United States Institute of Peace

The Iran Primer

Iran Warns US on Visa Waiver Act

Iranian officials have warned that changes to the U.S. Visa Waiver Program could be a violation of the nuclear deal. On December 20, 102 Iranian lawmakers sent a letter to President Rouhani condemning the move and demanding government action. House Resolution 158, which passed 407 to 19 on December 8, aimed to tighten visa-free travel to the United States. Citizens of 38 countries, including many E.U. member states, can currently fly to the United States without applying for a visa. The rule, signed into law by President Obama on December 18 as part of a $1.1 trillion spending bill, requires citizens of those 38 states to apply for a visa after having traveled to Iran for pleasure or business in the past five years. The restriction applies to dual citizens as well.
An earlier version of the bill only required visas for those who travelled to “terrorist hotspots,” such as Iraq and Syria. But Iran and Sudan were added to the list of countries because of their designation as “state sponsors of terrorism” by Washington. The restriction applies to dual citizens of those four countries as well.The legislation was intended to make it more difficult for terrorists who hold E.U. or other citizenships to enter the United States. The following are reactions by Iranian officials to H.R. 148.

Foreign Minister Mohammad Javad Zarif
“This visa-waiver thing is absurd. Has anybody in the West been targeted by any Iranian national, anybody of Iranian origin, or anyone travelling to Iran? Whereas many people have been targeted by the nationals of your allies, people visiting your allies, and people transiting the territory of, again, your allies. So you’re looking at the wrong address…”
—Dec. 17, 2015, in an interview with The New Yorker
“Unfortunately, there are mixed signals coming from Washington, mostly negative signals, including the visa waiver program restrictions. Now we await for the decision by the administration on how it wants to bring itself into compliance with its obligations under the JCPOA.”
“I have had discussions with Secretary Kerry and others on this for the past several days since it’s become known that this was the intention. And I wait for them to take action.”
—Dec. 19, 2015, in an interview with Al Monitor
Parliamentary Speaker Ali Larijani
“Although it is not an important issue, it is aimed at harassment and is against the paragraphs 28 and 29 of the Joint Comprehensive Plan of Action (JCPOA).”
“If the Americans pursue the plan, they will destroy an achievement with their own hands since it is against the JCPOA and it will trouble them.”
—Dec. 17, 2015, in a speech in Qom
Deputy Foreign Minister Syed Abbas Araghchi
“The U.S. Congress's approval has different legal aspects which are being studied and if it is against the contents of the Joint Comprehensive Plan of Action (JCPOA), we will take action against it.”
“We are in consultation with the Group 5+1 (the US, Russia, China, Britain and France plus Germany) and specially the EU (Foreign Policy) Coordinator (Federica Mogherini) to show the necessary reaction in this regard.”

—Dec. 13, 2015, to reporters in Tehran 


“The law Obama signed contradicts JCPOA. Definitely, this law adversely affects economic, cultural, scientific and tourism relations.”

—Dec. 20, 2015, according to state television


Parliament’s National Security and Foreign Policy Committee Chairman Alaeddin Boroujerdi
“It is true that they [Americans] have set restrictions on citizens of other countries but they have committed such a violation indirectly.”

