UK policy towards Iran - Foreign Affairs Committee Contents

4  The Joint Plan of Action

Previous international engagement with Iran on its nuclear programme

62. In 2003, as it became increasingly apparent that Iran had not consistently given accurate information about its nuclear activities, the IAEA sought a commitment to greater transparency by Iran, and international pressure grew for the IAEA to declare Iran non-compliant with the Safeguards Agreement. In 2006, it duly reported Iran to the UN Security Council, and resolutions imposing sanctions duly followed. From 2006, the UK, France and Germany were complemented by the US, Russia and China (forming the "E3+3" otherwise known as the "P5+1") in negotiations to contain Iran's nuclear activities. Latterly, the negotiating approach adopted by the P5+1 could be summarised as one with red lines of "stop, shut, ship":

·  Stop production of 20% enriched uranium;

·  Shut the Fordow facility (the subterranean enrichment facility, whose existence was not made public until 2009);

·  Ship out the current stocks of 20% enriched uranium to a third country.

The tortuous history of negotiations between the two sides is set out in some detail in the FCO's memorandum to our predecessors' inquiry into Iran in 2007-08.[137] Throughout, Iran has had a record of playing for time, "concealment and duplicity",[138] and "playing games" during negotiations.[139]


63. The second limb of policy towards Iran, alongside negotiation, has been the imposition of sanctions: these have accumulated steadily over the years are now multi-layered. They include sanctions authorised under UN Security Council resolutions, sanctions imposed unilaterally by the US, and sanctions agreed by the European Union. Not all sanctions relate to Iran's nuclear programme: some are imposed for human rights violations.[140] The main elements of the sanctions regime relating to the nuclear programme in force on 31 December 2013 are set out below.

Box 2: Sanctions related to Iran's nuclear programme
UN sanctions

Four of the six UN Security Council Resolutions relating to Iran's nuclear programme imposed new sanctions:

·  Resolution 1737 (23 December 2006) required states to prevent the supply, sale, or transfer of designated nuclear and ballistic missile-related goods to Iran; barred states from providing relevant technical or financial assistance, training or resources; and instructed states to freeze assets of designated individuals.

·  Resolution 1747 (24 March 2007) extended this assets freeze and called upon states to "exercise vigilance and restraint" in the supply, sale, or transfer of major military weapons systems and related material imposed an arms embargo

·  Resolution 1803 (3 March 2008) extended the asset freezes and called upon states to inspect Iranian ships and aircraft, and to prevent named individuals involved with the nuclear programme from entering or transiting their territory.

Resolution 1929 (9 June 2010) established a full embargo on sales of arms to Iran, instructed states to inspect vessels suspected of carrying prohibited Iranian cargo, and imposed an asset freeze on named companies or entities believed to be linked to the financing of proliferation activities.

European Union sanctions

A series of Council decisions gave effect to UN Security Council resolutions imposing sanctions on Iran. Further measures included:

·  Council Regulation (EU) 961/2010 (27 October 2010), which imposed additional restrictions on trade in dual-use goods and technology, and equipment which might be used for internal repression; restricted transfers of funds to and from Iran; and restricted Iran's access to the insurance and bonds markets of the Union

·  Council Decision 2012/35/CFSP (23 January 2012), which prohibited the purchase, import or transport from Iran of crude oil and petroleum and petrochemical products; prohibited any related financing or financial assistance; prohibited the sale, supply or transfer of key equipment and technology for the petrochemical industry; and prohibited the sale, purchase, transportation or brokering of gold, precious metals and diamonds, to from or for the Government of Iran

Council Decision 2012/152/CFSP (15 March 2012), which prohibited the supply of specialized financial messaging services (such as SWIFT), used to exchange financial data, to Iranian persons and entities, including Iranian banks and other institutions engaged in support for Iran's nuclear activities.

US sanctions

The current regime of US sanctions is based upon a succession of Presidential Executive Orders and legislative measures, including:

·  Executive Order 12170 (President Carter, November 1979), which "blocked" Iranian government property and interests where subject to US jurisdiction

·  Executive Order 12613 (President Reagan, October 1987), which prohibited import of goods or services of Iranian origin into the US

·  The Iran and Libya Sanctions Act (1996), which imposed sanctions on foreign companies investing more than $20 million in one year in Iran's energy sector

·  The Comprehensive Iran Sanctions, Accountability, and Divestment Act (2010), which imposed sanctions on persons providing goods, services (including insurance or financing), resources or support to Iran that would allow it to maintain or expand its domestic production of refined petroleum resources.


