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Who Will Rebuild Syria: Extremely Loud & Incredibly Close

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After raging for eight years, the violent phase of the Syrian civil war seems to be reaching its final stages, with Idlib as the last holdout. Recently, leaders of Russia, Iran and Turkey held talks in Sochi to discuss securing peace in Syria and preventing a large-scale military assault on Idlib, Syria’s last rebel enclave. World leaders have also discussed the the reconstruction of the war-torn country. Russian President Vladimir Putin urged European Union countries to help rebuild Syria, arguing that it would lead to a faster return of refugees from Europe to their country. His efforts have so far been unsuccessful as EU countries refuse to participate in a rebuilding process that involves Bashar Al-Assad. Arab states are considering readmitting Syria into the Arab League and have shown interest in investing in the country’s reconstruction. However, the United States is pressuring the Gulf states to hold back on restoring relations with Syria and investing in its reconstruction. As such, it seems that in addition to Russia, China, Iran, and India are best poised to invest in and benefit from the country’s rebuilding. Former United Nations Special Envoy to Syria, Staffan de Mistura estimates the cost of Syria’s reconstruction to be 250 billion USD, while the Syrian government estimates the number to be 400 billion USD. Either way, the cost is too high for the Syrian government to finance on its own without the help of its leading businessmen and international partners and allies.

How the Civil War Changed Syria’s Economic Environment

However, during the eight years of ongoing civil war, some prominent faces in Syria’s economic arena have disappeared, giving way to new actors who have positioned themselves and their businesses to benefit from the vacuum created by the civil war and, therefore, became highly influential, obtaining access to Al-Assad’s ‘inner circle’. Some of Bashar Al-Assad’s inner circle members were forced to flee the country, defect to the opposition, or remain neutral—thus losing their favourable position in this inner circle. This applies not only to the decision-making process, but also to the country’s internal economic process. The International Crisis Group’s Peter Harling argues that the war “forced large families to exile or to shut their businesses down and allowed a new generation of wheeler-dealers to emerge.” However, most of these actors and their assets have been sanctioned by the West due to their relationship with, and involvement in projects linked to the Syrian government. This creates a hurdle on the way to Syria’s reconstruction as many businessmen find their own funds—as well as international funds, companies and suppliers—inaccessible.

Economic Sanctions as an Obstacle

Economic sanctions have been successful in limiting the activity of Syria’s economic actors. It didn’t put them out of business as they have developed methods to bypass sanctions. Among those is establishing a close relationship with the Syrian government based on a system of ‘favors’, in which businessmen provide the government with some financial services in return for access to lucrative projects across the country. This poses several obstacles in the face of the country’s reconstruction. How independent are these businessmen from the government as economic actors best poised in terms of access and financial resources to rebuild the country? Given their proximate relationship to the Assad government, it is unlikely that they will gain access to foreign funds needed for the country’s rebuilding. Moreover, do their interests lay in rebuilding infrastructure and improving citizens’ living standards? Or will they rather pursue lucrative projects that are not entirely related to infrastructure, and therefore, will not bring significant benefit to the majority of the population? Furthermore, given the nature of the political and economic process in Syria, foreign companies will need to partner with local Syrian actors who have close ties to the government to be able to effectively invest and participate in the rebuilding process. However, these partnerships are restricted due to economic sanctions. As such, it is important to identify these local actors, their relation to the Syrian government and what initiatives towards rebuilding the country they have taken thus far. The most prominent and currently active businessmen in Syria can be divided into two groups: the ‘old guard’ who have been able to withstand local and external pressures and remain operable, and the ‘new guard’, who saw in the civil war the opportunities to gain access to financially beneficial economic sectors and projects.

Syria’s Most Prominent ‘Old Guards’

Rami Makhlouf is at the top of the ‘old guard’ list. Even under Western sanctions, he is still successfully operating in the country. This is in great part due to his relation to Al-Assad: he is a cousin from mother’s side. Following the outbreak of the war, Makhlouf stated that he would turn to charity and no longer pursue projects that can generate personal gain. However, Makhlouf still has close ties with leading businessmen in the country and is active in several economic sectors, including telecommunications (he owns mobile network company Syriatel), import/export, natural resources, and finance. Moreover, the Makhlouf empire has branches in some European countries, and a team of lawyers creating shell companies and bank accounts to bypass economic sanctions. Therefore, even if at times he is not the face of projects, it is highly likely that Makhlouf is somehow still benefiting from his relations with other businessmen and his numerous shell companies.

