Obama lost leverage in Iran nuclear talks by easing sanctions, critics say

U.S. and Iranian negotiators struggled to clinch a nuclear deal as Tuesday’s self-imposed deadline drew ever nearer, even as critics said the White House already had given up a key point of leverage by easing pressure on Iran’s economy in the months leading up to a prospective deal.

Top diplomats from the U.S. and five allies have been meeting with Iranian negotiators in Lausanne, Switzerland, for days in a last-ditch try to hammer out the blueprint for a final nuclear accord by the end of June. Both sides said a final deal is still out of reach.

“We are working late into the night and obviously into tomorrow,” said Secretary of State John F. Kerry. “Everyone knows the meaning of tomorrow.”

International officials said the sides have made progress, with Iran considering demands for further cuts to its uranium enrichment program but resisting time limits to technology it could use to make nuclear weapons. The biggest sticking point among many that remain centers on how quickly and how widely U.S. sanctions on Iran will be removed.

Mark Dubowitz at the Foundation for Defense of Democracies said in an interview that Washington’s economic leverage over Tehran has slipped significantly as the Obama administration eases the pressure of sanctions enforcement in hopes of cutting a deal.

“If we don’t retain significant economic leverage, then we do not have the ability to enforce what will be a deeply flawed nuclear deal against Iranian cheating,” he said.

The sanctions and the post-deal prospects for the Iranian economy are looming as a bigger issue as the talks reach a critical phase. Nearly all Republicans and several key Democrats on Capitol Hill share Mr. Dubowitz’s view that the Obama administration has given too much to Iran by easing sanctions throughout the negotiating process.

President Obama’s top advisers strongly reject that assessment. Deputy Secretary of State Antony Blinken, formerly the president’s deputy national security adviser, told Congress this month that existing sanctions are still inflicting massive pain on Iran’s economy.

“In the event Iran were to renege on any commitment it made, the sanctions would snap back in full force,” Mr. Blinken told the House Foreign Affairs Committee on March 19.

At the same hearing, Adam Szubin, acting Treasury undersecretary for terrorism and financial intelligence, said that even though the U.S., Iran and other world powers signed a joint plan of action for negotiating more than a year ago, he and others in the administration “have worked very intensively to enforce our sanctions.”

“In the past 15 months, we’ve targeted nearly 100 actors, individuals and companies who are either helping Iran evade sanctions or helping Iran conduct other misconduct,” Mr. Szubin said. “We have imposed nearly of half a billion dollars in penalties on companies that were conducting illicit transactions under our Iran sanctions, and we will not soften our enforcement of existing sanctions.”

A debate over numbers

After Mr. Szubin’s remarks, Treasury officials provided to The Washington Times a rundown of six sanctions enforcement announcements from December 2013 to December 2014.

Among the more high-profile developments was in April 2014, when Treasury sanctioned a host of individuals for operating front companies in the Middle East and China on grounds that they were helping Tehran procure ballistic missile equipment and evade oil sector sanctions.

But Mr. Dubowitz and others at the Foundation for Defense of Democracies said the sanctions haven’t been enough and the administration’s claims of toughness were overblown.

A fact sheet prepared by the Foundation for Defense of Democracies last week suggested that the Treasury adjusted some dates to bolster its argument, counting enforcement actions taken before the joint plan of action was implemented in January 2014.

The Foundation for Defense of Democracies fact sheet also noted that the Treasury Department has not designated a single Iranian entity for sanctions in the first 89 days of 2015.

“Since we’ve been at the [negotiating] table, we’ve seen a de-escalation of sanctions pressure and a pace of designations that has been insufficient to keep Iran in an economic crisis,” Mr. Dubowitz said. Iran’s economy was “on its back” in 2012 and 2013 but is “now on its knees and getting up to its feet.”

“It’s not that [the Treasury Department] hasn’t been designating enough Iranian entities,” Mr. Dubowitz said. “The most important thing is that these designations don’t represent a significant economic escalation. They’re not the shocks that are going to do severe damage.

“While designations and sanctions have continued, it’s clear the White House is loath to do anything that would jeopardize the nuclear negotiations and has been more reticent than it should be in targeting Iran’s illicit and destabilizing activities in the Middle East and beyond,” he said. “The net result will be a nuclear deal that paves the way for Iran to get a weapon and to achieve regional dominance.”

Not everyone agrees.

“I believe enforcement has remained fairly rigorous,” said Suzanne Maloney, a senior fellow at the Brookings Institution, adding that there may be other reasons for slower sanctions designations.

“We’ve been in the business of pursuing Iranian entities through these sanctions for over nine years now,” she said. “Most of the Iranian organizations involved in terrorism, military or nuclear activity were designated by the 2010 to 2012 time frame — so now what you see is this cat-and-mouse game of making sure the Iranians don’t find ways of evading sanctions that are already in place.”

At the same time, Ms. Maloney said, there is “very little evidence of some sort of major breakthrough happening on the part of the Iranians — or that there has been a wink-and-nod approach to sanctions enforcement since the beginning of the negotiations.”

If a deal is reached with broad sanctions relief to Iran, she said, the impact is unlikely to be as quickly felt in Tehran as critics might think. The world’s major investors will remain wary of being targeted by Washington if the deal collapses, she said.

“What the Iranians want is the return of major European investors — the long-term sustained investment by all the major European oil and financial companies, as well as other sectors like automotive, from British, French and German companies,” Ms. Maloney said. “[But] my very strong impression is that most of the major players will move very cautiously even if they have a clear opportunity to do so.”