64. Much of the current economic woe in Iran is due to international sanctions, although mismanagement and lack of investment have also played a large part.[141] The embargo on oil sales has had far-reaching effects, as has the withdrawal of SWIFT, the international system for transferring funds. Professor Ehteshami told us that this had made cross-border transactions "nearly impossible" and had encouraged barter, which was less cost-effective and efficient.[142] Iran's Oil Minister was reported last year as having said that the fall in oil exports caused by sanctions was costing Iran between $4 billion and $8 billion per month.[143] According to one estimate, oil revenue lost to Iran amounted to $95 billion in 2011 and $26 billion in 2012.[144] Sanctions may also have hindered Iran's attempts to source ingredients for the solid fuel for its Sajjil missile.[145]

65. Many of those who contributed to our inquiry believed that sanctions had played some part in triggering Iran's more positive approach to negotiation on its nuclear programme, which had led to the adoption of the Joint Plan of Action.[146] It was said that sanctions had been "vital in bringing the Iranian government back to the negotiating table"[147] and that the economic pain which they had inflicted had forced Iran to make concessions.[148] Others, while not denying that sanctions had damaged the Iranian economy,[149] saw more of an indirect link to the newfound desire for more meaningful negotiations. They suggested that sanctions had led to an economic situation which had generated an appetite amongst the Iranian public for a rapprochement which would give them "a different direction for influence on the world";[150] and that in turn had played a large part in the election of President Rouhani, who had portrayed himself during the election campaign as "the man who could make a deal with the West".[151]

The Joint Plan of Action


66. Following the election of President Rouhani in June 2013 and the appointment of Javad Zarif as Foreign Minister, foreign ministers from the P5+1 met Mr Zarif in the margins at the UN General Assembly meeting in New York in September, where he presented a new proposal which Secretary of State Kerry described as "very different in the vision" of possibilities for the future.[152] Further meetings in Geneva in October and November led to the agreement of what is known as the Joint Plan of Action, on 24 November 2013.

67. The Joint Plan of Action envisages a two-step solution: the first step would last six months (renewable by mutual consent), in which the two sides would make specified concessions. It was agreed on 10 January 2014 that this six month period would start on 20 January. The second step, which would be implemented within one year of the adoption of the Joint Plan of Action, would be a "comprehensive solution", but this is defined only in terms of objectives: how they would be achieved was not spelt out. A series of negotiations on the second step began on 18 February 2014. The essence of the Joint Plan is set out below.[153]

Box 3: Main features of the Joint Plan of Action

Preamble and general principles

— Overall goal is a solution which would ensure that Iran's nuclear programme will be exclusively peaceful

— "Under no circumstances will Iran ever seek or develop any nuclear weapons"

— "Nothing is agreed until everything is agreed"

— A Joint Commission from both sides would monitor implementation of the first-step measures and would work with the IAEA "to facilitate resolution of past and present issues of concern"

First step measures, to last six months

— Iran to split existing stock of 20%-enriched uranium: half to be working stock of 20%-enriched uranium in oxide form for fabrication of fuel for the Tehran Research Reactor; the other half to be diluted to no more than 5%-enriched, with no reconversion line.

— Iran to suspend enrichment of uranium above 5%

— Iran to make no "further advances" in activities at Natanz, Fordow or Arak

— Iran to convert to oxide newly 5%-enriched uranium during the six-month period

— Iran to install no more centrifuges, other than "like-for-like" replacement of damaged centrifuges

— No reprocessing by Iran, or construction of facilities capable of reprocessing

— Arak reactor not to be commissioned; no fuel or heavy water to be transferred to the site; no more fuel to be produced or tested; no remaining components at Arak to be installed

— Iran to be permitted to continue research and development, including on enrichment

— Enhanced monitoring by the IAEA, including daily access for IAEA inspectors to surveillance records at Fordow and Natanz

— E3/EU+3 to pause efforts to further reduce Iran's crude oil sales: current customers to be able to continue to purchase current average amounts; EU and US sanctions on associated insurance and transportation services to be suspended

— US and EU sanctions on petrochemical services, gold and precious metals, cars and associated services (insurance, transport or financial) to be suspended

— No new nuclear-related UN Security Council or EU sanctions; US Administration to refrain from imposing new nuclear-related sanctions

— Financial channel to be established to permit trade in humanitarian goods (food, agricultural products, medicine and medical devices), using Iranian oil revenues held abroad

Final step measures

— All UNSC, multilateral and national nuclear-related sanctions to be lifted

— Rights and obligations of parties to Non-Proliferation Treaty and IAEA Safeguards Agreements to be reflected

— Will involve a mutually defined enrichment programme, with mutually agreed parameters consistent with practical needs, with agreed limits on scope and level of enrichment activities, capacity and stocks of enriched uranium

— Concerns about Arak reactor to be fully resolved

— Transparency measures and enhanced monitoring to be fully implemented


68. Agreement of the Joint Plan of Action generated a widespread sense of optimism that a resolution of the crisis in relationships with Iran might at last be within sight, and that Iran now had representatives who could be trusted and with whom the P5+1 and others could do business. World leaders variously described the outcome as "a victory for all"[154] and as something which offered "a real opportunity to achieve a comprehensive, peaceful settlement".[155] The Foreign Secretary described the Plan as "a thorough and detailed first-stage agreement that is a significant step towards enhancing the security of the Middle East and preventing nuclear proliferation worldwide".[156] The main dissenting voice was that of the Israeli Prime Minister: Mr Netanyahu described the agreement as "a historic mistake".[157]

