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Feature: Iran debate rages in Washington as clock ticks down on Trump decision

Houston (Platts)--6 Oct 2017 219 pm EDT/1819 GMT


US President Donald Trump says he has already made up his mind what to do with the Iran nuclear deal, and yet lawmakers and his top advisers are using the final 10 days before a key deadline to argue opposite sides of the issue.


  • White House to announce decision 'in the coming days'
  • Trump expected to pressure Europe, Iran for new terms
  • US could reimpose sanctions if renegotiation fails

The decision could determine whether the US reimposes sanctions that kept as much as 1 million b/d of Iranian crude off the global market.

Because the October 15 deadline falls on a Sunday, Trump is expected to announce the decision at the end of next week.

White House spokeswoman Sarah Sanders said in a briefing Thursday that Trump would announce his Iran strategy "in the coming days."

"That will be a comprehensive strategy, with a unified team behind him supporting that effort," Sanders said.

Related Capitol Crude podcast episode: If US reimposes sanctions, Iran's major oil consumers could sway success

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ADVISERS ON BOTH SIDES


The argument for Trump to not certify Iranian compliance grew louder this week when Senator Tom Cotton, a member of the Armed Services Committee, said in a widely shared speech that "decertifying" Iran would be the only way to pressure the deal's other parties to return to the negotiating table.

"The world needs to know we're serious, we're willing to walk away, and we're willing to reimpose sanctions -- and a lot more than that," said Cotton, an Arkansas Republican, at a Council on Foreign Relations event in Washington. "They'll know that when the president declines to certify the deal, and not before."

Nikki Haley, US ambassador to the UN, amplified that case by tweeting a link to Cotton's speech and adding that the senator "has a clear understanding of the Iranian regime and flaws in the nuclear deal."

On the other side of the debate, Defense Secretary Jim Mattis testified to Congress this week that staying in the Iran nuclear deal is in the national security interest of the US and that Trump should not abandon it without evidence of Iranian non-compliance.

"Overall, our intelligence community believes that they have been compliant. And the [International Atomic Energy Agency] also says so," Mattis told a House of Representatives committee.

Related: Find more content about Trump's administration in our news and analysis feature.


'DEAL MAKES US SAFER'


EU, UK, German, French ambassadors to the US also went to Capitol Hill to urge lawmakers to stick with the agreement.

"On the Hill today ... setting out why we think [the] Iran deal makes us all safer," Kim Darroch, British ambassador to the US, tweeted Wednesday.

Oil analysts continue to see the possibility of a reimposition of US sanctions if Trump tries to renegotiate the deal and fails to persuade the other six parties to return to the table.

Joe McMonigle, an analyst for Hedgeye Potomac Research, expects Trump to decertify Iran and push to renegotiate terms of the deal -- with European leaders, or possibly China, taking the lead in talks.

The 2015 nuclear deal was reached between Iran and China, France, Germany, Russia, the UK and the US.

"I think you'll see at least the rest of the year be used to try to get the Iranians to agree to some further concessions," he said. "I don't think the chances of success are very high for that, so my guess on timing would be the end of the year or early next year for sanctions getting reimposed."

McMonigle thinks unilateral US sanctions would have a significant impact on the oil market, while other sanctions watchers see less of an impact.

Elizabeth Rosenberg of the Center for New American Security predicts reimposed US sanctions would see grudging and uneven compliance by international energy companies and would not be able to entirely stop crude flows that returned to the market in 2015.


THREAT OF NEW SANCTIONS


McMonigle said the administration would only go through the effort to decertify Iran if it was willing to follow that up with additional sanctions if negotiations fail.

"That's the only reason why we'd be going through this exercise," he said. "He's doing it to get a better deal, and in the absence of a better deal to reimpose sanctions. He's not doing this to just make the point that they're not in compliance."

Mark Dubowitz, CEO of the Foundation for Defense of Democracies and an Iran hawk who has criticized the deal from the beginning, said sanctions could be reimposed in six months if not sooner.

"I can't really gauge Trump's patience level," he said. "It's not indefinite, it's not limitless. But the conversation's already begun."

Dubowitz, who said he talks regularly with the administration on the issue, predicts Trump will decertify Iran on the basis of the nuclear deal not being in the "vital national security interest" of the US and because the relief from Western sanctions was not proportionate to Iran's nuclear concessions.

But he does not see Congress or the White House immediately turning to sanctions.

"I think there's a clock that will start ticking as soon as he refuses to certify and then there will be a window of time for Europeans to come on board," Dubowitz said. "I think those discussions have begun already.

"It's eminently doable in three months, and six months would be very generous."

A freeze on Western sanctions since the nuclear deal has allowed more than 1 million b/d of Iranian crude to return to the global market.

Iran's oil production increased to 3.83 million b/d in August from 2.8 million b/d in 2015, before the sanctions were lifted, according to the Energy Information Administration.

--Meghan Gordon, meghan.gordon@spglobal.com

--Edited by Valarie Jackson, valarie.jackson@spglobal.com




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