June 28, 2023 | Memo
How Congress Should Respond to an Interim Iran Deal
Background
The Biden administration and Iran are reportedly negotiating over an informal, unwritten agreement that would entail significant U.S. concessions to the Islamic Republic — parts of which may already be underway.1 Most significantly, America would provide Iran with billions of dollars in sanctions relief in exchange for mere pledges by Tehran to refrain from enriching uranium at weapons-grade levels. Under the arrangement, Iran reportedly will be permitted to continue enriching to 60 percent purity. From a technical perspective, that is 99 percent of the effort required to produce weapons-grade uranium enriched to 90 percent purity. In practice, Iran could still expand its nuclear capabilities and advance toward the nuclear threshold.2
In addition, the arrangement would entail U.S. ransom payments to Tehran in exchange for the release of three American hostages in Iran — Siamak Namazi, Emad Shargi, and Morad Tahbaz — whom the regime imprisoned on fabricated espionage charges.
At the same time, by keeping details of the agreement secret and avoiding any acknowledgment of it, the Biden administration may be seeking to evade the Iran Nuclear Agreement Review Act (INARA), which requires Congress to review any nuclear-related deal with Iran.3 The law enables Congress to pass a resolution of disapproval within 30 days of any agreement’s finalization — regardless of the form the agreement takes — that would prevent the executive branch from providing any sanctions relief.
Reported Elements of the Deal
A wide range of press reports has identified the likely parameters of any informal, unwritten agreement with Iran. The main incentives for Iran are financial. While it remains unclear whether the nuclear arrangements and the hostage arrangements constitute two separate agreements or two parts of the same accord, the understandings between Washington and Tehran would reportedly release Iranian funds held in Iraq and South Korea, provide Iran with financial assistance from the International Monetary Fund (IMF), and relax enforcement of U.S. sanctions.4 In mid-June, Oman’s foreign minister, Sayyid Badr Albusaidi, said he believed a hostage deal was nearing completion.5 Notably, the Sultanate of Oman served as a backchannel for talks between Washington and Tehran prior to the 2013 interim nuclear deal that led to the 2015 nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA).6
A February 2023 report detailed an ongoing hostage negotiation between Washington and Tehran that would include the release of $7 billion in sanctioned funds held in escrow under U.S. sanctions laws in South Korea.7 A bank in Qatar or another third country would process the transactions. The Biden administration may argue that Tehran can use the $7 billion only for “humanitarian purposes” or to help pay down Tehran’s outstanding debts. But money is fungible, and this will be yet another bailout for Tehran and its faltering economy that would free up more resources for Tehran’s missile, military, and nuclear programs, and strengthen the regime’s infrastructure of repression at home.
The United States has already provided Iran with significant financial concessions in an effort to reach a deal. Earlier in June, the Biden administration reportedly authorized the release of more than $2.7 billion held in escrow in Iraq to allow Iran to pay off its debts.8 Press reports suggest Iran has up to $7 billion more held in Baghdad that the Iraqi government could release in the weeks and months ahead.9 Likewise, since May 2022, the Biden administration has only sporadically enforced sanctions against illicit Iranian and foreign networks supporting trade in oil and petrochemicals.10 Estimates of Iranian oil exports in May reached 1.5 million barrels per day, Iran’s highest export number since the United States withdrew from the JCPOA in 2018.11
Reports of new concessions are emerging. The head of the Central Bank of Iran (CBI), an institution sanctioned by the U.S. Treasury Department for financing Iran’s Islamic Revolutionary Guard Corps (IRGC), a designated foreign terrorist organization, recently visited Washington for IMF meetings.12 Iran’s finance minister, Ehsan Khandouzi, later claimed that the regime would soon receive a cash injection from the IMF.13 Press reports estimate the prospective IMF bailout at nearly $7 billion.14 The United States blocked such a bailout in 2020, and U.S. law mandates that the American executive director at the IMF oppose the allocation of any funds to a state sponsor of terrorism, such as Iran.15
In exchange for the U.S. concessions, Iran would continue its foreign and security policy but delay further escalation with respect to its nuclear program, military support for Russia, and attacks against select U.S. positions in the region.