69. Most witnesses to our inquiry voiced strong support for the Joint Plan of Action and saw it as a good deal[158] or at least good in parts.[159] It was described to us as "an impressive agreement … full of really concrete stuff",[160] and as "a good deal because Iran's capabilities in every part of the nuclear programme of concern are capped, with strong verification measures".[161] However, Mr Kessler, representing the Henry Jackson Society, told us that it was "more of a bad deal than a good one", for reasons which we discuss below.[162]

70. There was less optimism, when we took evidence early in 2014, about the chances of success in negotiating the second-stage "comprehensive" agreement. It was widely accepted that this would be "challenging",[163] even "formidably difficult".[164] Some gave a bleak forecast. The Henry Jackson Society stated that the Joint Plan of Action was "unlikely to lead to a comprehensive deal" and that the P5+1 should prepare for the "day after" its likely failure.[165] Mr Fitzpatrick,[166] while positive about the agreement, reckoned that there was just a 10% chance of success of a comprehensive deal being reached during the first six months of interim measures as the two sides were too far apart: he believed that it would be too difficult politically for Iran to accept the limits that would be required and for Washington to give Iran what it wanted in terms of lifting sanctions.[167]

Evaluating the Joint Plan of Action

71. Essentially, the Joint Plan of Action is a balanced set of concessions by the two sides: Iran has undertaken to suspend elements of its nuclear programme and to reduce its stocks of enriched uranium, in exchange for an acceptance by other parties that Iran may enrich uranium in the long term, and a limited relaxation of the sanctions regime imposed on Iran. Although the oil embargo remains, as does the withdrawal of facilities via SWIFT[168] for international financial transfers, any efforts by the P5+1 to strengthen sanctions against oil sales are "paused", and some of the substantial Iranian oil revenues held abroad may be used for trade in humanitarian goods.[169] The principles expressed in the Preamble to the Plan—that the overall goal is a solution which would ensure that Iran's nuclear programme will be exclusively peaceful, and that under no circumstances would Iran ever seek or develop any nuclear weapons—are ones which indicate a welcome intention.


72. The strengths of the Plan may be summarised as follows:

·  Suspending the installation or operation of extra centrifuges, combined with the temporary halt to production of 20%-enriched uranium and the dilution of half of existing stocks of 20%-enriched uranium, reduces scope for speedy enrichment. Mr Fitzpatrick believed that the "breakout time" required in order to produce enough material for a nuclear weapon had doubled, when in the absence of an agreement it might have halved.[170] Opinion varied on what a reasonable period for minimum "breakout" time might be: Peter Jenkins suggested six weeks,[171] but Oren Kessler, representing the Henry Jackson Society, said that "about a year" would be a reasonable objective for negotiators.[172]

·  It allows greater transparency on Iran's nuclear activities, through daily access for IAEA inspectors to surveillance records at the Natanz and Fordow facilities; and access to centrifuge assembly workshops, rotor production workshops and storage facilities, and to uranium mills and mines.[173]


73. The potential weaknesses of the Plan include:

·  The acknowledgement, as part of the comprehensive agreement, that Iran may have a mutually defined enrichment programme. This is something which was in the past a 'red line' for US and which is still opposed in principle by Israel, and which undercuts UN Security Council resolutions calling on Iran to cease enrichment activities. We are aware of concerns that to give a signal to Iran that it may enrich uranium would start a nuclear arms race in the region.[174] However, the Nuclear Non-Proliferation Treaty does not explicitly bar or restrict the right of parties to the Treaty to enrich uranium: it recognises the right of all parties "to develop research, production and use of nuclear energy for peaceful purposes" in conformity with non-proliferation obligations under Articles I and II.[175] Mr Kessler, representing the Henry Jackson Society, did not favour recognition of a right for Iran to enrich uranium, but he acknowledged that it was now unrealistic to argue for complete cessation.[176]

·  Construction of the reactor at Arak may continue. There is nonetheless an undertaking to submit updated design details to the IAEA and to conclude a Safeguards Approach for inspection. The Henry Jackson Society pointed out that the undertaking not to commission the reactor was meaningless while it was not ready for operation,[177] but this reservation has less force if the interim measures are rolled over for further periods of six months and construction nears the point at which the reactor might be commissioned.

·  Iran may continue its research and development activities, and these may encompass research into more advanced centrifuges which could be capable of significantly faster enrichment.[178] The Iranian Atomic Energy Organisation announced in December 2013 that it had completed initial tests on a new generation of centrifuges.[179]

·  While the conversion of 5%-enriched uranium to oxide is designed as a confidence-building measure, reconversion from oxide to uranium hexafluoride—the form in which it may be enriched—is not particularly difficult or time-consuming and could conceivably be done covertly.[180] The removal of oxide for reconversion would, however, be difficult to conceal from IAEA inspectors.[181]

·  There is no mention of the military facility at Parchin, where Iran is thought to have staged tests for a nuclear weapons detonation system and where the site is reported to have been sanitised, paved over and reconstructed in an attempt to conceal the nature of previous activities there.[182] Requests by the IAEA for access have been denied. The Foreign Secretary has accepted that Parchin "remains a point of difference" which "must be addressed as part of a comprehensive and final settlement".[183] It is hoped that a Joint Statement on a Framework for Co-operation between Iran and the IAEA might allow the Agency access to the Parchin site.[184]

·  No detail is evident on how historical concerns about breaches of the Safeguards Agreement might be resolved. A "Joint Commission" would work with the IAEA "to facilitate resolution of past and present issues of concern", but there is the possibility that past misdemeanours might simply be excused in the interests of a settlement for the future.[185]

·  The Plan is based upon declared facilities and could be seen as a cover for progress towards development of a nuclear weapon at hitherto undeclared sites.