—Dec. 20, 2015, according to Press TV 



Iran's Economy in 2015

Cameron Glenn

For Iran’s economy, 2015 was a year of high expectations and slow results. The historic nuclear deal in July – and the promise of sanctions relief – initially raised hopes among foreign companies eager to tap into the Middle East’s second largest economy (after Saudi Arabia). Iranians expected to quickly notice improvements in their quality of life. But by the end of 2015, tangible economic benefits had yet to materialize.
The Islamic Republic still faced significant challenges, triggered not only by sanctions, but by years of profligate spending and economic mismanagement. Iran was even slipping towards a recession. Domestic production stagnated. Low oil prices squeezed the state budget. And unemployment remained stubbornly above ten percent.
In October, President Hassan Rouhani approved a six-month stimulus package – a notable shift from his economic policies focused on improving fiscal discipline. He hoped to stimulate growth before the parliamentary elections and the implementation of the nuclear deal. But the move threatened to undermine his efforts to reduce inflation.
Rouhani faced pressure to deliver on the economic promises that Iranians – and a host of foreign companies – so eagerly anticipated. His administration may struggle to bridge the gap between economic expectations and reality, even after sanctions are lifted in 2016.
International Trade
Some U.N., E.U., and U.S. sanctions were due to be lifted or suspended on the nuclear deal’s Implementation Day, expected in early 2016. But foreign companies began flocking to Iran even before the deal was signed. In 2015, Tehran hosted a flurry of trade delegations and signed new contracts to boost cooperation in energy, transportation, and other sectors.
Around 60 foreign delegations visited Iran between March and November, according to deputy economy minister Mohammad Khazaei. At least a dozen were from Europe, many of which had been active in Iran before sanctions were tightened in 2010.
Barely six days after the deal was signed, German Economy Minister Sigmar Gabriel met with officials in Tehran to discuss expanding “lasting and stable economic cooperation.” A week later, French Foreign Minister Laurent Fabius visited Tehran for the same purpose. It was the first visit to Iran by a French foreign minister in 12 years. Italy, which used to be one of Iran’s major trade partners, sent a delegation of 300 businessmen in early August.
The deal may strengthen Iran’s economic ties with Europe, but it is unlikely to have the same impact for the United States. U.S. sanctions relief will generally be limited to nuclear-related restrictions on non-U.S. entities. American companies will still be prohibited from trading with Iran. Limited exceptions include civil aviation, carpets, pistachios, and caviar.
By the end of the year, Iranian officials had made it clear that the Islamic Republic did not intend to improve trade ties with the United States. On November 5, Minister of Industry, Trade, and Mines Mohammad Reza Nematzadeh said that Iran must “stop entry of American consumer goods and…prohibit products that symbolize the presence of the United States in the country.”
High Hopes and Disappointments
The prospect of sanctions relief fueled optimism among Iranians in 2015. In May, around 55 percent of Iranians expected to see tangible improvements in living standards within a year of the deal being signed, according to a poll from the Center for International and Security Studies at Maryland. By September, the figure had risen to 63 percent.
The hopes were not unfounded. In October, the International Monetary Fund predicted that Iran’s economy could grow 4.4 percent in 2016 if sanctions are lifted – an increase from its projection of 1.3 percent growth in April, before the deal was signed. Valiollah Afkhami-Rad, head of Iran’s Trade Development Organization, said on July 27 that exports and domestic production may rise at least 20 percent after sanctions are lifted. In November, Central Bank vice governor Gholamali Kamyab predicted that around $29 billion of Iran’s $100 billion frozen funds would be repatriated by early 2016. And Oil Minister Bijan Zanganeh announced that Iran would increase oil production from 2.9 billion barrels per day to 3.9 billion barrels per day by March 2016.
Paradoxically, the anticipation of better economic prospects had a negative impact on the economy in late 2015. First Vice President Es’haq Jahangiri blamed high expectations for oversupply and low demand in several industries. “Unfortunately, some people are expecting a sudden fall in prices after the implementation of the nuclear agreement,” he said on September 12. Economy Minister Ali Tayyebnia also linked high expectations to low domestic spending on cars and home appliances.
The auto industry – Iran’s largest non-oil sector – struggled in the months following the nuclear deal. Sales were low, as Iranians anticipated price decreases and imports of higher quality cars once sanctions are lifted. In August, a social media campaign in Iran began calling for a boycott of Iranian-made cars due to poor quality and safety standards. Minister of Trade, Mining, and Industry Mohammad Reza Nematzadeh called the boycott “sinful” and “anti-revolutionary,” arguing it would hurt the economy. Iran’s steel and cement industries also stagnated in 2015 from high supply and low demand.
Lifting sanctions will likely provide some relief for Iran’s ailing economy, but may not be a panacea. Low oil prices presented another economic challenge in 2015. In January, the government revised its draft budget to assume an oil price of $40 a barrel. The initial budget that President Rouhani presented to parliament was based on $72 a barrel, down from $100 in the 2014 budget. Iran’s oil and gas infrastructure also lagged far behind its Gulf neighbors. Once sanctions are lifted, Iran hopes to secure a staggering $185 billion in oil and gas investments by 2020.
Source: OPEC
Rouhani’s Policies
Rouhani shifted gears to cope with economic pressures at the end of 2015. During his first two years in office, he had largely focused on improving fiscal discipline and modifying or reversing the populist policies of former President Mahmoud Ahmadinejad. Rouhani’s key achievement was reducing inflation to 14.8 percent by 2015, down from nearly 40 percent when he took office in August 2013.
For much of 2015, Rouhani stuck to similar policies. He tackled subsidy reform by raising gasoline prices twice and suspending monthly cash handouts to three million wealthy Iranians. All Iranians – regardless of income – had been eligible to receive the payments, but they have increasingly strained Iran’s state budget.
Reducing dependence on oil revenues became another key focus for his administration, especially as oil prices dropped. “We should have a variety of revenue sources, we cannot depend on a single source of income,” he said in January. On June 15, he announced that Iran’s 2015-2016 budget was “the least oil-dependent ever.”
By the end of the year, Rouhani faced new pressure to ward off a recession. In September, the ministers of economy, industry, labor, and defense sent Rouhani an open letter warning of economic decline. “If urgent action is not taken, stagnation could turn into crisis,” it said. The ministers blamed sanctions, low oil prices, and “uncoordinated decisions and policies.”
In October, Rouhani approved a six-month stimulus package, marking a significant change in policy. It was designed to inject cash into the economy and stimulate growth before sanctions are lifted. The timing of the policy shift suggests it may have been intended to help Rouhani score political points ahead of Iran’s elections for parliament and the Assembly of Experts. Some experts, however, warned that the move could increase inflation and jeopardize Iran’s economic recovery.
Low oil prices and structural problems may continue to stymie economic recovery in 2016. According to the World Bank, Iran still needs to improve its business environment, reduce the influence of state-owned enterprises, and reform its financial sector in order to see tangible benefits in growth and job creation.
Key Industries