Mohammad Hamsho is another infamous old guard who currently serves as Secretary of the Damascus Chamber of Commerce, Secretary of the Federation of Syrian Chambers of Commerce and member of the People’s Assembly for Damascus. In 2018, Hamsho visited Tehran and met with Secretary General of Tehran Chamber of Commerce, Dr. Bahman Eshghi. During the meeting, both sides affirmed their determination to work on improving their economic relation, and signed a memorandum of understanding on cooperation between the two countries in various economic, trade, investment and production sectors. However, given that both countries are under sanctions, the magnitude of their economic cooperation is still hard to predict. Hamsho has been subject to US sanctions since 2011, but has been successful in having European sanctions lifted in 2014 on the grounds that there was insufficient evidence of his involvement with the regime. Two prominent Syrian businessmen who landed on the EU’s latest list of sanctioned individuals, published on January 21, 2019, are Nader Qalei and Khaled Al-Zubaidi. The two are leading actors operating in Syria with investments in the construction industry. One of their most significant investments is in the construction of Grand Town, a luxury tourist project. The Syrian government has granted Qalei and Al-Zubaidi a 45-year agreement for this project in exchange for approximately 20% return on revenue. According to the Council of the EU, Qalei and Al-Zubaidi benefit from and/or support the regime through their business activities, in particular through their stake in the Grand Town development. One of the most prominent actors in the country’s media sector is Majd Sleiman, otherwise known as the ‘intelligence boy’, son of Hafez Al-Assad’s cousin. Sleiman is currently the chief executive director of Alwaseet Group, one of the largest media groups in the Middle East and North Africa region. At the age of 25, he was already running several businesses and had established regional and international connections in the Middle East, Africa, East Asia, Europe and the United States. Even though Sleiman is active in the media and publishing sector, which is considered unprofitable, his companies received significant amounts of money from British accounts. This could be indicative of potential money laundering for the Syrian regime through British banks, via Sleiman.

Syria’s Most Prominent ‘New Guards’

With some families falling out of Al-Assad’s favors, and others exiled or unable to operate due to economic sanctions, a few savvy businessmen found an opportunity to fill the newly created vacuum and establish ties with the Al-Assad government by providing it with much needed services. Most prominent among these ‘new guards’ is Samer Foz, a leading Syrian businessman, known for his ruthlessness in conducting business. In fact, in 2013, Foz served a six month jail sentence for killing a Ukrainian/Egyptian businessman in Istanbul, Turkey. Foz is involved in multiple sectors of Syria’s economy, including brokering grain deals, and a stake in a regime-backed joint venture involved in the development of Marota City—a luxury residential and commercial development project. After several of Al-Assad’s former business allies found themselves unable to continue their business activities, Al-Assad welcomed Foz to his inner circle. Moreover, after being heavily affected by the war, Syria’s agricultural industry suffered, and Foz positioned himself as one of the few businessmen with the ability to broker grain deals. As a result, he received access to commercial opportunities through the wheat trade. Through his investments in the food industry and some reconstruction projects, Foz made his way into the inner circle by providing financial and other support to the regime, including funding the Military Security Shield Forces. Notably, Foz maintains very close ties with Iran, as well as Russia and other Western and Arab countries such as Italy, the United Arab Emirates (UAE) and Lebanon.

Another relatively new name to the arena of businessmen in Syria is Mazen Al Tarazi. Al Tarazi resides in Kuwait and has launched several campaigns in an attempt to get into Al-Assad’s inner circle. One of his campaigns was named “Returning to Syria” in which he pledged to bear the cost of Syrians wanting to return to their country. Moreover, in 2014, he assigned a plane at his own expense to transfer Syrians from Kuwait to Damascus, and back to Kuwait so they can cast their votes in the Presidential election. In 2017, his attempts proved successful and he was granted an investment license for a private airline in Syria, as well as other projects including a deal with Damascus Cham Holdings for a 320 USD million investment in the construction of Marota City. The Syrian Palestinian businessman benefited from his public support of the Assad government. In fact, according to Syrian media, Al Tarazi’s investment in Marota City is the first investment in Syria in which the investor’s share is greater than that of the public sector (51% of the project was owned by Al Tarazi and 49% by the Damascus Holding Company of the Damascus governorate). This investment, as well as his outspoken support for Al-Assad landed him on the EU’s latest list of sanctioned persons. The final businessman on the ‘new guards’ list is Samir Hassan, owner and agent of several companies in Syria, including Nokia and Nikon. After bad harvests due to war, he invested in imports of food supplies, in particular wheat, rice, sugar, and tea, and developed a close relationship with the Al-Assad family. During the civil war and against the background of improved relations with Russia, Hassan was named the Chairman of the Syrian-Russian Business Council, quite a prestigious position given the special relationship between Russia and Syria. Hassan’s investments in the food industry will also be vital during the reconstruction of Syria where he will be able to provide materials and products needed for reviving the agricultural sector, one of the greatest contributors to Syria’s Gross Domestic Product (GDP).