74. The main objection voiced by those who are sceptical of the value of the Joint Plan is, however, the sanctions relief, officially estimated to be worth about $7 billion to Iran over six months.[186] Some expressed grave reservations about what they saw as too speedy a relaxation of sanctions:[187] the Henry Jackson Society and BICOM both believed that it had given Iran breathing space and a psychological boost, as well as "a tremendous boon to the economy",[188] and that a good deal of leverage had been lost.[189] Many in the US Congress argue that sanctions should, if anything, be strengthened rather than relaxed,[190] and the Henry Jackson Society argued that if the Joint Plan of Action did not lead to a comprehensive deal, sanctions should be expanded in order "to force Iran to agree to terms considerably more limiting than those outlined in the interim agreement".[191] We note that Iranian assets worth between $60 and $100 billion worldwide remain frozen.[192]

75. Others have voiced doubts about the value of strengthening sanctions in Iran. Mr Fitzpatrick has said that:

    Those who call for more sanctions in the mistaken belief that adding more pressure will induce Iran to 'cry uncle' and give up uranium enrichment do not understand Iran well at all. Political and social dynamics make such capitulation impossible ... Proud countries do not succumb to pressure by giving up the technology that has become a symbol of national sovereignty.[193]

He added that Iran was "far from being brought to its knees" and that it had "too diverse an economy and too many trading partners for sanctions to effect a stranglehold". He argued that sanctions were "already nearing their limit, as China refuses to further cut back oil purchases and EU sanctions are increasingly losing court challenges"; and he concluded that "if the P5+1 had not agreed to a deal in Geneva ... the international tide of opinion would have turned against sanctions".[194]

76. Peter Jenkins, a former UK Permanent Representative at the IAEA, also challenged the assumption that Iran was susceptible to coercion through sanctions, and he gave examples of occasions on which he believed that Iran had chosen to act in the way it did not because of the fear of sanctions but for other reasons, such as limiting damage to its reputation.[195]

77. It was also put to us that some elements within Iran welcome sanctions, partly for their propaganda value in vindicating the view of Iranian hardliners that the West is seeking to impede Iran's scientific progress,[196] and partly to relish the spirit of isolation which was a feature of Iran after the 1979 Revolution.[197] It is also claimed that parts of the Iranian Revolutionary Guard Corps benefit from black market profits from trade which evades sanctions.[198]

The merits of negotiation and its alternatives

78. Despite the various imperfections and gaps in the detail of the Joint Plan of Action, no-one suggested to us that the P5+1 should not have sought to negotiate a deal. The main alternative is the neutralisation or disruption of Iranian nuclear facilities and capability. Various covert attempts have already been made in this vein: it has been alleged that the US and/or Israel were responsible for the Stuxnet computer 'worm' which temporarily disabled centrifuges at the Natanz nuclear site in 2010 and interrupted the enrichment of uranium;[199] and Israel has been accused of assassinating Iranian nuclear scientists.[200] Mr Fitzpatrick told us in February 2013 that the Stuxnet worm had introduced a 'hiccup' into the programme but had not set it back, and he noted that the series of assassinations appeared to have come to a halt and had been "very forcefully denounced" by the then US Secretary of State, Hillary Clinton.[201]

79. The other route to neutralisation of facilities is the use of force. Mr Jenkins[202] told us that if there were conclusive evidence that Iran had decided to acquire nuclear weapons or had embarked upon producing the highly enriched uranium or plutonium required, there would be a case for seeking approval by the UN Security Council for the use of force. As he observed, there is currently no such evidence, at least not in the public domain.[203]

80. There has been speculation about a possible unilateral attempt by Israel to destroy Iranian nuclear facilities. The logistics of such a strike, given the distance involved and the difficulty of penetrating the underground Fordow complex, are formidable; but Professor Johnson reminded us that Israel had proved itself capable of eliminating the Osirak reactor in Iraq in 1981. He argued that a military operation to neutralise Iranian facilities was "doable" and that Israel was not bluffing: it had the capacity and the will to carry out such a strike if negotiations were to fail and it believed that it was under imminent threat. He also hinted that some Arab states might permit Israeli aircraft to use their airspace in the course of any such operation.[204]

81. We believe that neither of these alternatives to negotiation offer a realistic prospect of a long-term, sustainable solution to current concerns over the Iranian nuclear programme. The negotiations on the Joint Plan of Action are the most promising forum for reaching a settlement which assuages fears about the scope and intention of the Iranian nuclear programme. We endorse the UK's decision to take part in negotiations with Iran on its nuclear programme through the framework of the Joint Plan of Action.

