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Economic Trends: June and July

            The most important developments in June and July were India’s payments of two more installments of $550 million to Iran for previous oil purchases. The interim nuclear deal enabled the repatriation of $4.2 billion in oil revenues to Tehran. India forwarded its first of payment in May. The three total $1.65 billion.
          
The Statistics Center of Iran and several government officials announced promising figures suggesting improvements in the economy. The inflation rate fell 24.2 percent at the end of July from 26.2 percent at the end of June. The unemployment rate in the first quarter of 2014 was 10.5 percent, about 1.8 percent less than during the same period in 2013.
           
Some international companies also showed renewed interest in Iran. Boeing, under a special license from the U.S. government, agreed to sell Iran airplane parts for the first time since 1979. Iran’s largest auto maker, Khodro Industrial Group, restarted exporting to Russia for the first time in five years. Khodro also met with international auto makers Renault and Peugeot.
          
But these improvements may only be marginal or anecdotal. On July 29, U.S. Treasury Under Secretary for Terrorism and Financial Intelligence David S. Cohen told a Congressional committee that “Iran remains in a deep economic hole” and that its economy “is doing worse today” than it was at the outset of the interim nuclear deal in January.
           
The following is a run-down of the top economic stories from June and July with links.

 
Domestic Developments
 
Inflation: Iran’s inflation rate fell to 24.2 percent at the end of July from 26.2 percent at the end of June, according to the Statistics Center of Iran. 
 
Unemployment: The unemployment rate among Iranians with a bachelor’s degree rose from 14.6 percent in 2005 to 20.1 percent in 2013, according to the head of the National Census Centre.
 
Iran’s Statistical Center reported that unemployment from January to March 2014 was 10.5 percent, about 1.8 percent less than during the same period in 2013.
 
Poverty: The overall poverty level during Ahmadinejad’s presidency rose dramatically from 21.9 percent in 2005 to 50 percent in 2013, according to Iran’s finance minister.
 
Income: President Rouhani’s economic advisor, Masoud Nili, candidly discussed the poor state of the economy in an interview with state television. “The national incomes have declined 20 per cent in recent 2 years; when compared to market exchange rate, monetary base, and price index in 2005, they show rises as 3.5, 5.5, and 4.5 times, respectively, in 2013; while at the same period, the production increased only 20 per cent, and the number of employed people declined as well,” he said.
 
Privatization: Iran has transferred about $776.3 million worth of shares of state-run companies to the private sector in spring 2014, according to Tasnim News Agency. Iran plans to privatize some 186 state-run companies by March 2015.
 
Gasoline: Gasoline in Iran, at an average of $1.52 a gallon, is fourth-cheapest among 61 countries with per capita daily incomes more than $3.50, according to a Bloomberg report. The Islamic Republic had the highest fossil-fuel subsidy in the world until 2010.
 
Iran began distributing Euro-4 premium gasoline, which meets European emission standards that are stricter than Iran's, in Tehran and Tabriz. Distribution is slated to expand to Shiraz, Bandar Abbas, Esfahan and Mashhad.  
 
Oil Minister Bijan Namdar Zanganeh said that Iranians are using more than $90 billion worth of liquid fuel and that the government is using subsidies to pay for $80 billion.  
 
Oil output: Iran has the capacity to produce more than 4 million barrels per day, according to Mohammad Baqer Nobakht, Rouhani’s adviser for supervision and strategic affairs.
 
Nuclear power plants: Iran announced that Russia’s state nuclear power company Rosatom will build two more nuclear reactors at the Bushehr power plant. Rosatom expects to start construction before the end of 2014. The announcement came as the company’s deputy director general, Nikolai Spassky, visited Tehran.
 
Tourism: Foreign tourist visits to Iran climbed 215 percent in spring 2014 compared to 2013, according to the deputy director of Iran’s Cultural Heritage, Tourism and Handicrafts Organization. “Over 23,600 foreign tourists visited Iran in the three-month period, compared with 7,500 last year,” said Morteza Rahmani-Movahed.
 