Trends in investments of Syria’s Businessmen

In general, businessmen involved in the Marota City and Grand Town projects have found themselves under Western economic sanctions. Most of Syria’s prominent businessmen have invested in these projects thanks to their connections with the government. In addition to some of the figures mentioned above, Anas Talas, Nazir Ahmad Jamal Eddine, Khaldoun Al-Zoubi, Hayan Mohammad, Nazem Qaddour, Maen Rizk Allah Haykal and Bashar Mohammad Assi have been recently sanctioned primarily due to their participation in the construction of Marota City. The Marota City and Grand Town projects are not essential for the country’s reconstruction, as they represent luxury residential and commercial projects and do not contribute to rebuilding the damaged infrastructure. However, several of the mentioned businessmen have been investing in infrastructure-related industries, such as the metal and steel industry, as well as the electrical and food industries. Recently, Hamsho bought “Al Sewedy Cables” factory, previously owned by Egyptian businessman Ahmad Al Sewedy, which produces electrical cables, towers, columns, transformers and circuit breakers, as well as a foundry (metal melting) factory that produces material for construction. Hamsho was able to acquire Al Sewedy’s company after it defaulted on loans given to it by the Islamic Bank of Syria and was sold in an auction. Foz has also been investing in former businessmen’s assets as he secured the ‘empires’ of two Syrian millionaires previously in Al-Assad’s inner circle. Emad Hamisho, previously known as the “economic shark” of Syria, and his family were sanctioned by the Syrian Ministry of Finance in 2013 after defaulting on a loan of 3.8 million Syrian Pounds he had borrowed from the real estate bank. In 2014, the sanctions were lifted without any clarifications on whether Hamisho had settled his account with the ministry or not. In 2018, the Ministry of Finance issued a new decision to sanction the assets of “Hamisho Minerals.” Foz saw an opportunity in it and swooped in. He entered into a partnership with Hamisho and created a new company where he heads the board of directors. Moreover, after a series of tightening measures initiated against him by the Syrian government in the early phases of the civil war, Imad Ghreiwaty decided to gradually transfer his investments abroad and resign from his position as the head of the Union of Chambers of Industry. His assets included a cables company, “Syria Modern Cables”, which Foz bought in 2017. Notwithstanding the manner of purchase, these initiatives are important for the country’s rebuilding, and are profitable for the investors, as they will provide construction material necessary for the reconstruction phase.

Financing Syria’s reconstruction

It is evident that rebuilding Syria will be largely controlled by Al-Assad’s inner circle of businessmen who have preferential access to investments and are best positioned to receive projects and tenders in the upcoming period. However, a few businessmen will not be able to rebuild the country on their own, and even the country’s most prominent and richest businessmen will find themselves limited in their activities due to imposed economic sanctions. While Syria’s allies are willing to help, and have already begun cultivating and consolidating relationships with local actors to gain access to the Syrian market, they are also facing certain limitations. Iran and Russia are constrained by economic sanctions of their own, whereas India and China are reluctant to invest unless they receive security guarantees to insure and protect their investments in Syria. Therefore, while both local and external actors are willing and seek to invest in the lucrative industry of Syria’s rebuilding, they are faced with many obstacles, including economic sanctions. The irony of the matter is that actors who have access and finances to invest in rebuilding Syria cannot do so since their access depends on their relationship with Al-Assad—a relationship that has provided them with opportunities and finances, and landed them on international economic sanctions lists that now restrict their ability to operate at their full capacity. With the United States and European Union unwilling to foot the bill, it remains to see whether the Gulf States will overcome Western pressures, restore ties with Al-Assad and invest in rebuilding Syria.

First published in our partner RIAC

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Iran-US Tensions Are Unlikely to Spill into War

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To the south of Georgia trouble is brewing as Iran and the US (and its allies) are almost openly engaged in a military competition around the Persian Gulf and the Strait of Hormuz.