Building trust

82. There is, however, a major risk: a successful outcome depends heavily upon mutual trust between Iran and the P5+1, and that trust has until now been sorely lacking. On the one hand, the P5+1 could recite a long catalogue of occasions when Iran had concealed its nuclear activities and had failed to comply with requirements of the Safeguarding Agreement under the Nuclear Non-Proliferation Treaty, and when Iran had appeared to be intent on frustrating any attempt at genuine negotiation.[205] On the other hand, many with influence in Iran have, for decades and for reasons which are rooted in history, nursed suspicion of Western motives; and Iran has felt unjustly demonised. Levels of trust and co-operation reached a particularly low point during the presidency of Mahmoud Ahmadinejad, whose antagonism towards the West gave little or no indication that Iran was disposed to reach any sort of settlement on the nuclear question which would be acceptable to the P5+1.


83. Since the election of President Rouhani in June 2013, there has been a marked change in the tone of much of Iran's engagement with the West: while the invective has continued in certain quarters (including the media), it has been balanced by more moderate and less confrontational public statements in other parts of the hierarchy in Iran. Part of this is attributable to President Rouhani and Foreign Minister Zarif personally: the Foreign Secretary told the House on 8 October 2013 that he had discussed the conflict in Syria with Mr Zarif and that "it is clear that the new President and Ministers in Iran are presenting themselves and their country in a much more positive way than in the recent past. There is no doubt that the tone of meetings with them is different".[206] Mr Straw, who encountered Mr Rouhani during the period between 2003 and 2005 when he was Foreign Secretary and Mr Rouhani was Chief Nuclear Negotiator, has said of Mr Rouhani that "you could do business with him, and we were able to do business with him".[207]

84. The question for the UK and other members of the P5+1 is whether they can put trust in President Rouhani, as someone whose intentions are indeed to aim for a genuine resolution to disagreements about Iran's nuclear programme, and whether he can carry enough of the Iranian establishment with him to ensure a broad-based commitment within Iran to any deal, or whether he is in reality politically isolated.

85. It should not be forgotten that Mr Rouhani has a long revolutionary pedigree and was a close colleague of Ayatollah Khomeini before the 1979 Revolution.[208] Both BICOM and the Henry Jackson Society described Mr Rouhani as "a regime insider" in their written submissions. Mr Rouhani has held key positions as Secretary of the Supreme National Security Council[209] between 1989 and 2005, National Security Adviser to the President from 1989 to 1987 and from 2000 to 2005,[210] as Chief Nuclear Negotiator from 2003 to 2005; and as a member of the Expediency Council[211] since 1997. We were told that Mr Rouhani had in the past taken a hardline position on cracking down on dissent,[212] and several submissions referred to his account of having "duped" the West in the course of nuclear negotiations.[213] Both BICOM and the Henry Jackson Society observed that under his presidency there had been little visible sign of a new direction in foreign policy (for instance on Syria, or support for Hezbollah);[214] religious intolerance continues unabated; civil society and the media continue to be restricted; and the use of extreme punishment has become more frequent rather than less.

86. On the other hand, Mr Rouhani's background as an "insider" gives him (for now) credibility at the highest levels of Iranian leadership, and we were told that he has a good relationship with the Supreme Leader, Ayatollah Khamenei.[215] Lord Lamont, a member of the delegation from the All-Party Parliamentary Group on Iran, which visited Iran in January 2014, told us:

    I think it is a good thing that Rouhani is a man of the regime, rather than a complete outsider-if he had been a complete outsider, he probably wouldn't have been allowed to stand. The fact that he has held so many different offices and been at the centre of the regime in Iran gives him a greater capability to deliver. He does appear to be trusted by the supreme leader, Mr Khamenei, who has reluctantly allowed the negotiations to proceed, while simultaneously saying that he doesn't think they will succeed in the end.[216]

A further sign of high-level trust in Mr Rouhani and his allies lies in the transfer of the nuclear portfolio from the Supreme National Security Council to the Ministry of Foreign Affairs in September 2013.[217]

87. That is not to say that President Rouhani's position is entirely secure. His election success was clear: from a field of six candidates, he was elected with 51% of the vote, despite not being the preferred candidate of the Supreme Leader. During his election campaign he succeeded in attracting the endorsement of powerful figures from less hardline schools of thought in Iran, including Ayatollah Hashemi Rafsanjani[218] and former President Khatami;[219] and public support for the main hardline candidate during the 2013 Presidential Election, Saeed Jalili, was strikingly low, translating to just 11% of the vote.[220] Opinion within the Majlis, however, remains relatively hardline: there was considerable opposition within the Majlis to the visit by the All-Party Parliamentary Group on Iran in January 2014;[221] there were chants of "Death to Britain" in the Majlis in November 2011 when the decision was taken to downgrade diplomatic relations;[222] and uncertainties remain about the extent to which it would accept further concessions under the Joint Plan of Action (such as signing the Additional Protocol permitting more intrusive inspections). Other potent forces, such as the Islamic Revolutionary Guard Corps, temporarily have less prominence but have not necessarily been weakened. We are not persuaded by the suggestion that the neoconservative order in Iran was "shattered" by the election of President Rouhani.[223]