International Developments
 
U.S. sanctions: The cumulative impact of U.S. sanctions since 2011 has cost Iran some $120 billion in oil revenues, according to the Treasury Undersecretary for Terrorism and Financial Intelligence David S. Cohen. “Iran's currency, the rial, has depreciated by about 50 percent since January 2012 and has declined by about 7 percent since the JPOA was announced last November,” he told a Senate Committee on Foreign Relations hearing.
 
Indian payments: India made two more $550 million payments to Iran, one in June and one in July, for oil under the interim nuclear deal, which allows Tehran to repatriate $4.2 billion in blocked funds across the world. New Delhi is reportedly looking into implementing a mechanism that would allow Iran to use owed money to buy food, medicine and other humanitarian goods bought in third countries.
 
Nuclear talks: The four-month extension of nuclear talks will spare Iran “a 20 percent fall in its oil sales,” but nothing more, according to the international affairs director at the National Iranian Oil Company. “Short-term agreements have a no war-no peace nature. Such agreements make conditions for Iran's oil sales unclear because issues like shipping, banking and insurance are long-term matters and companies active in these sectors usually don't have any desire to change their activities in the short term,” said Mohsen Ghamsari.
 
Oil and Gas: China, Iran's biggest oil buyer, imported nearly 50 percent more in the first half of 2014 than in 2013, according to data collected by Reuters. Purchases by Japan and Korea were down compared to 2013. But the combined purchases of China, India, Japan and Korea were up nearly 25 percent from last year, at 1.2 million barrels per day versus 961,236.
 
India imported 281,000 bpd of Iranian crude oil from January to June, up by a third compared to the same period last year, according to Reuters. India is Iran’s second largest oil buyer after China.
 
Petrochemical exports have increased 6.6 percent during the first quarter of the Iranian calendar year, which started on March 21, 2014. And domestic sales have risen 7.3 percent, according to Deputy Managing Director of Iran’s National Petrochemical Company (NPC) Mohammad Hassan Peivandi.
 
Iran could be ready to make up for a shortage in oil in the world markets within three months, according the managing director of the National Iranian Oil Company, Rokneddin Javadi.
 
Aviation: Boeing agreed to supply Iran Air with plane parts for the first time since the U.S. embargo on bilateral trade was implemented in 1979. In April, the U.S. government issued a license to Boeing allowing it to provide “spare parts that are for safety purposes” to Iran for a “limited period of time.”
 
Banking sanctions: Germany’s second largest bank, Commerzbank, is expected to pay $600 to $800 million for doing business with Iran and other countries under U.S. sanctions. New York’s top banking regulator, the Justice Department, the Treasury Department, the Federal Reserve and the Manhattan District Attorney are reportedly involved in talks.
 
Non-oil exports: Non-oil exports in the second quarter of 2014 have increased by about 20 percent compared to the same period in 2013, according to the Islamic Republic of Iran Customs Administration. Iran exported some $11.86 billion in goods in April, May and June. 
 
Iran’s carpet exports reached $57 million in the first quarter of the Iranian calendar year that began on March 20, 2014. Iran’s National Carpet Center said exports rose 23 percent compared to the same period last year. Iran exported 1,000 tons of hand-made carpets to nearly 80 countries. The U.S. reportedly imported $51,000 worth of carpets.
 
Auto industry: Iran started exporting cars to Russia for the first time in five years. Iran-Khodro, stopped shipping vehicles to Russia in 2009 when it adopted stricter Euro-5 emission standards. Iran’s largest auto manufacturer plans to export 10,000 cars to Russia by 2015.
 
Khodro also restarted talks with international companies Renault and Peugeot. “The Group has started to get back in touch with our past partners to get ready for a return of our activities there, if possible,” said a Peugeot spokeswoman, according to The Wall Street Journal.
 
Turkey: Iran and Turkey signed 10 cooperation agreements on tourism, joint ventures and customs cooperation during President Rouhani’s visit to Ankara. Turkey sought a discount on Iranian gas but the two sides failed to agree on a price.
 
E.U. sanctions : An E.U. court annulled sanctions on Tehran’s Sharif University of Technology because of lack of sufficient evidence linking it to the country’s nuclear program. But the asset freeze will remain in effect for two months, giving E.U. governments time to submit further evidence.
 