True, Georgia does not share a border with Iran, but its close economic and cultural relations with Tehran might be further endangered. It is unlikely that the US will tolerate Georgia’s neutral position in a potential conflict between the two states. Therefore, the Georgian government will find itself in a difficult position but will most likely act according to wider US interests in the South Caucasus. Even if a military conflict does not ensue (as explained below), Georgian-Iranian relations will take a hit.

The US recently announced plans to set up a multinational military coalition to protect the waters around Iran and Yemen, particularly commercial routes where about $554 billion worth of trade, mainly oil and gas, passes through the Straits of Hormuz each year. The military confrontation between Iran and the US could cause disruption, costing the biggest trader, Saudi Arabia, $3.5 billion a week, but also negatively impacting many Asian shippers.

This comes on top of what happened last month when Iran came close to war with the US after Tehran’s unprecedented decision to shoot-down a US drone with a surface-to-air missile. Back then, the US officials, including President Donald Trump, said that this could trigger retaliatory strikes. According to various sources, Trump green-lighted a limited air-strike against Iran’s surface military capabilities but cancelled the decision some minutes later when fighters were in the air.

The root of Iranian-American tensions lies in the differences regarding Tehran’s nuclear program. Washington abandoned the nuclear agreement the world powers reached in 2015 and Iran recently announced it has reached a high level of uranium production.

The tensions, as said above, induced the US and its allies, primarily in the Persian Gulf, to create a coalition. This is a very good example of what kind of future naval coalitions the US will be able to muster to prevent a certain group of countries from controlling vital economic choke points such as the Strait of Hormuz or the Strait of Malacca in Asia. But this also raised an alarm among politicians and the world’s analytical community that we might see a military confrontation between the US (and its allies) and Iran. First, it should be emphasized that Iranians understand well that a military confrontation would be deadly for the country’s economy, leading to potential unrest in various regions. Second, a military confrontation with the US is simply beyond the Iranian resource base. However, it is also true that the US does not want to engage Iran as the latter is a completely different story from what the American forces did during the invasion of Iraq in 2003. And it is not about Iran’s far superior military capabilities than those of Iraq: the major difference lies in geographic factors.

A look at the map shows that Iran’s major population centers are surrounded by almost impregnable mountains and deserts as well as water barriers. In the west and northwest are the Zagros Mountains, which bar Iran from Iraq. In the north, the Elburz Mountains as well as Armenia’s mountainous lands serve as a defensive shield. The Caspian Sea to the north and the Arabian Sea to the south are yet more impregnable barriers. To the east and northeast lie the harsh climate of Afghanistan and Pakistan. Turkmenistan’s semi-barren steppe-lands keep Iran’s provinces more or less safe (barring occasional attacks by nomadic peoples).

The fact of being both geographically contained and geographically defended has defined the Iranian grand strategy from the ancient Persian empires to modern Iran. The country’s mountains and deserts have made it almost impossible to conquer and then keep under control. Consider, for example, several of history’s greatest conquerors. The Mongols and, later Tamerlane successfully invaded the Iranian plateau, but to keep it, they either had to deploy tens of thousands of troops (which they were unable to do) or co-opt the local population (which they did) by allowing them to participate in the country’s governance. The same goes for Alexander the Great, Iran’s most successful conqueror. Following his conquest of the land, he co-opted the local elites to hold onto the state – and after he died, Iran quickly regained its independence.

Iran and the US want to avoid a direct military clash, but also do not want to lose their face among their respective allies. Still, the attempts to diminish tensions between the two powers become less and less effective as Iran grows its nuclear-related capabilities and the US sees less and less room to entice Tehran into a mutually beneficial understanding.

Author’s note: first published in Georgia Today

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Algerian soccer success is a double-edged sword

Dr. James M. Dorsey

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It took Algeria barely two weeks to charge Algerian soccer fan Samir Sardouk and sentence him to a year in jail for harming the national interests of his country.

Mr. Sardouk was convicted for shouting “There is no God but Allah, and they will come down” during the African Cup of Nation’s opening match in the Egyptian capital of Cairo on June 21.

Four other Algerians were given six-month suspended sentences for lighting firecrackers in the stadium.

Mr. Sardouk’s slogan referred to demands put forward in months of mass anti-government protests that all those associated of Abdelaziz Bouteflika, the country’s long-standing president who was toppled in April, be removed from office.

Mr. Sardouk’s sentencing casts a shadow over the Algerian squad’s achievement in reaching the African Cup final for the first time in 29 years after defeating Nigeria.