Conclusion on pursuing negotiations

88. We do not believe that the marked change in the tone of Iran's approach to negotiations on its nuclear programme indicates a change in what it wants to achieve: we see no evidence that Iran is considering either aborting the programme or drawing back from further development of enrichment capacity. Nor do we believe that President Rouhani is necessarily a reformist at heart: he is a pragmatist[224] who hopes to improve standards of living in Iran by persuading the West to lift sanctions, while retaining in place as much of the country's nuclear programme as possible. Professor Ansari summed it up admirably, saying that "in a sense Rouhani has been allowed to play reformist abroad but conservative at home".[225]

89. We nonetheless believe that Mr Rouhani's political skills and long experience will enable him to stand a good chance of judging what concessions can and cannot be made on the nuclear programme if he is to retain the confidence of the Supreme Leader and other more militant elements within Iran. While Mr Rouhani has the impetus of his election victory and demonstrably high levels of public support, we believe that the P5+1 can have confidence that he is an authoritative representative of Iran. We also believe that, having stood on a platform of achieving an economic revival by negotiating with the P5+1 and getting sanctions lifted, he is genuinely committed to a sustainable deal. For now at least, he should be trusted; but he should be judged by his actions, not by his words.

90. The Joint Plan of Action itself contains the foundations for building trust on a wider, not just personal, level: it provides an opportunity for both sides to demonstrate that they have adhered to commitments under the six-month interim measures. As the Foreign Secretary has observed, the Plan is specific and extensive, and it will be clear if Iran is failing to comply with it. If that happens, the basis for trust will not have been established and the P5+1 could revert to a full sanctions regime, possibly strengthened. To take the view that Iran cannot be trusted to deliver on any agreement would deny any attempt to reach or indeed test an agreement.[226]

91. Relief from sanctions is a priority for Iran, and as long as the terms of any deal are acceptable to both sides, it is in Iran's interest to abide by them rather than run the risk of provoking a return to a sanctions regime which might be even stronger.[227] We note that the IAEA has confirmed that Iran has, so far, met its obligations under the interim measures.[228]


92. Negotiations are currently (July 2014) under way to work out the details of a comprehensive solution, which the Plan envisages would be implemented within one year of its adoption. The six-month interim measures expire on 20 July, although they may be renewed by mutual consent. This seemed to several of our witnesses to be the most likely outcome,[229] although it should be noted that repeated renewal could, by prolonging the limited sanctions relief, allow a cumulative relaxation of pressure on Iran and enable it steadily to improve its negotiating position.[230] An added sense of urgency flows from the fact that Baroness Ashton, who is leading negotiations on behalf of the EU, is due to come to the end of her term as High Representative at the end of October 2014. Furthermore, mid-term Congressional elections in November may result in a political climate in the US which is less conducive to negotiation.

93. We make the following observations on negotiations on the comprehensive agreement:

·  There is probably no prospect of a lasting deal which does not allow Iran to enrich uranium

·  Enrichment capacity should be limited to a level which Iran would not reject outright but which would still allow enough time for any attempt at breakout to be detected and referred to the UN Security Council—we suggest six months as an absolute minimum

·  Trust, which is essential if the Plan is to succeed, may crumble unless the comprehensive agreement enshrines a right for the IAEA to make unannounced and intrusive inspections of all nuclear facilities, products, designs and records

·  The IAEA's Additional Protocol offers a good basis for the more stringent monitoring which is required, although it may be preferable to build the key provisions into the terms of the comprehensive agreement rather than require adoption of the Additional Protocol itself[231]

·  International sanctions undoubtedly played a major part in preparing the ground for a more amenable Iranian negotiating position. They may not have directly forced Iran to make concessions; but the fatigue amongst large sections of the Iranian public with the international isolation and disadvantage which flowed from sanctions was a factor in the election of President Rouhani, which in turn paved the way for more fruitful negotiations

·  The limited sanctions relief being applied under the Joint Plan of Action has reduced pressure on Iran and has provided it with a breathing space, but that should not necessarily be seen in a negative light: it may even strengthen the appetite in Iran for taking the steps necessary to allow further layers of sanctions to be peeled away[232]

·  We doubt that any deal would have been achieved in Geneva in November 2013 had limited sanctions relief not been offered

·   The Joint Commission established under the Joint Plan of Action should include activities at the Parchin military site as part of its discussions "to facilitate resolution of past and present issues of concern"

·   Modifying the design of the Arak reactor so that it produces less plutonium[233] has value, but third-party monitoring of storage of the spent fuel—or preferably removal and third-party custody of it—would be instrumental in helping to allay concerns.


94. There is one point on which we take particular issue with the Government. The sanctions applied by the EU involve, amongst other things, restrictions on transfers of funds to and from an Iranian person, entity or body, and prohibitions on EU credit and financial institutions transferring funds to or from Iranian banks. One of the undertakings in the Joint Plan of Action was that the P5+1 would "establish a financial channel to facilitate humanitarian trade for Iran's domestic needs using Iranian oil revenues held abroad";[234] and the same channel could be used to enable direct payment of fees to universities and colleges for Iranian students studying abroad. Certain foreign and Iranian banks were to be specified and enabled to facilitate the trade, without contravening those aspects of the sanctions regime which remained in place.

