EU proposes lifting pressure on Iran’s Revolutionary Guards to revive nuclear deal

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BERLIN — Europe’s proposal to resuscitate Tehran’s nuclear deal with world powers would blunt American sanctions against Iran’s Revolutionary Guards and pave the way for Tehran to avoid further scrutiny of suspected atomic sites, according to excerpts of a draft of the text reviewed by POLITICO.

The details of the draft were finalized in Vienna on Monday after 16 months of talks. As the EU worked on it in close co-ordination with Washington, the terms suggest that U.S. President Joe Biden’s administration is prepared to make greater concessions than expected to secure a deal — especially by reducing pressure on the Islamic Revolutionary Guard Corps, a powerful military organization with near-ubiquitous political and economic influence in Iran that the U.S. has designated as a terrorist organization.

However, the U.S. special envoy for the Iran talks, Rob Malley, in a statement to POLITICO after this story was first published, denied that the United States was changing its standards or rules when it comes to enforcing sanctions.

“To be clear: We have not engaged in any negotiation about changing due diligence, know-your-customer, or other U.S. sanctions compliance standards for sanctions that would remain under a mutual return to full [nuclear deal] implementation. Any report to the contrary is flat out wrong,” Malley said, while also tweeting a similar comment.

Biden has made trying to revive the 2015 nuclear deal a foreign policy priority, arguing that it is the best way to keep Iran from building a nuclear bomb. Under the original accord, which President Donald Trump withdrew from in 2018, Iran faced relief from international sanctions in return for agreeing to strict limits on its nuclear activities. Since the U.S. withdrawal, Iran’s nuclear activities have accelerated and a senior adviser to Supreme Leader Ayatollah Ali Khamenei has boasted that the country now has the technical ability to build a bomb, even if that is not Tehran’s strategic goal.

In April, Biden dismissed an Iranian demand that he reverse a 2019 decision by the Trump administration to place the IRGC on the U.S.’ list of “Foreign Terrorist Organizations.” A bipartisan group of U.S. senators followed in early May with a resolution declaring that the U.S. should not agree to any deal to lift sanctions.

While the European proposal, brokered by EU foreign policy chief Josep Borrell in close coordination with U.S. officials, would not lift the IRGC sanctions per se, it would severely limit their effectiveness.

Under the proposed text, Europeans and other non-Americans could conduct business with Iranian entities engaged in “transactions” with the IRGC without fear of triggering U.S. sanctions, as is currently the case, provided their primary business partner was not on a U.S. sanctions registry.

“Non-U.S. persons doing business with Iranian persons that are not on the [U.S. sanctions list] will not be exposed to sanctions merely as a result of those Iranian persons engaging in separate transactions involving Iranian persons on the [U.S. sanctions list] (including Iran’s Islamic Revolutionary Guard Corps (IRGC), its officials, or its subsidiaries or affiliates),” the proposal reads.

This wording would allow the Europeans to do business very widely across Iran, where commercial interaction with the IRGC is almost inevitable, particularly in terms of trade. One diplomat following the dossier noted the wording also suggests that IRGC entities could seek to evade U.S. sanctions simply by conducting their business via surrogates and shell companies that create a degree of separation, rendering the U.S. restrictions toothless for non-American enterprises and individuals.

An EU spokesman declined to comment on the substance of the proposal. But Malley and other U.S. officials, as well as some sanctions experts, disputed the idea that the sanctions standards were being weakened. 

A senior Biden administration official told POLITICO of the so-called due diligence, know-your-customer or other relevant compliance standards. “Those standards are consistent and non-negotiable. They would remain unchanged in any mutual return to full implementation of the [nuclear deal],” this official said.

Top U.S. officials, however, have declined to get into specifics about the language in the drafted proposal to restore the deal.

“We are not negotiating in public and will not comment on purported leaks from the press,” the senior Biden administration official added. “We are carefully studying the EU’s proposed final text and will provide our answer to them as asked. You have seen how the EU has described this text as their final effort at a compromise — nobody should be surprised that it requires difficult decisions for all participants.”

Over the past few decades, the IRGC, a parallel military that is distinct from the regular armed forces of Iran and answers directly to Khamenei, has emerged as an economic juggernaut with corporate holdings spanning finance, construction and energy. Under the presidency of Mahmoud Ahmadinejad, a controversial firebrand who took office in 2005, the IRGC’s tentacles into the Iranian economy became so extensive that former U.S. Treasury Secretary Henry Paulson declared at the time “it is increasingly likely if you are doing business with Iran, you are doing business with the IRGC.”

The Revolutionary Guards’ strong presence in border security also gives them a deep influence over an array of import-export businesses — a factor that is at the forefront of thinking in many EU countries that want to rebuild trade ties with the Islamic Republic, holder of some of the world’s biggest oil and gas reserves.

Europe’s lenient approach

The U.S. has long targeted the IRGC and its Quds Force, a paramilitary arm that trains and finances groups such as Hezbollah, designated as terrorists by both the EU and the U.S. Washington has accused the IRGC of killing hundreds of American servicemen in Iraq and Afghanistan through proxies with roadside bombs. Earlier this week, U.S. prosecutors charged a member of the IRGC of plotting to murder former U.S. National Security Adviser John Bolton. Former Secretary of State Mike Pompeo and former Secretary of Defense Mark Esper have also been targeted by the Iranians.

