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Trump blasts Iran but pushes Congress to fix, stay in nuclear deal

Washington (Platts)--13 Oct 2017 239 pm EDT/1839 GMT


US President Donald Trump has essentially kicked the fate of the Iran nuclear deal to Congress, urging lawmakers to stay in the agreement but to impose new triggers that would automatically snap US sanctions back into place based on Tehran's actions.


  • White House proposes parallel law to trigger Iran sanctions
  • Key senators release legislative blueprint to tighten Iran deal
  • Analysts split on oil market impact of unilateral US sanctions

And yet Trump threatened in a speech Friday to pull the US out of the 2015 international agreement known as the Joint Comprehensive Plan of Action if Congress does not make the fixes.

"It is under continuous review, and our participation can be canceled by me, as president, at any time," he said.

Two key senators distributed a legislative blueprint Friday for fixing the JCPOA by adding new snapback provisions to a US oversight law.

For now, that means joint US/EU sanctions that stopped more than 1 million b/d of Iranian oil flows into Europe and Asia remain frozen. The sanctions were eased in January 2016 in exchange for Iran agreeing to curtail its nuclear program.

Iranian production has climbed to 3.83 million b/d as of September, compared with 2.91 million b/d in January 2016 when sanctions were lifted, according to S&P Global Platts survey data.

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TRUMP SEES 'VERY REAL THREAT'


Despite the International Atomic Energy Agency concluding that Tehran is abiding by the agreement, Trump said the Iranian regime has committed "multiple violations," including stockpiling heavy water and blocking inspectors.

He said Iran has received "massive sanctions relief" under the JCPOA while continuing to develop its missiles program.

"Based on the factual record I have put forward, I am announcing today that we cannot and will not make this certification," Trump said. "We will not continue down a path whose predictable conclusion is more violence, more terror and the very real threat of Iran's nuclear breakout."

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LEGISLATIVE FIX


The Trump administration's seemingly contradictory decision -- decertifying Iranian compliance while Secretary of State Tillerson acknowledged that the country remains in "technical compliance" -- presents a complicated message to send to Capitol Hill. And Trump's poor track record pushing his legislative agenda through Congress adds uncertainty.

But Friday morning, Republican Senators Tom Cotton of Arkansas and Bob Corker of Tennessee, were already promoting a fact sheet on "Fixing the Iran Deal" that was developed in consultation with the White House.

The senators want an "automatic snapback of US sanctions should Iran go under a one-year 'breakout' period and move closer to a nuclear weapon." The proposal would make the Iran oversight law "remain in force indefinitely, effectively ridding the JCPOA of its sunset provisions as they apply to US sanctions."

"The legislation would not conflict with the JCPOA upon passage," the senators' fact sheet said. "Instead, it would set conditions that halt Iran's nuclear program and provide a window of time for firm diplomacy and pressure to work."


TILLERSON: NOT A 'SLAM DUNK'


Tillerson explained the strategy Thursday in a briefing to reporters that was embargoed until Friday morning.

"I don't want to suggest to you this is a slam dunk up there on the Hill. We know it's not," Tillerson said Thursday. "People have very strong feelings about this nuclear arrangement with Iran. We also feel strongly."

Tillerson said one of the weaknesses of the deal was that "Congress never really got to express its view" of the Iran deal, except for after the fact through oversight legislation that created the requirement for the president to certify Iran's compliance every 90 days.

He said Congress has three options for addressing the Iran deal: do nothing; reimpose the frozen US sanctions, which Tillerson acknowledged would amount to the US walking away from the nuclear deal; or amend the oversight legislation to include "very specific trigger points" that will cause the sanctions to snap back based on Iran's activities.

The White House will push the third strategy, along with an effort to work with allies in the nuclear deal to address enforcement issues and a sunset clause.

The plan would have to pass both houses of Congress.

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


'WE MAY BE UNSUCCESSFUL'


Tillerson said the administration is not recommending reimposing the sanctions now because "that's tantamount to walking away" from the deal.

"The president on many occasions talked about either tearing the deal up or fixing the deal," Tillerson said. "He said many times we've got to fix this deal. What we're laying out here is the pathway we think provides us the best platform from which to attempt to fix this deal.

"We may be unsuccessful, we may not be able to fix it. And if we're not, then we may end up out of the deal."

But Tillerson said before that happens, Trump is saying: "We'll try. We'll go try to fix it."

"I think you're going to hear that he's not particularly optimistic," he said.

Trump's decision to decertify Iranian compliance starts a 60-day period created by the oversight legislation that allows Congress to pass fast-track legislation reimposing sanctions without committee review or threat of filibuster. If lawmakers do not take action in 60 days, they can still pass legislation through regular order.

Analysts disagree on the impact of the possible reimposition of US sanctions, especially if European sanctions remain frozen. Some see a major impact on par with the pre-deal sanctions that could send oil prices soaring, while others expect many oil traders to find workarounds.


EU SAYS DEAL 'CANNOT BE RENEGOTIATED'


Colin Kahl, a Georgetown University professor and former deputy assistant to President Barack Obama, said the proposed legislation would "unilaterally change the terms of the nuclear deal."

However, Corker told reporters Friday that White House and State Department lawyers concluded the legislation would not alter the JCPOA.

European leaders said they will resist any attempts to reopen the nuclear deal.

"JCPOA cannot be renegotiated," an EU senior official said Friday. "All other concerns have to be addressed outside this agreement."

EU officials have been talking to US leaders "to make the case that all the other issues of concern with Iran will not be better served if we undo the nuclear non-proliferation agreement," the official said.

On Monday, EU foreign ministers will meet in Luxembourg to discuss the Iran deal and other issues.

In the US, White House advisers and lawmakers have spent the past several weeks urging Trump not to blow up the deal because it could set Iran on the path to develop nuclear weapons.

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

--Siobhan Hall, siobhan.hall@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com




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