95. In practice, it appears that the UK has not specified any banks to provide the necessary financial channel. When we took evidence in February and March 2014, there appeared to have been little if any flow of humanitarian goods, as banks were not prepared to offer the necessary facilities:[235] the FCO indicated that these decisions by banks were "commercial" ones.[236] We also note that banking facilities for those with a legitimate requirement have been disrupted: at the end of February, the Iranian Chargé d'Affaires was unable to open a bank account in London, and Ben Wallace MP told us that the All-Party Parliamentary Group had had its bank account "cancelled".[237] There have since been signs of a recent increase in exports of humanitarian goods from the UK to Iran, albeit from a low base. UKTI data for the first quarter of 2014 show that the value of exports from the UK to Iran of medicinal/pharmaceutical products was £6.3 million from January to March 2014, up from £3.4 million from January to March 2013, and the value of exports of "edible products and preparations" was £24 million from January to March 2014, up from £0.4 million from January to March 2013.[238]

96. As the Foreign Secretary himself noted in a letter to Mr Straw on 6 March 2014, "many banks have been wary of processing the payments required. This has been driven in large part because of risk aversion to US banking sanctions".[239] Lord Lamont, speaking in a debate in the House of Lords on 27 February, spoke of "US banking sanctions being imposed informally by the back door on our own banking industry" and of "American authorities threatening banks in the UK".[240] The Foreign Secretary told us in March that the US had provided letters of comfort to selected banks to reassure them that it was permissible to access Iranian oil revenues for humanitarian trade, and he said that he was "keeping an eye" on the issue and would give it further attention if arrangements were not working out.[241] We note that where UK banks are conducting business which is permissible under the terms of EU sanctions but not under the terms of US extra-territorial sanctions, UK law (in the form of the Protection of Trading Interests Act 1980) would protect UK businesses and prevent the enforcement of those sanctions in the UK. However, if those businesses use clearance services in the US for transactions, the UK legislation would not insulate them from US legislation; nor would the act of any US arm be immune.[242]

97. Not enough is being done to put into practice that part of the Joint Plan of Action which is designed to facilitate trade with Iran in humanitarian goods. The UK should not assume that letters of comfort from the US Treasury to banks will be enough to reassure them that they will not be penalised commercially for facilitating humanitarian trade. Ministers should state publicly that they encourage UK banks to provide the necessary facilities for trade in humanitarian goods and will if required defend to the US Treasury their right to do so. If trade with Iran in humanitarian goods is facilitated under the Joint Plan of Action, even if only on a limited scale, vigilance will be needed if the diversion of funds and illicit trade which occurred under the Oil-For-Food Programme in Iraq is not to be repeated in Iran.

137   See Global Security: Iran, Fifth Report of Session 2007-08, HC 142, FCO memorandum, paragraphs 101 to 153 Back

138   Q 194 Back

139   Sir Robert Cooper Q 31 Back

140   On 12 April 2011 the European Council adopted Council Regulation (EU) No 359 (2011), which required Member States to freeze assets of named persons responsible for serious human rights violations in Iran, and persons, entities or bodies associated with them. On 14 April 2014, 86 individuals and one entity were subject to asset freezes under human rights sanctions. See and


141   Mr Straw Q 98; Professor Ansari Q 70 Back

142   Memorandum from Professor Ehteshami, paragraph 7 Back

143   HC Deb 25 November 2013 col 29 Back

144   Holly Topham, RUSI analyst, RUSI Journal January 2014  Back

145   Evidence from Mark Fitzpatrick, 5 February 2013, HC 952, Q 48 Back

146   See Sir Robert Cooper Q 38, Professor Ansari Q 79 Back

147   Memorandum from the FCO, Section 4 Back

148   Memorandum from the Henry Jackson Society, para 17 Back

149   One Iranian Minister, in conversation with members of the All-Party Parliamentary Group on Iran during their visit in January 2014, had described sanctions as "crippling". See Q 98 Back

150   Rt Hon Jack Straw MP and Ben Wallace MP, Q 116 and 117. See also memorandum from the National Iranian American Council, para 1  Back

151   Sir Robert Cooper Q 6; Mr Fitzpatrick Q 140 Back

152   The Guardian 27 September 2013 Back

153   Full text available at Back

154   President Putin, Kremlin statement 24 November 2013, House of Commons Library Standard Note 6780 Back

155   Statement by President Obama Back

156   HC Deb 25 November 2013 col 23  Back

157 The Board of Deputies of British Jews welcomed the progress made. Back

158   Professor Ali Ansari Q 68; Lord Lamont Q 97  Back

159   Professor Johnson, speaking on behalf of BICOM, Q 146 Back

160   Sir Robert Cooper Q 36 Back

161   Mark Fitzpatrick blog: "The surprisingly good Geneva deal", 25 November 2013 Back

162   Q 146 Back

163   Mr Hague Q 207; Baroness Ashton Back

164   HC Deb 21 January 2014 col 138 Back

165   Memorandum from the Henry Jackson Society, summary Back

166   Director of the Non-Proliferation and Disarmament programme at the International Institute for Strategic Studies Back