  • Foreign oil companies have sought opportunities to resume work in Iran – which holds the world’s fourth largest oil reserves – since the nuclear deal was signed in July. In October, representatives from 10 major oil, gas, and petrochemical companies visited Tehran to discuss investment opportunities. They included oil giants previously active in Iran, such as France’s Total and Italy’s ENI.
  • Iran hopes to lure back foreign oil companies by offering more favorable contract terms. In November, Iran introduced the Iran Petroleum Contract (IPC). Unlike the “buy-back” contracts unpopular with foreign firms, the IPC allows companies to participate in all the stages of an oil or gas field’s lifecycle.
  • Iran’s crude oil production hovered around 2.9 million barrels per day in September. Oil Minister Bijan Zanganeh predicted it could rise to 3.9 million barrels per day by March 2016, if sanctions are lifted.
Natural Gas

  • Iran holds the world’s second largest natural gas reserves. Some officials speculated in 2015 that the Islamic Republic could eventually replace Russia as a natural gas supplier to Europe. But new exports would require expensive new pipeline infrastructure or liquefaction facilities, which would cost billions of dollars and take years.
  • Deputy Oil Minister for Commerce and International Affairs Amir-Hossein Zamaninia said on July 23 that Iran could feasibly deliver liquefied natural gas to Europe within five to 10 years. In September, Oil Minister Bijan Zanganeh met with officials from Poland and Spain to discuss the possibility of exporting liquefied natural gas to the two countries. European companies estimated that Iran could supply Europe with up to 35 billion cubic meters of gas per year by 2030.
  • Other Iranian officials have approached the issue with more caution. In May, Mohsen Ghamsari, a director at the National Iranian Oil Company, said that exporting natural gas to Europe was not “economically feasible.” In November, deputy head of the National Petrochemical Company Mohammad Hassan Peyvandisaid that it would not be “economically justified” for Iran to export liquefied natural gas in the immediate future.
  • In April, Zanganeh announced that Iran plans to increase gas production to 200 million cubic meters per day by April 2016. “This is what we planned by assuming that the sanctions will remain in place,” he said. “If the sanctions are removed, things will proceed much faster.”
Auto Industry