Germany: Germany’s exports to Iran increased by 20 percent in the first four months of 2014 compared to the period last year, according to Eurostat. They reached €797 million while Iran’s exports to Germany also increased to €107 million, up nine percent from 2013.
 
Humanitarian trade: Iran is reportedly lobbying to get HSBC, Europe’s largest bank, to process humanitarian trade transactions that have been frozen due to concerns about violating international sanctions on the Islamic Republic, according to Reuters.
 
Ports: India’s transport minister, Nitin Gadkari, said that two state-run ports are investing in Iran’s Chabahar port, now under construction. Chabahar, on Iran’s southeast coast, could enable Indian exports to Iran and landlocked Afghanistan to bypass Pakistan. Transporting goods between Iran, Afghanistan and India would be much shorter.
 
Foreign investment: Iran’s economy will need more foreign investment to thrive, according to Industry, Mines and Trade Minister Mohammad-Reza Nematzadeh. Foreign investors put some $783 million into Iran’s industrial marks between March 2013 and March 2014, which created more than 11,000 job opportunities, according to Deputy Director of Iran Small Industries and Industrial Parks Organization Qolamreza Soleimani. 
 
Bio-energy: A U.S. company signed a preliminary agreement to invest $1.175 billion in Iran. World Eco Energy plans to produce 250 megawatts of electricity daily by burning trash and processing algae, salt and waste water, according to AFP.
 
United Arab Emirates: The trade volume for 2013 between Iran and the United Arab Emirates totaled more than $15 billion in 2013, according to Iran’s ambassador to the UAE. And Some 50,000 Iranian companies are operating in Dubai alone, according to the head of the Dubai Chamber of Commerce.
 
Finance expo: More than 360 Iranian and foreign companies reportedly participated in the Seventh International Exhibition of Exchange, Bank and Insurance of Iran from June 8 to 11. Companies from England, Germany, Italy, Switzerland, Greece, Cyprus, Turkey and South Korea were present.
 
Tags: Economy

US Report on Iran's Religious Freedom Abuses

           Iran’s government reportedly continued to imprison, harass intimidate and discriminate against people based on religious beliefs in 2013, according to an annual report by the U.S. State Department.
           
Iran's foreign ministry, however, rejected the findings. "Such reports are instrumental, prepared and broadcast with the mere goal of piling up pressure on other countries," spokesperson Marziyeh Afkham said on July 30. “Growing Islamophobia in the U.S., systematic discrimination of Muslims and restriction on religious minoritiesˈ freedom in the American community has turned the country into one of the major violators of religious rights,” she claimed.
           
The following is the executive summary of the U.S. report with a link to the full text.

          The constitution states that all laws and regulations must be based on undefined “Islamic criteria” but protects certain aspects of religious freedom for members of some but not all religious minorities. In practice, the government severely restricted religious freedom, and there were reports of imprisonment, harassment, intimidation and discrimination based on religious beliefs. There were continued reports of the government charging religious and ethnic minorities with moharebeh (enmity against God), “anti-Islamic propaganda,” or vague national security crimes for their religious activities. Those reportedly arrested on religious grounds faced poor prison conditions and treatment, as with most prisoners of conscience. The frequent arrest and harassment of members of religious minorities continued during the year, following a significant increase in 2012. There continued to be reports of the government imprisoning, harassing, intimidating, and discriminating against people because of their religious beliefs. The constitution states that Ja’afari Shia Islam is the official state religion. It provides that “other Islamic denominations are to be accorded full respect” and officially recognizes only three non-Islamic religious groups, Zoroastrians, Christians, and Jews, as religious minorities. Although the constitution protects the rights of members of these three religions to practice freely, the government imposed legal restrictions on proselytizing and regularly arrests members of the Zoroastrian and Christian communities for practicing their religion. The government occasionally vilified Judaism. The government considers Bahais to be apostates and defines the Bahai faith as a “political sect.” The government prohibits Bahais from teaching and practicing their faith and subjects them to many forms of discrimination not faced by members of other religious groups.
 