Together with celebrations of Algeria’s earlier qualification for the African Cup’s semi-finals after defeating Ivory Coast, it demonstrates the risk for autocrats and illiberals who use sports in general and soccer in particular to project their country in a different light internationally and polish their tarnished images by associating themselves with something that evokes the kind of deep-seated passions akin to the power of religion.

If celebrations of Algeria’s semi-final qualification and subsequent victory over Nigeria are anything to go by, an Algerian triumph in the finals, like past soccer victories in countries like Egypt and Iran, are likely to inspire rather than distract anti-government protesters.

Algerians fans in France took to the streets in Paris, Marseille and Lyon within hours of Algeria reaching the final. Their celebrations were mired by violence.

Similarly, the semi-finals celebrations spilled over into mass anti-government protests despite a huge police presence on the streets of Algiers and Paris added to the significance of Mr. Sardouk’s conviction. The protesters demanded a “civilian, not a military state”

Algerian police reportedly detained a dozen demonstrators. “There is a clear desire to prevent peaceful marches in Algiers, the deployed security device says it all.” tweeted Said Salhi, vice president of the Algerian League for the Defense of Human Rights (LADDH).

African Cup-related Algerian fan violence precedes the 2019 tournament. A massive brawl between players and fans mired a 2014 Libya-Algeria African Cup qualifier.

Violence associated with this year’s tournament was nonetheless minimal when put into the context of violence in Algeria having become a norm prior to this year’s revolt and the fact that the uprising has been largely peaceful.

The apparent shift away from violence is all the more remarkable given Algerian psychologist Mahmoud Boudarene’s assessment in 2014, a time of multiple soccer-related incidents.

“Violence in Algeria has become ordinary and banal. Hogra, the word Algerians use for the government’s perceived contempt for ordinary citizens, has planted a sickness in Algerian society. People feel that the only way to get anything done is to have connections or threaten the peace. It is a system where hogra and social injustice rule. Social violence has become the preferred mode of communication between the citizen and the republic — today in our country everything is obtained through a riot,” Mr. Boudarene told the Associated Press at the time.

This year’s popular revolt, inspired by lessons learnt from the 2011 popular Arab revolts, has emboldened protesters and given them a sense of confidence that is likely to ensure that potential African Cup final celebrations-turned-protest remain largely peaceful.

With Algeria having qualified for the final, the Algerian defence ministry, despite the police posturing, was preparing six military planes to fly 600 fans to Egypt for the African Cup final.

The gesture underlined soccer’s political importance and constituted an attempt by the military to align itself with the Algerian squad’s success.

The significance of soccer makes Mr. Sardouk’s sentencing all the more remarkable despite the assertion that his slogan mired Algeria’s march towards soccer victory.

For starters, it sought to draw a dividing line between national honour and protest in a country where a majority are likely to be soccer fans.

He was convicted at a time that Algeria has been wracked by protests since February in support of political reforms that would dismantle the country’s long-standing, military-dominated regime with a more transparent and accountable government.

The conviction is also noteworthy because Mr. Sardouk’s protest, coupled with acts of defiance by militant Egyptian soccer fans, threatened to turn the African tournament into a venue for the expression of dissent from across the Middle East and North Africa, a region populated by autocratic, repressive regimes and wracked by repeated explosions of poplar anger.

Finally, the sentencing was striking because it violated the spirit of both the military’s effort to retain a measure of control by co-opting the protests and a long-standing understanding with militant soccer fans that preceded the recent demonstrations that allowed supporters to protest as long as they restricted themselves to the confines of the stadium.

The Algerian military’s attempt to curtail fans and co-opt the revolt bumps up against the fact that the protesters, like their counterparts in Sudan, Morocco, Pakistan and Russia, have sought to avoid the risks of the military seeking to implement a Saudi-United Arab Emirates template to blunt or squash the protests.

The core lesson protesters learnt is that the protests’ success depends to a large extent on demonstrators’ willingness and ability to sustain their protests even if security forces turn violent. An Algeria that emerges from the African Cup final as the continent’s champion would give the protesters a significant boost.

It also constitutes an opportunity to ensure that Algeria does not revert to an environment in which violence is seen as the only way to achieve results.

Said a former senior Algerian intelligence official: “We will return to violence if there is no real democratic transition. The African Cup doesn’t fundamentally change that but does offer a window of opportunity.”