  • Iranian car production rose 8.7 percent in the first five months of the Iranian calendar year (March-August 2015), but sales of Iranian cars dropped 15 percent in the same period. 
  • Western automakers left Iran due to sanctions, but several companies – including Fiat Chrysler, Volkswagen, Mercedes-Benz, and Peugeot – have expressed interest in returning to Iran once sanctions are lifted.
  • On July 29, Iranian automaker Iran Khodro and German automaker Mercedes-Benz announced they plan to sign a five-year deal to distribute Benz cars in Iran and a 10-year deal for production of commercial vehicles. Iran Khodro has also held discussions with Volkswagen and French automaker Peugeot. It hopes to expand ties with Renault and Suzuki as well, according to CEO of Iran Khodro Industrial Group Hashem Yekeh Zareh.



  • Iran’s steel industry struggled in 2015, plagued by low demand, high production costs, and competition from low-quality steel products from China.
  • In October, steel demand was at an all-time low, and production dropped for the third straight month. Iranian steel exporters shifted focus to domestic production, seeking $20 billion to develop the steel industry and triple production within ten years.
  • In November, the Iran Steel Producers Association called on the government “to help the steel industry move out of recession.”
  • Also in November, two Italian companies proposed a four billion euro deal to participate in Iranian steel and aluminum projects.

  • Iranian cement exports – a key non-oil industry – declined by 30 percent in the first five months of the Iranian calendar year.
  • Iran is the largest cement producer in the Middle East, but it has struggled in the past few years from low demand, sanctions, and competition from other cement producers such as Turkey.

  • The water and electricity sectors have suffered from lack of investment over the last few years and uneven implementation of President Mahmoud Ahmadinejad’s subsidy reform program.
  • Energy Minister Hamid Chitchian warned in February that electricity shortfalls are hindering economic growth. The sector “has consistently been weakened over the past five years, and investment has dramatically decreased,” he noted. Energy demands are reportedly growing at about six percent a year while growth is less than a third of that.
  • Iran hopes to earn $50 billion in investments for water and electricity projects once sanctions are lifted, according to Energy Minister Hamid Chitchianin August. The projects would take around 20 years to complete. 
Timeline of Foreign Economic Delegations in 2015
January 20: Iran’s largest car maker, Iran Khodro, signed an agreement with France’s Renault to import two models of cars in early or mid-2015.
January 28: Ali Akbar Velayati, a top advisor to the supreme leader, visited Moscow and met with President Vladimir Putin. The two agreed to coordinate efforts to upgrade Iran’s observer status within the Shanghai Cooperation Organization. Velayati also met with Russian Foreign Minister Sergei Lavrov and Energy Minister Alexander Novak.
April 2: Iran and the world’s six major powers reached an agreement on the framework for a nuclear deal.