           Government rhetoric and actions created a threatening atmosphere for nearly all non-Shia religious groups, most notably for Bahais, as well as for Sufi Muslims, evangelical Christians, Jews, and Shia groups not sharing the government’s official religious views. Bahai and Christian groups reported arbitrary arrests, prolonged detentions, and confiscation of property. Government-controlled broadcast and print media continued negative campaigns against religious minorities, particularly Bahais. All religious minorities suffered varying degrees of officially sanctioned discrimination, particularly in the areas of employment, education, and housing. Bahais continued to experience expulsions from, or denial of admission to, universities.
 
            There were reports of societal abuses and discrimination based on religious affiliation, belief, or practice. Members of non-Shia religious groups faced some societal discrimination, and elements of society created a threatening atmosphere for some religious minorities. The government’s campaign against non-Shia created an atmosphere of impunity allowing other elements of society to harass religious minorities.
 
            Since 1999, the United States has designated Iran as a “Country of Particular Concern” (CPC) under the International Religious Freedom Act. In 2011, the Secretary of State redesignated Iran as a CPC, and redesignated the existing restrictions on certain imports from and exports to Iran. The U.S. government made clear its strong objections to the government’s harsh and oppressive treatment of religious minorities and pushed for improvements through high-level public statements and reports, support for relevant UN and nongovernmental organization (NGO) efforts, coordinated diplomatic initiatives with the international community, and sanctions. The U.S. government also engaged with NGOs and civil society to gain a greater understanding of the status of religious freedom in the country. The United States has no diplomatic relations with Iran.
 
Religious Demography
           The U.S. government estimates the population at 79.9 million (July 2013 estimate). Muslims constitute 99 percent of the population; 90 percent are Shia and 9 percent Sunni (mostly Turkmen, Arabs, Baluchis, and Kurds living in the northeast, southwest, southeast, and northwest, respectively). There are no official statistics available on the size of the Sufi Muslim population; however, some reports estimate between two and five million people practice Sufism.
 
           Groups together constituting the remaining 1 percent of the population include Bahais, Christians, Jews, Sabean-Mandaeans, and Zoroastrians. The two largest non-Muslim minorities are Bahais and Christians. Bahais number approximately 300,000, and are heavily concentrated in Tehran and Semnan. According to UN figures, 300,000 Christians live in the country, although some NGOs estimate there may be as many as 370,000. The Statistical Center of Iran reports there are 117,700. The majority of Christians are ethnic Armenians concentrated in Tehran and Isfahan. Unofficial estimates of the Assyrian Christian population range between 10,000 and 20,000. There are also Protestant denominations, including evangelical groups. Christian groups outside the country estimate the size of the Protestant Christian community to be less than 10,000, although many Protestant Christians reportedly practice in secret. There are from 5,000 to 10,000 Sabean-Mandaeans. The Statistical Center of Iran estimated in 2011 that there were approximately 25,300 Zoroastrians, who are primarily ethnic Persians; however, Zoroastrian groups report 60,000 members.
 
Click here for the full text.
 
Click here for more information on Iran’s religious minorities.
 

Four Journalists, Three Americans Detained

           Three American journalists, including The Washington Post correspondent Jason Rezaian, have reportedly been detained in Tehran. Gholam-Hossein Esmaili, director general of the Tehran Province Justice Department, confirmed July 25 that “The Washington Post journalist has been detained for some questions and after technical investigations, the judiciary will provide details on the issue.” Rezaian is a dual U.S.-Iranian citizen. Rezaian’s Iranian wife, Yaganeh Salehi, a correspondent for the Emirates-based paper The National, was also reportedly detained along with an American freelance photojournalist and his wife, who not have been named by officials.

           On July 29, the State Department called for the release of Rezaian. “We call on the Iranian government to immediately release Mr. Rezaian and the other three individuals. We continue to monitor the situation closely,” State Department spokeswoman Jen Psaki said.

           Also on July 29, Iranian authorities released the photographer's wife. But no further information was released regarding the status of the three journalists. Rezaian's mother released the following video clip calling for the release of her son and daughter-in-law.


            Salehi's family was allowed to visit the couple on September 7, according to the International Campaign for Human Rights in Iran. An informed source said that Salehi and Rezaian had lost a “shocking” amount of weight and that they were “very worried about their state of limbo in prison.”         
 