Media reports vary regarding the exact parameters of Iran’s nuclear “concessions,” with the latest account from the New York Times stating that Tehran would merely commit not to enrich uranium above 60 percent purity (and reportedly without stockpiling at 60 percent levels), which Iran has been producing since April 2021.16 Notably, twenty percent and above is considered highly enriched. In effect, the United States would be paying Iran to build its technical expertise and grow the rest of its uranium stockpiles, thereby enabling Tehran to sit comfortably on the nuclear threshold until a time of its own choosing.
The New York Times report also suggests that Iran might agree to refrain from attacking American contractors in Syria and Iraq. However, Tehran could easily reverse this pledge at any time or deny its role in attacks committed by its terrorist proxies, which operate between Syria and Iraq and control a vital land corridor in the area.17 U.S. Secretary of Defense Lloyd Austin testified in March 2023 that Iran and its proxies had attacked U.S. forces in those countries 83 times since January 2021.18 There is also no indication that Tehran would cease ongoing plots to kill or kidnap former U.S. officials and Iranian Americans.
Iran may reportedly agree to refrain from transferring ballistic missiles to Russia as well, though it has not done so to date.19 Should Tehran provide Moscow with ballistic missiles to use against Ukraine, it would mark the most significant proliferation of Iranian ballistic missiles to another state in the history of the Islamic Republic. It would also offer Russia a more lethal precision-strike weapons system and enable Russia to conserve its own missile stockpile. It remains unclear if the upcoming termination of United Nations (UN) prohibitions in October 2023 on Iranian ballistic missile activity would change such an understanding.20 Notably, however, the agreement would be silent on Iran’s ongoing provision of one-way attack and combat drones, as well as ammunition, to Russia for use against Ukraine.21
Analysis of the Deal
Policymakers will need to carefully assess the prospective costs and benefits of this unwritten agreement.
1. The agreement will not prevent Iran from developing a nuclear weapon. It may instead bring Iran closer to the nuclear threshold.
As Iran’s supreme leader, Ayatollah Ali Khamenei, recently stated, any agreement he endorses would preserve, not trade away, Iran’s atomic infrastructure.22 Iran’s ability to escalate its nuclear program in the aftermath of the Trump administration’s withdrawal from the JCPOA occurred because the accord required Iran to store, and not destroy, excess centrifuges and nuclear material. In the rounds of diplomacy that led to the JCPOA, Washington failed to understand how instrumental Khamenei’s redlines about safeguarding Iran’s nuclear infrastructure were.23
In addition to repeating the same mistake of leaving nuclear infrastructure and centrifuges intact, this arrangement adds insult to injury by capping Iran’s uranium enrichment purity level at 60 percent, which the regime can quickly enrich to weapons-grade, or 90 percent. Notably, Iran briefly enriched to 83.7 percent purity in early 2023.24 Experts in mid-June assessed that drawing on varied enriched uranium stockpiles, Tehran could produce enough weapons-grade uranium for up to eight nuclear weapons in three months.25 It could continue amassing additional quantities all while in the deal — making a bad deal even worse.
The administration might respond by saying this is merely an interim arrangement only meant to persuade Iran to hold back from crossing the nuclear threshold. Yet nothing in the reported arrangement would stop Iran from constructing a new underground nuclear facility that experts fear would make it all but impossible to stop Iran from developing nuclear weapons.26
2. The administration may be violating U.S. law by providing sanctions relief to Iran without first notifying Congress and waiting 30 days before releasing funds.
Based on current reports, the release of funds for Iran prior to the Biden administration’s submission of any agreement for congressional review may already entail a violation of INARA. The statute specifies that within five calendar days after reaching any agreement with Iran relating to its nuclear program, the president must transmit the full agreement to Congress “regardless of the form it takes.” The president must also transmit additional materials related to any agreement, “including annexes, appendices, codicils, side agreements, implementing materials, documents, and guidance, technical or other understandings, and any related agreements,” before the congressional clock starts. These parameters suggest that Congress must review even an unwritten, informal deal.