April 7: Rouhani and Turkish President Recep Tayyip Erdogan signed eight agreements to increase bilateral trade, aiming to increase trade volume to $30 billion by the end of 2015.
April 13: Russia began implementing an oil-for-goods deal with Iran. “In exchange for Iranian crude oil supplies, we are delivering certain products,” said Russian Deputy Foreign Minister Sergei Ryabkov. “This is not banned or limited under the current sanctions regime.”
April 13: France’s Total indicated that it would be interested in reviving oil and gas investments in Iran, if sanctions are lifted. “Iran has the world’s second largest gas reserves after Russia, and we will consider returning to this country once sanctions are lifted,” said Total CEO Patrick Pouyanne.
April 28: A Swiss business delegation met with Gholam Hossein Shafei, head of Iran's Chamber of Commerce. The two sides discussed expanding bilateral trade.
May 6: Iran and India signed a memorandum of understanding to develop the strategic Chabahar port in southeast Iran. Plans to develop the port date back to 2003, but were delayed by international sanctions on Iran.
May 10: Foreign Minister Mohammad Javad Zarif met with his South African counterpart, Maite Nkoana-Mashabane, in Tehran. Zarif described Iran’s relationship with South Africa as “friendly and strategic” and noted the potential for economic cooperation in the oil and gas industry.
July 14: Iran and the world’s six major powers reached a final nuclear deal.
July 20: German Economy Minister Sigmar Gabriel became the first high-level European official to visit Iran after the deal was announced. “German companies are not only prepared to sell products to Iran, but also seek to expand lasting and stable economic cooperation [with Iran],” Gabriel said. But he also indicated that closer economic ties would depend on Iran improving its stance towards Israel. Gabriel was accompanied by a delegation of businessmen, and met with several Iranian officials including Oil Minister Bijan Zanganeh.
July 28: Iranian Deputy Foreign Minister for Asia and Pacific Affairs Ebrahim Rahimpour met with Chinese foreign minister Wang Yi, reinforcing China’s role as a strategic partner for Iran.
July 29: Foreign Minister Laurent Fabius visited Iran on July 29, meeting with Iranian Oil Minister Bijan Zanganeh and other senior officials. It was the first visit to Iran by a French foreign minister in 12 years.
August 4-5: Italian Economic Development Minister Federica Guidi visited Iran with a team of 300 businessmen. Investment bank Mediobanca, Italy’s development ministry, and export credit agency SACE signed a memorandum of understanding “to facilitate future economic and commercial relations between the two countries.”
August 23: British Foreign Secretary Philip Hammond reopened the British Embassy in Tehran. Central Bank of Iran Governor Valiollah Seif announced that two Iranian banks would open in Britain.
September 8: Austrian firms signed contracts and memoranda of understanding with Iran totaling $89 million during Austrian President Heinz Fischer’s visit to Tehran. Fischer was the first European head of state to visit the Islamic Republic since 2004. Iran and Austria hope to increase bilateral trade from $300 million per year to $1 billion per year by 2020.
September 17: South Africa – formerly the leading African importer of Iranian oil – signed a deal to increase oil imports from Iran once sanctions are lifted.
September 21: France opened a trade office in Tehran during a visit from a business delegation with representatives from Airbus, Renault, Peugeot, and Total.
October 2: A British economic delegation, which included oil and gas companies, visited Iran.
October 12: The Japanese foreign minister met with Oil Minister Bijan Zanganeh in Tehran to discuss increasing oil imports once sanctions are lifted.
October 26: Brazilian Minister of Development, Industry, and Trade Armando Monteiro arrived in Tehran with a delegation to discuss improving economic ties with Iran. They hope to increase trade volume to $5 billion.
November: Two Italian companies proposed a four billion euro deal to participate in Iranian steel and aluminum projects.
November 2: Iran negotiated the potential for natural gas trade with Kuwait once sanctions are lifted. “Kuwaitis are looking to import natural gas from Iran,” according to managing director of National Iranian Gas Export Company Alireza Kameli.
November 18: A delegation representing 26 French oil companies discussed potential cooperation with officials in Tehran.
November 24: Russia and Iran signed seven memoranda of understanding on the sidelines of the Gas Exporting Countries Forum.
Cameron Glenn is a senior program assistant at the U.S. Institute of Peace.
Photo credits: U.S. Department of State