167   Q 142 Back

168   Society for Worldwide Interbank Financial Telecommunication Back

169   Defined in the Joint Plan of Action as "transactions involving food and agricultural products, medicine, medical devices, and medical expenses incurred abroad". Back

170   Q 118; see also Professor Johnson Q 160 Back

171   Memorandum by Peter Jenkins, paragraph 17. Mr Jenkins was UK Permanent Representative to the International Atomic Energy Agency from 2001 to 2006 Back

172   Q 160 Back

173   HC Deb 28 January 2014 col 472W Back

174   See for example The Independent 5 November 2012 Back

175 Back

176   Q 173 Back

177   Memorandum from the Henry Jackson Society, paragraph 14 Back

178   Mr Fitzpatrick Q 128 Back

179   HC Deb 24 February 2014 col 55W Back

180   Memorandum from the Henry Jackson Society, paragraph 30. See also letter from Simon Henderson and Olli Heinonen to The Economist, 6 July 2013  Back

181   Mr Fitzpatrick Q 131 Back

182   Memorandum from the Henry Jackson Society, paragraph 7 Back

183   HC Deb 25 November 2013 col 28 Back

184   HC Deb 4 February 2014 col 194W Back

185   See Mr Fitzpatrick Q 134 Back

186   The Henry Jackson Society suggested that the total value might be rather higher, maybe not far short of $20 billion: see memorandum from the Henry Jackson Society, paragraph 19 Back

187   See Joint Statement by the Board of Deputies of British Jews and the French CRIF 1 December 2013 Back

188   Q 189 Back

189   Memorandum from BICOM, paragraph 34 Back

190  Back

191   Memorandum from the Henry Jackson Society, summary  Back

192   HC Deb 24 February 2014, col 31 Back

193   'The surprisingly good Geneva deal', Mark Fitzpatrick blog, 25 November 2013 Back

194   'The surprisingly good Geneva deal', Mark Fitzpatrick blog, 25 November 2013  Back

195   Memorandum from Peter Jenkins, paragraph 7 Back

196   Memorandum from the National Iranian American Council, paragraph 4 Back

197   Lord Lamont Q 98 Back

198   Mr Fitzpatrick Q 121 Back

199 Back

200 Back

201   Evidence from Mark Fitzpatrick, 5 February 2013, HC 952, Q 45 Back

202   UK Permanent Representative to the IAEA, 2001 to 2006 Back

203   Memorandum from Peter Jenkins, paragraph 5 Back

204   Professor Johnson and Mr Kessler Q 178 to 181 Back

205   Memorandum by the FCO, section 2 Back

206   HC Deb 8 October 2013 col 27 Back

207 Back

208   Memorandum from the Henry Jackson Society, paragraph 9 Back

209   The body with overall responsibility for foreign policy and national security matters Back

210 Back

211   An advisory body with ultimate adjudicatory power in disputes over legislation Back

212   Memorandum from the British Parliamentary Committee for Iran Freedom Back

213   Memorandum from the British Parliamentary Committee for Iran Freedom, page 1, memorandum from the National Council of Resistance of Iran, section 4 Back

214   Q 150. See also memorandum from the FCO, section 5 Back

215   Sir Robert Cooper, Q 5 Back

216   Q 99 Back

217   Times of Israel 5 September 2013 Back

218   President of Iran from 1989 to 1997 and now Chairman of the Expediency Council Back

219   Professor Ansari Q 51 Back

220   Memorandum from the National Iranian American Council, paragraph 9 Back

221   Q 87 Back

222   HC Deb 30 Nov 11 col 963 Back

223   Memorandum from Professor Ehteshami, paragraph 6 Back

224   Professor Ansari described his politics as "somewhat opaque", Q 49 Back

225   Q 67 Back

226   HC Deb 25 November 2013 col 37 Back

227   Mr Fitzpatrick Q 137, Mr Kessler Q 148 Back

228   See; also Mr Hague Q 195 Back

229   Mr Fitzpatrick Q 118. See also memorandum from the Henry Jackson Society, paragraph 16. Back

230   See Mr Kessler Q 172 Back

231   See Mr Wallace Q 113; also memorandum from Peter Jenkins, paragraph 13, and HC Deb 25 November 2013 col 40 Back

232   See Sir Robert Cooper Q 28 Back

233   The plant could be converted to use "light water" rather than heavy water: see Lord Lamont Q 110, Mr Fitzpatrick Q 118, and memorandum from Peter Jenkins, paragraph 22 Back

234   'Humanitarian trade' was defined as transactions involving food and agricultural products, medicine, medical devices, and medical expenses incurred abroad Back

235   See for instance memorandum from the British Council, paragraph 4.6 Back

236   HC Deb 24 February 2014 col 33 Back

237   Mr Wallace Q 97 Back

238   Data supplied by the FCO. Back

239   HC Deb 26 March 2014 col 117WH Back

240   HL Deb 27 February 2014 col 1037 Back

241   Q 212 Back

242   See HC Deb 26 March 2014 cols 117WH to 124 WH  Back

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Prepared 14 July 2014