Author’s note: This story first appeared on Africa is a Country

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Iran: Second stage of suspension of commitments under JCPOA nuclear deal

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On May 8, 2019 – exactly a year after President Donald Trump’s catastrophically ill-advised decision to withdraw the United States from the Joint Comprehensive Plan of Action (JCPOA) and impose financial and economic sanctions on the Islamic Republic of Iran (IRI), Iranian President Hassan Rouhani said that Tehran was suspending the implementation of two of its commitments under the landmark nuclear accord, signed in 2015.  “Tehran has spent a whole year waiting for the remaining signatories to the agreement to fulfill their part of the obligations,” Rouhani said in televised remarks.  

Tehran insists that since the parties to the 2015 nuclear deal, above all the Europeans, have failed to fully meet their commitments concerning the economic part of the agreement, maintaining the JCPOA in its present form makes no sense. Iran did not follow the US example and leave the JCPOA though. It only warned the other signatories that it might do so, giving them two months to compensate for Washington’s withdrawal and guarantee Iran’s interests. This deadline expired on July 7.

During those past two months, Tehran refused to sell uranium enriched up to 3.67 percent to either Russia or the United States above the 300 kg limit.  By the time the JCPOA deal was signed, Iran had accumulated 10,357 kg of such uranium, and 410.4 kg of uranium enriched up to 20 percent. By 2019, Tehran had eliminated its stocks of 20%-enriched uranium and was selling surplus low-enriched uranium (LEU) to Russia and the US.  According to the terms of the JCPOA deal, Iran was allowed to enrich limited quantities of uranium for scientific purposes, and export surplus quantities exceeding the 300 kg limit. Now Iran is stocking up on LEU again. Tehran has been doing the same with its surplus heavy water necessary for the production of plutonium, which is at the heart of the production of plutonium-based nuclear weapons. Iran has a heavy water producing plant, which is not on the list of facilities banned by the JCPOA, but it is still not allowed to store more than 130 tons of heavy water. Tehran previously exported 32 tons of heavy water to the United States and 38 tons to the Russian Federation. After May 8, however, it started accumulating heavy water.

President Rouhani insisted that Iran’s interests, above all the freedom to sell oil and the lifting of sanctions imposed on its banking sector, be ensured.  No miracle happened though, as the European Union, above all Germany, France and Britain the United Kingdom have failed to create an effective mechanism to compensate for the negative impact of US sanctions on the Iranian economy.

On June 28, Germany, France and the United Kingdom set up INSTEX (Instrument in Support of Trade Exchanges) – a new transaction channel that will allow companies to continue trading with Iran despite US sanctions. However, this system has so far focused on the supply of humanitarian goods to Iran (medicines, medical equipment, food). Iran wants more though: it needs free oil exports and free banking.

Sadly, the European powers are not yet ready to guarantee this, apparently hating the prospect of coming under Trump’s sanctions.

Iran is now announcing a new stage of its struggle. As it earlier promised, within the next 60 days Tehran will lift restrictions on the level of uranium enrichment (currently at 3.67 percent) bringing it to a level it needs. Weapons-grade uranium is enriched to 90 percent. It’s really a long way moving from 3.67 percent all the way up to 90 percent. What is really dangerous, however, is that Iran is now moving exactly in this direction. Back in January, Ali Akbar Salehi, the head of the Atomic Energy Organization of Iran (AEOI), said that his country was now all set to resume uranium enrichment in a wider scale and with a higher level of enrichment.

On June 7, AEOI spokesman Behrouz Kamalvandi said that Iran was fully prepared to increase uranium enrichment to any level, adding that the enrichment level would soon be brought to 5 percent. The following day, he said that “Iran has surpassed the uranium enrichment level of 4.5 percent. The level of purity is sufficient to meet the country’s needs in providing fuel to our power plants,” he added.

In the second stage of suspensions of its commitments under the JCPOA deal, Iran will move forward also on the plutonium track. It has just announced the termination of work done by a special group of experts concerning the reconstruction of a heavy water reactor in Arak. The IR-40 reactor was designed to produce up to 10 kilograms of weapons-grade plutonium a year, which is enough fissile material for making approximately two plutonium bombs. The JCPOA envisages reformatting the reactor so that it is not capable of producing weapons-grade plutonium. It is exactly for this purpose that a working group was set up consisting of representatives of the Atomic Energy Organization of Iran, the Atomic Energy Authority of China and the US Department of Energy. In 2017, experts from the United States replaced their British colleagues during the Arak reactor redesign process. According to an official Iranian report released in April 2018, “conceptual reconstruction of the reactor” had already been completed. However, the reconstruction process is slow and easily reversible. At the end of May, Iranian Deputy Foreign Minister Abbas Araghchi said that “We don’t count on JCPOA and JCPOA participants in the Arak project anymore. We will do it ourselves.”