Iran and the Region in 2015

Garrett Nada
Tensions between the Islamic Republic and the Arab world deepened in 2015, exacerbated by the wars in Syria, Iraq and Yemen. President Hassan Rouhani’s top priority after securing the nuclear deal in July was to improve relations with Tehran’s neighbors. Iran made limited progress in upgrading ties with its neighbors in South and Central Asia. But overall, Shiite Iran instead was isolated, especially as Sunni nations increased cooperation among themselves. 
In 2015, Iran sent more Revolutionary Guards (IRGC), including top generals, to help Damascus fight both rebels and extremist militant groups, including the Islamic State (ISIS) and the Nusra Front. Brigadier General Hossein Salami told Iranian state television that Iran was helping Syria build a new force with recruits from Iraq, Afghanistan, Lebanon and Pakistan. But the intervention took a growing toll. Iran lost at least four IRGC generals in Syria in 2015. From October 1 and December 15, IRGC combat fatalities reportedly totaled more than 100.
By October, Syrian President Bashar al Assad had the advantage in the balance of forces against the rebels, according to General Joseph Dunford, chairman of the Joint Chiefs of Staff. He estimated that less than 2,000 Iranians were operating in Syria. But Iran also organized militiamen from Afghanistan, Iraq, Pakistan and other countries to aid Syrian government troops. The Fatemiyoun military division, composed of Afghan refugees living in Iran and Syria, was reportedly the second largest foreign military force fighting for the regime, after the Lebanese Shiite militia Hezbollah.   
But Tehran also appeared interested in diplomacy on Syria. Foreign Minister Zarif and a delegation of Iranians joined peace talks in October. Representatives from 17 countries, the United Nations, and the European Union participated in the talks. The decision to include Iran, backed by the United States, marked a major change after two earlier failed peace initiatives in 2012 and 2014. They held a second round in November.
For Iran, the two key issues were the fate of President Bashar Assad and the role of the opposition. The Syrian president “is the Islamic Republic of Iran's red line because he was elected president by the Syrian people,” said Ali Akbar Velayati, the supreme leader’s foreign policy advisor. Tehran views many of the rebel militias, some backed by the West, as terrorist groups.
After ISIS came within 25 miles of Iran’s border in January 2015, Iran deployed more military advisors to Iraq to help fight the extremists. In March, General Qassem Soleimani, commander of the IRGC’s elite Qods Force, directed an assault by Iraqi military and Shiite militias in Tikrit. Tehran touted its role. Pictures of Soleimani on the frontlines were widely shared on social media. In October, General Dunford said that there were more than 1,000 Iranian troops in Iraq.

But Iran also suffered losses of senior personnel in Iraq. An IRGC commander, Reza Hosseini Moghadam, was killed by ISIS snipers in Samarra. Jassem Nouri, a seasoned commander who served in the Iran-Iraq war in the 1980s, was killed near Ramadi. A Qods force commander close to Soleimani, General Sadiq Yari, was killed while fighting ISIS in Tikrit.  