In this context, regime funds are held in Iraq and South Korea due to U.S. financial and banking sanctions that prohibit direct transfers with sanctioned Iranian financial institutions. The recent release of about $2.76 billion from Iraq is taking place because the administration issued a national security waiver provided for in law.27 While the administration claims the waiver is no different than any waiver previously issued regarding Iraq’s import of electricity from Iran, any issuance of the waiver, if also tied to a nuclear arrangement, could implicate the congressional review requirements in INARA. The same principle applies if the Biden administration decides to release the additional $7 billion in Iraq or to release the $7 billion funds frozen in South Korea.
3. The Biden administration may be violating U.S. law by allowing the IMF to provide Iran, a designated state sponsor of terrorism, with a multibillion-dollar bailout.
The International Financial Institutions Act requires the U.S. executive director at the IMF to “use the voice and vote of the United States to oppose any loan or other use of the funds of the respective institution to or for a country” that is designated as a state sponsor of terrorism. The law also prohibits funds to non-nuclear weapons states that may be seeking to develop a nuclear explosive device.28
4. The United States may inadvertently fund both sides of the war in Ukraine.
Despite warning the public of deepening military and strategic ties between Iran and Russia, the Biden administration is moving forward with an agreement that would indirectly subsidize Iran’s transfer of weapons to Russia.29 Lax sanctions enforcement would also open new opportunities for Russia to use Iran for expanded sanctions evasion and to learn from evolving Iranian sanctions busting practices. Meanwhile, the missile prohibitions on Iran enshrined in UN Security Council Resolution (UNSCR) 2231 are slated to expire in October 2023, thereby removing international restrictions on Tehran’s weapons transfers to Russia.
5. The administration would be breaking its commitment to maintain sanctions on the IRGC, which is a foreign terrorist organization.
Money trapped in bank accounts belonging to institutions like the CBI and the National Iranian Oil Company (NIOC) are currently subject to U.S. terrorism sanctions. The United States has previously sanctioned both the CBI and NIOC for financing the IRGC.30 No evidence suggests such financing has ceased. Unfreezing these accounts would constitute terrorism sanctions relief without a halt to Iran’s sponsorship of terrorism or ongoing plots to assassinate former U.S. officials. Additionally, the IRGC will benefit from an improvement in Iran’s financial position due to this terrorism sanctions relief.
6. The administration would be accepting the sunset provisions of the JCPOA, allowing key restrictions on Iran — including its nuclear program — to expire.
The JCPOA and UNSCR 2231 included a series of sunsets, or expirations to key international restrictions such as an arms embargo, a missile embargo, and limitations on nuclear enrichment and reprocessing.31 A new agreement would implicitly signal continued U.S. support for these sunsets, contradicting the Biden administration’s earlier assertions that it would seek a “longer and stronger” agreement with Iran.32
The only ways to remove those sunsets are to trigger the snapback provision contained in the JCPOA and UNSCR 2231 or to pass a new UN Security Council resolution.33 The snapback provision would not be subject to a veto by a permanent member of the UNSC, while a wholly new resolution would be. However, pursuant to UNSCR 2231, the snapback provision itself expires in 2025.
7. The agreement abandons the people of Iran and the national uprising that continues.
As FDD’s map of protests in Iran indicates, anti-regime protests in Iran that began in September 2022 continue to this day.34 Unfortunately, the regime’s crackdowns on protestors, women, and minorities, as well as its poisoning of schoolchildren and executions of political prisoners, persist.35 No one who claims to stand with the people of Iran can credibly support an arrangement that would enrich and thereby empower the regime.
8. The agreement will encourage more hostage-taking of Americans by the Islamic Republic and other U.S. adversaries.
The Islamic Republic’s hostage-taking track record is as old as the Islamic Republic itself. Iran’s revolutionaries have learned over the years that the West is willing to engage in lopsided and Faustian bargains with Tehran when faced with the regime’s willingness to use dual-citizens and foreign nationals as pawns to extract concessions. A massive ransom payment to Iran may lead to more incidents of hostage-taking of U.S. nationals abroad, both by Tehran and by U.S. adversaries who seek to extort America.