Given that history, the Biden administration is highly likely to face fierce resistance in Congress and beyond if it accepts the European proposal. Many in Congress are wary of making any concessions to Iran in light of its persistent threats to destroy Israel and the role it has played in destabilizing Iraq and the broader Middle East. Washington is also concerned about growing collaboration between Iran and Russia, including the possible sale of hundreds of armed Iranian drones to Moscow.  

Europe, which regards Iran as an attractive market and source of energy, has been more malleable in its approach to Tehran. The EU and U.K. have steadfastly backed the nuclear deal, even in the face of Iranian-backed terror activities on European soil. In July, for example, the Belgian parliament approved a prisoner swap treaty with Iran expected to allow for the release of an Iranian diplomat convicted of trying to blow up an opposition gathering in Paris in 2018.

Europe’s allegiance to the deal is both commercial and personal. Senior European diplomats spent years crafting the original Iran accord and officials across the Continent still regard it as the signature achievement of European diplomacy in recent decades.

Uranium probe

But even by the EU’s own standards, the concessions they’ve proposed to restore the deal cut generous slack to Iran.

In addition to lifting the pressure on the IRGC, the European proposal would also open the door for Tehran to quickly resolve a separate standoff with the U.N.’s nuclear watchdog, which has monitored Iran’s nuclear program, over undisclosed atomic sites discovered in 2019.

After detecting uranium particles at three previously undeclared sites in Tehran, the International Atomic Energy Agency demanded Iran provide an explanation, but it has so far stymied the Vienna-based U.N. watchdog’s probe by refusing to cooperate. In June, the IAEA’s board of governors censured Iran over its resistance, expressing “profound concern.”

Tehran has demanded the IAEA probes be concluded as a condition to reactivating the nuclear deal. Both the U.S. and Europeans refused, however, insisting the U.N. probe was a separate matter outside the scope of the nuclear deal.

Yet now, the same European countries that censured Iran in June have proposed a further concession by linking the resolution of the IAEA probes to the resumption of the nuclear accord. The proposed text states that the U.S. and Europeans “take note of Iran’s intent” to address the outstanding issues by “re-implementation day,” that is the date when the accord would go back into effect, expected to be a few months after the formal signing.

The risk of that approach, earlier reported by The Wall Street Journal, is that it could allow Iran to hold the entire agreement hostage if the IAEA doesn’t agree to do drop the probes. If, for example, the IAEA determines Iran has failed to come clean on what the sites were used for, Tehran could simply threaten to blow up the deal, prompting further international pressure on the U.N. to back down. The test will lie in whether the agency could withstand such pressure from its biggest members that want the deal to get done, which is doubtful.

Though analysts say the areas under investigation are likely legacy sites used in earlier stages of Iran’s nuclear program and not indications of new activity, their discovery nonetheless suggests that Tehran, which has long insisted its nuclear program is purely peaceful, has been less than forthcoming.

“Iran has the technical means to produce a nuclear bomb but there has been no decision by Iran to build one,” adviser ro Iran’s supreme leader Kamal Kharrazi said | Karim Jaafar/AFP via Getty Images

By putting the IAEA probe on the table in the EU proposal, one diplomat expressed a fear that the U.S. and Europeans risk not only signaling that they are willing to let the issue be swept under the carpet in pursuit of a deal, but that they are also willing to sacrifice the IAEA’s credibility as an independent agency by politicizing its mission in Iran.

The U.S. senior administration official pushed back on that narrative, noting that, “Safeguards on nuclear material go to the core of the IAEA’s mandate. The safeguards investigations are not political — they are not leverage or bargaining chips. Once the IAEA director general reports to the Board of Governors that the outstanding issues have been clarified and resolved, we expect them to come off the Board’s agenda. Not before.”

But any willingness to countenance less than complete safeguards is all the more extraordinary considering recent admissions by Iranian officials that they are capable of building a nuclear weapon.

“Iran has the technical means to produce a nuclear bomb but there has been no decision by Iran to build one,” Kamal Kharrazi, an adviser to Iran’s supreme leader, said last month. For years, Iran steadfastly denied it was pursuing such a capability.

Despite the concessions in the EU draft, Iran has yet to accept it, saying this week that it was still reviewing the proposal. The other parties to the original agreement, known as the “Joint Comprehensive Plan of Action,” include the five permanent members of the United Nations Security Council as well as Germany and the EU. Yet the real negotiation has been between the U.S. and Iran, with the Europeans acting as a go-between after Tehran refused direct talks.

After months of what appeared to be largely fruitless negotiations, the EU’s Borrell presented what he said was the “final text” on Monday.

“What can be negotiated has been negotiated,” he tweeted. “However, behind every technical issue and every paragraph lies a political decision that needs to be taken in the capitals. If these answers are positive, then we can sign this deal.”

Stuart Lau and Nahal Toosi contributed reporting.

This article has been updated.

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