, a joint commission with representatives from the 1+5 countries, the European Union, and Iran has been established. On July 10, Sarah Sanders, a White House spokesperson, stated that during the two-day summit of the leaders of the twenty major powers held on July 7-8 in Hamburg, Donald Trump encouraged the participating leaders to stop trading with countries that support terrorism, especially Iran. Abbas Araghchi, Iran's Deputy Foreign Minister, raised the issue as a violation of U.S. commitments under the nuclear agreement on July 21 in the joint commission overseeing the implementation of the JCPOA in Vienna, citing paragraph 29 of the nuclear agreement, which calls for the EU and the U.S. to refrain from adopting policies that 'directly or indirectly affect the normalization of trade and economic relations with Iran.' The joint commission overseeing the implementation of the JCPOA did not introduce the U.S. President's statements at the Hamburg conference as a violation of the nuclear agreement. The U.S. State Department, representing its government, is required by law to report to Congress every ninety days on Iran's compliance with its commitments under the JCPOA, thereby extending the suspension of nuclear sanctions against Iran for another 90 days. According to the Wall Street Journal, Donald Trump stated on July 21 that he would be 'surprised' if Iran remained committed to its obligations under the nuclear agreement in the next 90 days. The ball is in Iran's court? After the signing of the new U.S. sanctions law on August 2, the likelihood of the U.S. State Department sending another letter to Congress confirming Iran's implementation of the JCPOA, which is due on October 17, has been minimized. The new U.S. sanctions law against Iran mainly targets the IRGC, missile activities, support for terrorism, and human rights violations. Thus, foreign businesses and investors dealing with Iran are increasingly compelled to identify the ownership of their Iranian counterpart and examine the nature of their activities and uncover any potential relationship with the IRGC. Iran's missile industries and activities, despite the government's unsuccessful attempts to classify them as part of the aerospace force and under the command of the IRGC, remain a target of the new U.S. sanctions law. The IRGC's extraterritorial military activities, which occur under the umbrella of the Quds Force in the region, are another target of the new U.S. sanctions law. Therefore, the main target of the new sanctions law, as far as it relates to Iran, should be considered the IRGC. It can be expected that if the Trump administration refrains from confirming the next report on Iran's implementation of the JCPOA, all foreign investments from October 17 onward will face new conditions and will have to queue for permission from OFAC at the U.S. Treasury Department. The U.S.'s failure to act in lifting the sanctions for three months could provoke a retaliatory response from Iran and gradually prevent the nuclear agreement from functioning normally. At this stage, the Islamic Republic faces a sensitive choice between two options: gradually halting the extraterritorial military activities of the Quds Force and organizing Iran's missile activities in accordance with the requests outlined in UN Security Council Resolution 2231, or overlooking the benefits of the nuclear agreement and pushing Iran back into an economic crisis accompanied by rising inflation reminiscent of the years 2004 and 2005, which have decreased over the past two years. As a result of the regime's choice, either the IRGC will be placed behind the government, and its responsibilities, like any other conventional military force, will be limited to defending the country's borders and internal security (which in turn provides an opportunity to transform the state economy and strengthen the real private sector in Iran), or the government will be placed behind the IRGC, resulting in a more militarized and security-oriented administrative and political structure and exacerbating regional challenges; an option whose sustainability depends on welcoming unknown risks for the entire regime.