Finally, it was announced that the process of accumulating heavy water for the IR-40 reactor was in full swing. Allaying all doubts, President Hassan Rouhani said loud and clear that after July 7, Iran would refuse to reformat the Arak reactor and would bring it back to a state, which foreign countries describe as dangerous and capable of producing plutonium, if the other signatories to the JCPOA agreement failed to honor their obligations.

Unpleasant news, but fully predictable too, following the US withdrawal from the nuclear deal. It took the whole world by surprise.

Berlin has expressed “grave concern” overTehran’s plans to enrich uranium above levels allowed by the JCPOA deal.

“We have repeatedly appealed to Iran not to take further action to destroy the nuclear deal. And now we are urging Tehran to refrain from any steps that are contrary to its commitments under the JCPOA system,” the German foreign ministry said in a statement.

Paris was seriously alarmed by Tehran’s stated desire to raise the level of uranium enrichment above 3.67 percent fissile purity set in the JCPOA.

“We urge Iran to cease all activities that do not meet its obligations under the JCPOA,” the French foreign ministry said in a statement.

According to the Élysée Palace, President Emmanuel Macron will soon resume consultations on this issue with the Iranian authorities and concerned international partners, and will, before July 15, examine conditions for resuming dialogue with all parties.

London will remain committed to the nuclear deal with Iran, although it believes that Tehran’s actions breach the terms of the agreement, the British Foreign Office said. Simultaneously, the Foreign Office is coordinating its actions with the other signatories to the JCPOA deal and discussing with them what should be done next.

The European Union is extremely concerned about Iran’s plans and is urging Tehran to roll back its nuclear activities, which are not covered by the JCPOA agreement. However, the EU is waiting for official conclusions by the IAEA concerning Tehran’s steps before it outlines its official response.

Iran will take center stage at the meeting of EU foreign ministers, scheduled for July 15.

The EU countries, as co-authors of the JCPOA accord, are mulling the possibility of holding a summit to discuss the situation.

Tokyo is equally worried about Iran’s intention to begin uranium enrichment above 3.67 percent, and urges Tehran to immediately resume the implementation of the JCPOA accord. Japan believes that the Islamic Republic should stick to its commitments under the nuclear deal.

Jerusalem believes that the steps being taken by Iran to raise the level of uranium enrichment are “moderate.” Meanwhile, Israeli Energy Minister Yuval Steinitz said that Iran is on its way to producing nuclear bombs.

Prime Minister Benjamin Netanyahu, for his part, described Iran’s new decision as “very dangerous,” and urged France, Britain and Germany to impose “paralyzing sanctions” on Tehran.

Washington, in the person of President Trump, called the Iranian officials “bad guys,” just as he usually does, and advised Tehran to be careful about what it says and does.

“Iran does a lot of bad things. The Obama agreement [on this deal in 2015] was the most foolish agreement that you will ever find,” Trump said. He added that there will be a very serious discussion of this issue, either now or within the next few days. “Iran will never have a nuclear weapon,” Trump said bluntly.

Echoing the president, US Secretary of State Mike Pompeo is equally tough on Iran intimidating Tehran with new sanctions and threatening to completely isolate the country if it makes no concessions.

The truth is, however, that all this mayhem around Iran was provoked by Washington, while Tehran is just trying to push back the best way it can.  Moreover, it is doing this strictly in the framework of the JCPOA, a document approved by Resolution 2231 of the UN Security Council. Article 26 of the JCPOA prescribes the European Union and the United States to refrain from re-introducing or re-imposing sanctions against Iran. Moreover, the Article states that Iran will treat a re-imposition of sanctions or the introduction of new nuclear-related sanctions “as grounds to cease performing its commitments under this JCPOA in whole or in part.” This is exactly what Tehran is doing.

Beijing describes President Trump’s policy of “putting maximum pressure” on Iran as the main reason for Tehran’s retaliatory decision to suspend the implementation of some of its commitments under the JCPOA deal. Simultaneously, China regrets the measures being taken by Iran, and calls on all parties to show maximum restraint and stick to the terms of the 2015 nuclear accord in order to avoid any further escalation.

Russia fully understands the reasons behind Iran’s actions, but still urges Tehran to refrain from taking any further steps that could complicate the situation. Mikhail Ulyanov, Russia’s Permanent Representative at International Organizations in Vienna, hopes that the level of uranium enrichment in Iran will not exceed 5 percent. He also believes that there is no danger of nuclear proliferation.

