The U.S., Iran, and the JCPOA: Providing Incentives as Well as Threats

The latest round of exchanges between the U.S. and Iran has ended without any tangible progress. A brief moment of hope that some form of meaningful dialogue might emerge out of the G7 has reverted back to unnegotiable positions, and the next effect may well have been to further undermine Iran’s President Hassan Rouhani and harden the views of its Supreme Leader Ali Khamenei and the hardliners in the Revolutionary Guard.

So far “progress” has consisted largely of the fact that Iran has not withdrawn from the JCPOA, and the Trump Administration has said it is not seeking regime change and will not insist on any preconditions like the set of 12 demands it made in withdrawing from the JCPOA. At the same time, however, Iran has been progressively more aggressive in taking military action, and the US and Arab Gulf states have steadily hardened their military positions.

A low-level tanker war has developed inside and just outside the Gulf – raising the constant risk of some form of more serious escalation and conflict. Iran has suffered a great deal from U.S. sanctions, but has not given way or shown signs of any serious rise in popular discontent that poses a serious threat to the regime. If anything, it has become more aggressive in supporting the Hezbollah and Houthi, and in its actions in Syria, Iraq, and Yemen. At the same time, the Arab Gulf has grown even more divided, with Saudi Arabia and the UAE splitting over Yemen, and a lack of any coherent security action in the Gulf.

The end result is military confrontation, an arms race where several Arab Gulf states are spending more than 10% of their GDP on military forces, and no clear path forward. The net impact of sanctions seems as likely to continue to harden Iran’s position as to lead it to make serious concessions. The risk of a more serious war in the Gulf and/or the full collapse of the JCPOA nuclear agreement is rising, and the spillover of this crisis feeds – and is fed by – the wars in Syria and Yemen and the struggle for influence in Iraq.

In retrospect, the U.S. would have been far better off either staying with the JCPOA and negotiating to improve it over time. Hindsight is rarely useful, however, and even less so in an election year. Both the U.S. and Iran need to find ways to move forward without making overt unilateral concession. And ideally, all sides need a way to ease the level of tension in the Gulf and the region.

There are no easy or “good” options for doing this, but there are some possible ways forward.

First, the U.S. has so far been all “sticks” and no “carrots.” One option would be for the U.S. to work with Europe and key petroleum importers like Japan and South Korea to offer Iran a major trade and investment package as an incentive for making specific change in its its behavior. Simply putting a real world offer on the table would give Iran’s “moderates” far move leverage and a tangible way to move forward. It would show the Iranian people that they have a clear way forward, and it would greatly reduce U.S. vulnerability to charges that it was somehow trying to take over Iran or the region.

Second, the U.S. could limit its demands for granting the first major phase of the trade and aid package to specific negotiable change in the JCPOA – specifically an extension of the time limits and changes to the inspection criteria that many experts feel are its major weaknesses. If the U.S. worked with its European partners in the JCPOA to negotiate such changes, both the U.S. and Iran could claim some form of “victory.” The Trump Administration would have a much stronger agreement. Iran would have serious economic benefits, and could claim that it has never sought nuclear weapons and is simply providing further proof of its intensions.

Third, the U.S. could work with its Arab partners and negotiate with Iran to create a new structure for broader negotiations over security in the Gulf. Iran’s actions have increased the level of instability in the Middle East, but so have the hardline positions of its Arab neighbors. Iran’s steadily growing missile forces and the threat they would pose if they acquired precision strike capabilities is all too real, but Iran’s Arab neighbors are spending well over ten times as much on arms imports and they have a vastly superior mix of offensive air capabilities.

Iran cannot easily concede on missiles in the face of that Arab (and U.S.) superiority, but some form of arrangement that limits or freezes the strike capabilities of both sides might prove possible. In time, this might broaden to include confidence building measures, some form of limits to the regional arms race, and even some form of cooperation in fighting extremism. At a minimum, any form of dialogue would help, and reducing each side’s current tendency to demonize the other would be a significant step forward.

There is the risk that offering such options might end in a triumph of optimism or experience. But, two key factors need to be considered. The current process of confrontation is incredibly expensive for both Iran and the Arab Gulf states, and is destabilizing the region and steadily raising the risk of a war and major oil crisis that could affect the entire global economy. No outcome of this process of confrontation offers any major player a high risk of some form of “victory.” And, to speak from an admittedly selfish U.S. point of view, the U.S. needs to take far more credible positions and ones that will seem far more rational to the world and the Iranian people than the behavior of the Iran regime if its hardliners refuse a clear and credible bargain.

Anthony H. Cordesman holds the Arleigh A. Burke chair in Strategy at the Center for Strategic and International Studies in Washington, D.C. He has served as a consultant on Afghanistan to the United States Department of Defense and the United States Department of State.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2019 by the Center for Strategic and International Studies. All rights reserved.