Iran Gets Sanctions Relief Jan. 20 as Nuclear Deal Begins

A technician works inside the turbine room at the Bushehr nuclear power plant in Bushehr, Iran.

Iran agreed to curtail its nuclear activities starting Jan. 20 under a deal with world powers, triggering the easing of some sanctions and the start of a six-to-12 month timetable to reach a permanent accord.

Iran and the so-called P5+1 countries -- China, France,Russia, the U.K. and the U.S., plus Germany -- reached an understanding on how to implement a deal reached last November, U.S. PresidentBarack Obama said in a statement yesterday.

Iran “has agreed to specific actions that halt progress on its nuclear program and roll back key parts of the program,” Obama said. The agreement restricts Iran’s nuclear activities and imposes more intrusive inspections. In return, Iran will benefit from sanctions relief, which the U.S. values at $6 billion to $7 billion over six months.

It’s unlikely the implementation accord will quell bipartisan efforts in Congress to escalate pressure on Iran with further sanctions. Iran has threatened to abandon talks if Congress votes to tighten economic restrictions and Obama repeated yesterday his vow to veto additional sanctions while negotiations on a broader deal continue.

As many as 59 senators have signed on in support of sanctions legislation byNew Jersey Democrat Robert Menendez of New Jersey and Illinois Republican Mark Kirk. House Majority Leader Eric Cantor, a Virginia Republican, said in a statement that the implementation deal “only furthers a deeply flawed agreement.”

Women shop at a bazaar in Tehran, Iran.

Brent crude has lost 3.2 percent since the accord in November. Futures for February settlement rose 21 cents, or 0.2 percent, to $107.46 a barrel on the ICE Futures Europe exchange today.

Six Months

Under the accord, Iran is to immediately begin actions to eliminate within six months its entire stockpile of 20 percent enriched uranium, which could be most quickly processed to fuel nuclear weapons, according to one of three U.S. administration officials who briefed reporters yesterday on the condition that they not be named.

Iranian officials also agreed not to install or operate more advanced uranium centrifuges and to take steps to prevent use of current equipment for 20 percent enrichment, which will be verified as part of a tougher inspection regime by the International Atomic Energy Agency, one U.S. official said.

Negotiations on a permanent agreement -- to be completed within six to 12 months -- will begin within a few weeks, Lebanese al-Mayadeen television reported, citing Iranian Deputy Foreign Minister Abbas Araghchi.

50-50 Chance

Obama has said he sees no more than a 50-50 chance those negotiations will succeed, while emphasizing it’s important to seek such a diplomatic solution before the possibility of military action. One of the officials yesterday said that, while Iran’s behavior was encouraging, the odds are unchanged.

U.S. Secretary of State John Kerry told reporters in Paris yesterday that the next phase in the talks will be “very difficult.”

U.S. Vice President Joe Biden, who is visiting Israel to attend memorial events for former Prime Minister Ariel Sharon, will also use the trip to address concerns raised publicly by Prime Minister Benjamin Netanyahu that even limited concessions now will undercut the broader sanctions regime and embolden Iran.

Biden is expected to meet with Netanyahu and Israeli President Shimon Peres about the Iran accord and continued efforts to broker an Israeli-Palestinian peace deal through a direct meeting by February.

Congressional Critics

Congressional critics such as Menendez and Cantor have objected that the deal permits Iran to continue up to 5 percent enrichment, a level for use in civilian power reactors that could be further enriched for weapons, and development of more advanced centrifuges.

The issue of centrifuge development was one of the last issues resolved. While Iran is able to continue work it has underway based on previous IAEA reports, it can’t develop or install newer technology, one U.S. official said.

The P5+1 countries agreed to a series of steps to ease some sanctions while leaving in place the core energy and banking sanctions as well as those onIran’s energy shipping and ports, according to a third administration official.

They will suspend sanctions on Iran’s petrochemical exports and imports of goods and services for its auto sector. The U.S. will also put on hold efforts to further reduce Iran’s exports of oil to the six nations still purchasing its crude, the official said. Under sanctions law that took effect in July 2012, the U.S. would otherwise have demanded more “significant reductions” in imports from Iran.

Suspended Sanctions

Also, the nations will suspend sanctions on Iran’s imports and exports of gold and other precious metals, with some restrictions, and will expedite license applications for parts and services for its civil aviation industry. They will also take steps to facilitate financing of humanitarian trade through non-U.S. financial institutions, the official said.

Iran will get access to $4.2 billion in oil revenue held in foreign banks, to be released in monthly increments tied to its compliance with the commitment to eliminate the 20 percent enriched uranium stockpile, the official said.

Iran’s compliance will be monitored by the IAEA and the sanctions relief will be stopped and reversed if the country fails to meet its obligations, the first administration official said. At that point, he said, the administration would support moves by Congress to impose further sanctions.

IAEA Inspections

The implementation agreement substantially expands the IAEA’s powers. It will inspect Iran’s Fordo and Natanz enrichment facilities daily, rather than weekly, and for the first time get access to centrifuge production facilities. Iran is also obligated to resolve outstanding questions about suspected past nuclear militarization tests, including activities at its Parchin military facility, a U.S. official said.

“As this agreement takes effect, we will be extraordinarily vigilant in our verification and monitoring of Iran’s actions,” Kerry said yesterday.

The accord starts a six-month timetable to reach a final agreement. That period could be extended a further six months by mutual consent. Iran has asserted its program is for peaceful purposes, though the U.S., Israel and other nations think the Islamic Republic is seeking a weapons capability.

Iran’s oil exports, the country’s largest foreign-currency earner, plunged last year as U.S. and European Union sanctions meant that banks and insurers couldn’t handle Iranian sales of the fuel.