             Thirty-five other journalists of Iranian origin are also detained or imprisoned in Iran, according to the Committee to Protect Journalists.
 
            The latest move follows an earlier wave of arrests of Iranian Americans under former President Mahmoud Ahmadinejad. In 2007, Iranian American scholar Haleh Esfandiari was accused of taking part in anti-government activities. During a family visit to Iran, authorities placed her under virtual house arrest for four months and then held her in solitary confinement for another four months. In 2009, Iranian American journalist Roxanna Saberi was detained for five months, allegedly due to expired press credentials. At least two Iranian-Americans remain in custody in Iran from the Ahmadinejad years. One American, who is not of Iranian origin, is also missing, according to the Congressional Research Service.  
 
• Former FBI agent Robert Levinson, remains missing after a visit in 2005 to Kish Island to meet an Iranian source. Iran denies knowing his status or location. In December 2011, Levinson’s family released a one-year old taped statement by him. In January 2013, his family released recent photos of him, and they acknowledged in late 2013 that his visit to Kish Island was partly related to his contract work for the CIA.
 
• A former U.S. Marine, Amir Hekmati, was arrested in 2011 and remains in jail in Iran allegedly for spying for the United States. His family has been permitted to visit him there.
 
• On Dec. 20, 2012, a U.S. Christian convert of Iranian origin, Rev. Saeed Abedini, was imprisoned for “undermining national security” for setting up orphanages in Iran in partnership with Iranian Christians. His closed trial was held Jan. 22, 2013, and he was convicted and sentenced to eight years in prison.
 
            The latest U.N. Human Rights Council report, released in March, noted that at least 895 prisoners of conscience and political prisoners were imprisoned in Iran. The number included 379 political activists, 292 religious practitioners, 92 human rights defenders (including 50 ethnic rights activists), 71 civic activists, 37 journalists and netizens, and 24 student activists.
 
            Since May, authorities have targeted several journalists for charges such as “propaganda against the state” and “disrupting public order through participation in gatherings.” The following are examples of recent arrests outlined by the Committee to Protect Journalists.
 
• On July 7, cultural reporter Marzieh Rasouli tweeted that she will report to Evin Prison today to begin serving a two-year prison sentence on charges of "propaganda against the regime" and "disrupting public order through participation in gatherings," according to news reports. She was originally arrested in January 2012.
 
• On June 28, 2014, Iranian journalist and CPJ International Press Freedom Awardee Mashallah Shamsolvaezin wrote on his Facebook page that he had been charged with "propaganda against the state" related to his interviews with media and speeches he gave at two regional and international journalism conferences. He said he was released on bail of 2 billion riyals (approximately US$80,000).
 
• On June 21, 2014, Reihaneh Tabatabei, a journalist who worked for Shargh and Bahar, was summoned to Evin Prison to begin serving a six-month prison sentence for prior charges related to "publishing news about the Green Movement," according to reports.
 
• On June 20, 2014, critical blogger Mehdi Khazali was arrested while on a trip to the north of Iran, according to news reports. Reports said the arrest could be in connection with a critical blog post Khazali wrote that accused Ayatollah Mahdavi Kani of corruption and embezzlement. Kani is the head of the Assembly of Experts, the clerical body charged with electing the Supreme Leader. It is not clear if Khazali has been charged.
 
• On June 19, 2014, the Kerman province prosecutor announced that 11 staff members of Pat Shargh Govashir, a company that owns the popular Iranian technology news website Narenji and its sister sites, Nardebaan and Negahbaan, had been sentenced to between one and 11 years in prison on charges of receiving training from and producing content for the BBC, according to news reports.
 
• On June 7, 2014, Iranian documentary filmmaker Mahnaz Mohammadi reported to Evin Prison to begin serving a five-year prison sentence, according to news reports. The government charged Mohammadi with propaganda and collusion against the state, claiming she was cooperating with the BBC, but she denied ever working with the channel, the reports said.
 
