April 12, 2022 | Insight

How Russia Could Earn Billions From Biden’s Revival of the Nuclear Deal With Iran

April 12, 2022 | Insight

How Russia Could Earn Billions From Biden’s Revival of the Nuclear Deal With Iran

The Biden administration has two goals that are at odds with each other. It wants to ratchet up economic pressure on Russia, and it wants to revive the 2015 nuclear deal with Iran. The problem is the 2015 deal — formally known as the Joint Comprehensive Plan of Action (JCPOA) — permits Russia to undertake civil nuclear projects in Iran worth billions of dollars. The administration should insist on stripping those provisions from the nuclear deal, or it should walk away from the negotiating table in Vienna.

Last month, Russia forced a pause in the Vienna talks to ensure the protection of its financial interests. Moscow seeks to resume several civil nuclear projects in Iran that it previously carried out under the JCPOA, such as a $10 billion contract for Russia to build two additional reactor units at the Bushehr nuclear power plant. The Kremlin also seeks to recoup a $500 million debt for past work. More broadly, Russia wants to avoid running into Western sanctions for any such nuclear work in Iran.

Yet there is no technical reason a nuclear deal with Iran should protect the Kremlin’s interests. On March 22, when reporters asked whether Moscow had to be the party that carries out JCPOA-permitted projects, U.S. National Security Advisor Jake Sullivan stated, “We don’t have to rely on any given country for any particular element of the deal, but that is a role that Russia played in the past.” The following day, State Department spokesman Ned Price seemed even more amenable to protecting Moscow’s interests; he said Russia’s role was one “we’d be willing to entertain.”

This approach is mistaken, especially for an administration that claims it wants to hold Russia accountable for its aggression against Ukraine. Furthermore, according to an April 8  Washington Free Beacon report, if Moscow retains participation in these projects, several Russian state-run firms stand to benefit.

For work at the Bushehr plant, four subsidiaries of Russia’s state-owned Rosatom corporation — Rusatom Energy International, Atomstroyexport, TVEL Fuel Company, and Techsnabexport (TENEX) — would receive a combined total exceeding $10 billion to supply reactor fuel, remove spent fuel, oversee operations, and carry out new construction.

The JCPOA also permitted Novosibersk Chemical Concentrates Plant — another Rosatom subsidiary — as well as TVEL Fuel Co. to purchase Tehran’s enriched uranium stockpile in exchange for natural uranium provided by Kazakhstan. Allowing Iran to import natural uranium ensured Tehran could resume enrichment and violate the JCPOA at a time of its choosing, which it did in July 2019.

In May 2019, as part of its maximum pressure campaign against Iran, the Trump administration announced it had ended special “waivers” from U.S. sanctions that permitted Russia’s Iran-related projects to move forward. Washington prohibited both the Russian Bushehr expansion project and the purchase of natural uranium. The administration stated that any expansion of Bushehr beyond the existing unit and any transfers of enriched uranium out of Iran in exchange for natural uranium would be “exposed to sanctions.”

In addition, under the JCPOA, Russia’s TVEL Fuel Co. carried out a stable isotope production project at Iran’s below-ground Fordow enrichment plant, originally built by Tehran to produce nuclear material for atomic weapons. Tehran modified only about a dozen of its 348 centrifuge machines set aside for stable isotopes, and never complied with a JCPOA-mandated conversion of the plant into a “nuclear, physics, and technology centre” for international cooperation. Thus, when Tehran quickly resumed — and then expanded — uranium enrichment at the plant in November 2019, the Trump administration swiftly terminated the waiver for Russia’s work at Fordow.

Russia’s TVEL Fuel Co. also provided Iran with 20 percent enriched uranium fuel to run its small research reactor, which produces medical isotopes, and removed spent and scrap fuel. The Trump administration ended this waiver in May 2020, citing Iran’s ongoing “nuclear brinkmanship,” Tehran’s “expanding proliferation activities,” and the fact that the research reactor would not require new fuel for some time.

When the Trump administration announced in 2019 that Russian entities would face sanctions for continued Iran nuclear work, those entities reportedly halted their efforts. Yet in February 2022, as part of its Iran deal diplomacy, the Biden administration unilaterally restored the sanctions waivers.

The situation now begs for a course correction. There is no need for Russian firms to engage in uranium transactions with Iran. Under a restored accord, the Islamic Republic could comply with the deal’s limits on enriched uranium by simply blending it down to natural uranium. The administration should announce that it will rescind sanctions waivers for all projects carried out by Russian entities and should threaten new penalties.

Washington should also urge its allies and partners that conduct business with Rosatom to unwind or pause their contracts. For example, Rosatom is currently spearheading at least eight foreign reactor projects, including ones with NATO members Hungary and Turkey and NATO partner Finland. More broadly, Washington must explain how it will prevent Moscow from using Iran’s financial system as a sanctions-evasion hub under a reported quid pro quo arrangement between Russia and Iran.

Governments must make increasingly difficult choices about cutting off Russia’s economy. But as Sullivan acknowledged, the Iran deal can at least proceed without Russia’s input — even if the wiser option would be not to proceed at all with what appears to be a deeply flawed agreement.

Andrea Stricker is a research fellow focusing on nonproliferation issues at the Foundation for Defense of Democracies (FDD), where she contributes to FDD’s Iran Program and Center on Economic and Financial Power (CEFP). For more analysis from Andrea, the Iran Program, and CEFP, please subscribe HERE. Follow her on Twitter @StrickerNonpro. Follow FDD on Twitter @FDD and @FDD_Iran and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focused on national security and foreign policy.


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