Russia’s Deputy Foreign Minister Sergei Ryabkov warned against attempts to overdramatize the whole situation and urged the parties to show restraint and keep the nuclear deal alive.

“We urge everyone to show restraint, we urge the European signatories to the JCPOA not to ramp up tensions over the issue. We urge our Iranian colleagues to be extremely responsible, as before, in what they do in this respect, especially where it comes to the implementation of a comprehensive safeguards agreement with the IAEA and an additional protocol to this agreement, not to mention maintaining Iran’s participation in the NPT accord. There have been alarming signals to this effect coming from Tehran and we would certainly not welcome, to put it mildly, any movement in this direction,” Ryabkov emphasized.

The IAEA has decided to hold an emergency meeting on the Iranian issue and the Agency’s Board of Governors met on July 10 to discuss concerns about the nuclear report issued by the Iranian authorities.

Virtually the entire world understands Tehran’s position and the measures it has been taking to counteract the US sanctions, but it still urges it to show restraint in order to avoid any further spike in tensions.

Is it really possible to defuse tensions? Well, this depends on multiple factors, both internal and external.

The main thing, however, is whether the European Union is able to make a dent in Washington’s financial, economic (and, above all, oil) blockade of Iran. Will Europe face a serious confrontation with the United States? How satisfied will Tehran be with the EU’s actions and assistance it could get on the matter from China and Russia?

Presently, these questions defy easy answers, although many observers believe that, unfortunately, these answers could be pretty pessimistic. Iran’s Deputy Foreign Minister Abbas Araghchi said that Iran would suspend ever more commitments to the JCPOA once every 60 days if its signatories failed to adhere to the terms of the landmark deal. 

What are the further steps that the Iranians could take as they roll back their commitments under the JCPOA deal? According to political analysts, a discontented Iran could keep stocking up on low-enriched uranium and heavy water above the caps set by the nuclear deal. The most dangerous thing, however, is that if Tehran starts to raise the level of uranium enrichment to 20 percent or above, it will restore the nuclear reactor in Arak to the condition it was in before the nuclear deal was signed, and limit, or even end, any oversight by IAEA inspectors. 

According to experts, the next, “reverse” re-equipment of the reactor to its pre-2015 state will take a lot of time and cost a lot of money. Despite the really drawn out process of conversion to a “safe” state, the head of AEOI Ali Akbar Salehi said in 2016 that after reconfiguration, the reactor would take between three and four years to go on-stream – sometime around 2020. The reactor, modified according to JCPOA specifications, is about 75 percent ready now. This means that “reverse-converting” it to a working “plutonium” state will take at least several years.

The same is true with the uranium program. According to the London-based International Institute for Strategic Studies (IISS), in 2013, at the height of its nuclear infrastructure development, of all enriched uranium stored in Iran, about 120-130 kg of 93 percent-enriched uranium could be obtained, which is enough for building five nuclear charges.

US and Israeli physicists believed that it would take between a year or two for Iran to achieve these indicators. It was a purely mathematical calculation though, which ignored a whole variety of external and internal factors. The specialists were not sure that Iran possessed sufficiently advanced technology and chemically pure substances to ensure a gradual increase in uranium enrichment up to 90 percent and be able to turn uranium from gaseous state to that of a high-quality metal, necessary for the creation of a nuclear charge.

Therefore, it would actually take Iran at least a decade to create a ready-for-use nuclear weapon (a missile warhead). And this provided there is no outside interference.

In view of the above, it would be safe to assume that Iran will take months, and in some cases even years, to restore the highest level of its nuclear infrastructure development. This is the relative time frame within which Iran’s nuclear program could get a new start. If, of course, it is allowed to make such a start.

How to prevent a military solution to the Iranian nuclear issue? This question takes us back again to the year 2012. There are two answers: war or negotiations. Since no one wants war, either in Tehran, Washington, Jerusalem or anywhere else, then negotiations are the way to go.

Washington appears ready for negotiations with Tehran without any preliminary conditions, that is, with continued US pressure on Iran and tough sanctions.

Tehran may start negotiations with Washington if these sanctions are lifted and with a permission from the country’s supreme leader Ayatollah Khamenei.

On May 31, Russian Foreign Minister Sergei Lavrov said: “We will welcome the start of negotiations between the US and Iran … <…> But we are convinced that negotiating from the position of “first, I will strangle you economically, and then you will beg us to negotiate,” is not something we perceive as a model for behavior on the foreign policy front.”

From our partner International Affairs

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