• On May 28, 2014, Saba Azarpeik, a reformist journalist with the weekly Tejarat-e Farda and daily Etemad, was arrested at the Tejarat-e Farda offices, according to news reports. Azarpeik, who was arrested previously in 2013, has often written critically of conservative officials and human rights abuses in the country, the reports said.
 
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Senators Seek Congressional Review of Any Nuclear Deal with Iran

            On July 23, five Republican Senators announced the following plan to require President Obama to seek Congressional approval of any nuclear deal with Iran. The following is a press release posted by the Senate Committee on Foreign Relations.

 
           With a four-month extension of Iran nuclear talks announced by the Obama administration last week, U.S. Senators Bob Corker (R-Tenn.), Lindsey Graham (R-S.C.), Marco Rubio (R-Fla.), John McCain (R-Ariz.) and James Risch (R-Idaho) introduced legislation today requiring congressional review of any final agreement with Iran. The bill also would prevent further extensions of the negotiations, strictly enforce Iran’s compliance, and prevent implementation of a final agreement if a veto-proof majority of Congress disapproves of the deal.
 
             “I strongly support vigorous diplomatic efforts to prevent a nuclear-armed Iran, but it must be clear that there will be no more extensions,” said Corker, ranking member of the Senate Foreign Relations Committee. “Congress must weigh in on any final deal, ensure Iranian compliance is strictly enforced, and provide a backstop to prevent a bad deal from occurring. While this bill does not include new sanctions on Iran, it allows Congress to seek further sanctions if an acceptable final deal can’t be reached.”
 
             “Stopping Iran’s nuclear ambitions through the P5+1 is the most important foreign policy decision in generations,” said Graham. “The Iranians are pursuing a nuclear weapon, not peaceful nuclear power. The last thing the world needs is an agreement with Iran that allows them to maintain their nuclear breakout capability. This agreement should be sent to the Congress for review and Congress should have the ability to vote it down. Congress played a fundamental role in enacting sanctions against Iran and should have a say whether this agreement is strong enough to lift sanctions. President Obama felt he needed congressional approval to move forward in Syria and Congress should insist on being involved in any nuclear deal with Iran.”
 
             “I am more convinced than ever that these negotiations are unlikely to result in an agreement with Iran that prevents it from developing a nuclear weapon,” said Rubio. “By unilaterally making major concessions to the Iranians, the administration is laying the groundwork for a very bad deal. It is essential that Congress have the opportunity to fully examine, debate and vote on any deal concluded with Iran. This issue is too important for U.S. national security for Congress’ views to continue to be ignored.”
 
             “We should seek every opportunity to try to stop Iran's nuclear weapons programs through diplomacy, but diplomacy cannot be an open-ended process that allows Iran to
play for time while advancing its program and weakening sanctions,” said McCain. “It must be clear that there will be consequences if Iran fails to reach an agreement or violates its obligations.”
 
             “This important piece of legislation ensures Congress the opportunity to disapprove any nuclear agreement with Iran that does not contain airtight inspection and verification mechanisms,” said Risch. “Additionally, if Iran at any time violates the terms of its nuclear agreements, this legislation rightly obligates the Obama administration to re-impose all previous sanctions and start over. Given Iran’s history and bad faith on this issue, this legislation is absolutely necessary.”
 
The Iran Nuclear Negotiations Act of 2014 contains the following key provisions:
 
Congressional Review: The president must submit any comprehensive nuclear agreement with Iran to Congress within three days of concluding such an agreement. After a 15-day review period, Congress has another 15 days to introduce a joint resolution of disapproval, which would have expedited consideration in both the House and Senate. If the president fails to submit any final agreement to Congress or a joint resolution of disapproval is enacted into law, any sanctions that had been temporarily lifted would be re-imposed.
 
Making Sure Iran Doesn’t Cheat: Within 10 days of the intelligence community receiving evidence that Iran has failed to comply with the terms of an agreement or cooperate with the International Atomic Energy Agency (IAEA), the Director of National Intelligence must determine whether the information is credible and accurate and notify Congress. A determination that Iran has cheated would re-impose all sanctions that had been temporarily lifted.
 
No More Extensions: If the president does not submit a comprehensive final agreement to Congress, all sanctions relieved under the interim agreement would be immediately restored on November 28, 2014, four days after the end of the extension period. This allows the president to negotiate while ensuring the Iranians do not use the negotiations as a delaying tactic or a cover for advancing their program.
 