9. The agreement will likely lead to regional escalation instead of de-escalation.
The agreement effectively gives the Islamic Republic more resources and time to refine its broad array of asymmetric threats. More regional instability, not less, is therefore likely, thus fundamentally undercutting the narrative that the agreement is a responsible form of de-escalation. By enabling Iran to access $20 billion in freed-up cash and increase its energy exports, the United States would be effectively underwriting Iran’s provision of drones to Russia for use against Ukraine; offering the Islamic Republic more resources to bolster its ballistic missile arsenal; facilitating expanded Russian sanctions evasion through Iran using tried-and-true tactics perfected by Tehran; tacitly green-lighting more plots to assassinate U.S. officials; and formally abandoning brave Iranian protestors, who deserve maximum support amid their national uprising, which is continuing despite the regime’s violent crackdown. Moreover, Iran will be free to turn its focus and terror resources on Israel, increasing the likelihood of a regional conflagration.36
Policy Recommendations for Congress
Congress should consider a range of steps that would signal its disapproval of the new deal and blunt its deleterious effects. Lawmakers should make clear that the new agreement would undermine U.S. interests, harm America’s national security, and ultimately help advance the very outcome — a nuclear-armed Iran — that it seeks to prevent.
1. Whether or not Biden submits the deal to Congress, the House and Senate should consider passing resolutions of disapproval for any such arrangement between the United States and Iran.
2. The release of funds to Iran in violation of INARA would constitute a harm for which Congress could seek injunctive relief. Congress should use every legal tool available to stop the release of funds to Iran, potentially including a request for a temporary restraining order against the Treasury Department.
3. Congress should immediately launch an investigation into the Biden administration’s possible violation of the International Financial Institutions Act and demand immediate testimony from Treasury Department officials to determine what steps they have taken to facilitate an IMF bailout for Iran.
4. Congress should hold a hearing to provide the American public with details of the negotiations and to clarify (a) if the administration paid any ransom; (b) the relationship between the unfrozen assets in Iraq or South Korea and the repatriation of American hostages; and (c) the impact that the hostage arrangement could have on other American adversaries, like Russia, which are currently also holding U.S. citizens as hostages.
5. Using floor speeches, hearing opportunities, press releases, tweets, and other media opportunities, Congress should highlight the upcoming expiration of the UN missile embargo under UNSCR 2231 and dissuade the Biden administration, the United Kingdom, France, and Germany from allowing it to happen. Congress should also press the UK and European Union (EU) not to delist Iranian missile, military, and nuclear entities found in Annex II – Attachment 2 of the JCPOA. The UK and the EU are slated to delist these entities in October, per Annex V of the accord.37
6. Congress should consider legislation prohibiting the administration from using any waivers or licenses to allow the release of funds from accounts tied to entities designated for terrorism. Congress should also consider devising a mechanism to use frozen regime assets to compensate American victims of Iran-backed terrorism who have outstanding judgments against the Islamic Republic.
7. Congress should consider legislation tying any sanctions relief for Iran to certifications by both the U.S. intelligence community and the International Atomic Energy Agency that Iran’s nuclear program is purely peaceful and does not have any military dimensions.
8. Congress should pass a resolution supporting the restoration of an international standard of zero enrichment for Iran.
9. Congress should pass a resolution demanding the immediate snapback of UN sanctions on Iran.
10. Congress should pass legislation to tighten sanctions on those supporting the procurement, production, or proliferation of Iranian missiles.
11. Congress should seek clarity from the Biden administration regarding its intentions toward future sanctions relief mandated by the JCPOA. Specifically, under Annex V of the JCPOA, the United States is slated to remove from its sanctions lists a series of nuclear-related persons and entities found in Annex II – Attachment 4 of the deal.38 Lawmakers should ask the administration whether it still intends to lift these sanctions.
12. Congress should pass a resolution declaring that providing access to any funds for the Islamic Republic would constitute an abandonment of Iranian protestors, including but not limited to women, minorities, and dissidents. Lawmakers should also swiftly pass a law requiring the administration to apply human rights sanctions on Iran’s supreme leader and president.
13. Congress should review U.S. force posture in the Middle East and expedite military sales and transfers to Israel in order to deter further Iranian escalation and ensure a credible military threat of force exists should such deterrence fail.
14. Congress should pass a resolution supporting a new U.S. policy direction for Iran that combines maximum support to the Iranian people, strict enforcement of economic and financial sanctions, isolation within international fora, accountability at the International Atomic Energy Agency, the immediate snapback of UN sanctions, a credible military threat against Iran, and other policies that address the growing China-Russia-Iran axis.