 

Report: Guiding Principles for Nuclear Talks

          Senior officials from the world’s six major powers have outlined five key principles that must underpin a deal, according to a new Institute for Science and International Security report. They include: 1) sufficient response time in case of violations; 2) a nuclear program meeting Iran’s practical needs; 3) adequate irreversibility of constraints; 4) stable provisions; and 5) adequate verification, according to David Albright, Olli Heinonen and Andrea Stricker. “Without following these principles, the negotiations cannot deliver an agreement which can ensure that Iran’s nuclear program is indeed peaceful and that a deal will be long lasting,” wrote the experts. The following are excerpts from the report with a link to the full text.

 
Adequate Response Time
 
           One of the Six’s key principles is that an agreement must provide sufficient time to mount an effective response to major violations by Iran. There are two parts to this principle—one involves intrusive IAEA inspections able to promptly detect non-compliance (and address it by effective verification) and the other recognizes that even the most intrusive inspections are alone inadequate to provide enough response time in the case of Iran. The latter, adequate response time, requires significant limitations on Iran’s nuclear programs and translates into a need to limit Iran’s pathways to making nuclear weapons.
 
           An effective metric of adequate limits on Iran’s main overt pathway to nuclear weapons, its centrifuge program, is breakout time, which measures the length of time Iran would need to produce enough weapon-grade uranium for a single nuclear weapon. The United States and its allies seek restrictions such that a breakout by Iran using its known centrifuge plants would take at least one year, although they may settle for at least six months if additional assurances can be obtained.
 
Practical Needs
 
           Limiting Iran’s centrifuge program to less than 4,000 IR-1 centrifuges is consistent with Iran’s actual needs for enriched uranium for many years. This number of centrifuges would provide Iran with sufficient enriched uranium for its existing research reactor programs and account for modest growth in them. Thus, Iran would not suffer any serious consequences in its nuclear program by limiting the numbers of centrifuges to these levels.
 
Irreversibility
 
           Another critical principle for the Six is irreversibility. Here the concept of irreversibility is understood as accepting that perfect irreversibility is not possible but in practice recognizes that the restoration of the previous, unconstrained situation should take a long time—on order of years and not months. In the case of Iran, a long term agreement would have little lasting value if Iran can reverse the constraints in a matter of days or months. The case of North Korea contains many examples where nuclear constraints were quickly undone and Pyongyang resumed its march to nuclear weapons. This case also contains important examples of North Korea being unable to establish previous levels of plutonium production when an agreement ended. North Korea shut down its large gas-graphite reactors, ending their ability to make large amounts of weapon-grade plutonium, as a result of the 1994 US/DPRK Agreed Framework. When this agreement ended suddenly in 2002, North Korea was able to reestablish a relatively small plutonium production capability.
 
Stability
 
           Although not articulated explicitly by the Six’s officials, stability as a guiding principle requires provisions that do not lead to persistent accusations of violations or require huge numbers of actions to achieve compliance. Such provisions can undermine the credibility of an agreement and call into question its enforceability.
 
           An example involves lowering the amount of enriched uranium Iran has access to while increasing the number of allowed centrifuges to 10,000 or more IR-1 centrifuges, in an effort to increase breakout times. These two steps taken together are not a zero-sum provision; they would create an unstable, highly reversible situation.
 
Effective Verification
 
           Effective verification is another core principle, and Iran has refused to make concessions in this area as well. The IAEA must provide prompt warning of violations, determine the correctness and completeness of Iran’s declarations, establish the total number of centrifuges produced by Iran and the size of its uranium stocks, and establish confidence in the absence of undeclared nuclear activities or facilities, including providing assurances on the absence of nuclear weapons related activities in Iran. Iran argues that ratifying the Additional Protocol is enough but while such a step is welcome, it is not sufficient. The long term agreement must also establish a range of other verification provisions, which collectively are often known as Additional Protocol Plus. According to one senior official, Iran has resisted the conditions necessary to create the “Plus.”
 
Click here for the full report.
 

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