Gulf Countries and Yemen
Relations between Iran and the Sunni sheikhdoms in the Gulf soured further in 2015. New Iranian outreach to the Gulf nations failed to stem the slide. In September, the Gulf Cooperation Council countries —Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates —accused Iran of interference in their domestic affairs by harboring fugitives, supporting terrorist groups and inciting violence. Shiite Iran and its Sunni neighbors also supported rival actors in the Syrian and Yemeni conflicts. In a sporadic war of words, Tehran accused Saudi Arabia of supporting terrorist groups, including ISIS and al Qaeda. Riyadh accused Iran of sending thousands of militants to Syria, further fueling Shiite-Sunni tensions.
In Yemen, Iran supported the Houthis, a Zaydi Shiite movement that has controlled the capital, Sanaa, since September 2014. Tehran condemned Saudi Arabia after it launched an air campaign, with support from other Gulf states, against Houthi rebels in March 2015. In a reflection of the tensions, the IRGC commander alleged in April that the kingdom was on the “edge of collapse” and that its air campaign was “shameless.” Supreme Leader Ayatollah Ali Khamenei called the Saudi intervention a “genocide.”
Riyadh countered that Iran was responsible for exacerbating the Yemeni conflict. “Iran has relations with the Houthis, as it provides them with weapons and specialists, and Iran is one of the main reasons behind the war in Yemen,” Foreign Minister Adel al Jubeir said in October. In his address to the U.N. General Assembly, Jubeir said Riyadh wanted good relations with Tehran, but also called on it to stop interfering in Arab affairs.
Saudi-Iran tensions flared again in September when hundreds of pilgrims – including more than 400 Iranians – died in a stampede during a Hajj pilgrimage in Saudi Arabia, home to Islam's two holiest cities.
Bahrain’s troubled relationship with Iran was a microcosm of tensions between the Gulf states and Tehran. Their relations have been troubled since predominantly Shiite Bahraini citizens protested the Sunni-dominated government and monarchy in 2011 during the Arab Spring. Manama has routinely accused Tehran of meddling in its domestic affairs. Iran has denied interfering, saying that it only generally supports opposition groups seeking greater rights for Shiites. In February, Bahrain’s interior ministry published a list of 72 individuals whose nationality had been revoked over “intelligence, security, terrorism and allegiance issues.”
Bahrain announced in July that it had foiled an arms smuggling plot by two of its citizens with ties to Iran. Citing hostile Iranian statements, Manama withdrew its ambassador from Tehran. Iran’s foreign ministry urged Bahrain to deal with its own domestic issues and have a serious national dialogue instead of playing a “blame game.” In August, Bahraini authorities arrested five people for alleged links to Iran in connection with a bombing that killed two policemen.
In October, Bahraini security forces reported they had found a large weapons cache including 1.5 tons of C4 explosives. Bahrain’s foreign affairs ministry said it recalled its ambassador in Tehran “in light of continued Iranian meddling in the affairs of the kingdom of Bahrain ... in order to create sectarian strife and to impose hegemony and control.” The foreign ministry also gave Iran’s acting charge d’affaires three days to leave Bahrain.
In November, Bahrain arrested 47 members of a group allegedly tied to “terror elements in Iran.” A public prosecutor said five individuals had communicated with Iran’s Revolutionary Guards. They were stripped of their citizenship and sentenced to life imprisonment. 
Iran’s relationship with Turkey in 2015 was characterized by both rivalry and cooperation. The biggest challenge facing the two was how to resolve the Syrian crisis. Ankara sought the removal of President Bashar al Assad while Tehran significantly upped its military presence in Syria to shore up his regime. Turkey also supported Saudi Arabia’s air campaign against the Houthi rebels in Yemen. Iran, widely seen as a backer of the Zaydi Shiite movement, condemned the intervention as a violation of Yemeni sovereignty.
In March, Turkish President Recep Erdogan accused Iran of trying to dominate the region and foment sectarianism. “Iran has to change its view. It has to withdraw any forces, whatever it has in Yemen, as well as Syria and Iraq and respect their territorial integrity,” he said at a press conference. Several Iranian lawmakers called on their government to cancel Erdogan’s April visit to Tehran, and one said Erdogan was trying to rebuild the Ottoman Empire.
Despite tensions, Erdogan made the trip. He and Rouhani signed eight agreements and focused on boosting economic cooperation. The two have been close trade partners for years. Iran accounts for some 20 percent of Turkey’s gas imports. A bilateral preferential trade agreement went into effect in January. Throughout 2015, the two sought ways to double their annual bilateral trade volume to $30 billion. Turkish Finance Minister Mehmet Simsek said the nuclear deal, announced in July, was “great news” for the Turkish economy and bilateral trade.
In December, the gulf between Turkey and Iran seemed to widen further. Erdogan again accused Iran and Iraq of pursuing sectarian policies in an interview with Al Jazeera. He justified the presence of Turkish troops in northern Iraq by citing the local needs of Sunnis for arms and self-defense training. “What will happen to Sunnis? There are Sunni Arabs, Sunni Turkmen and Sunni Kurds? What will happen to their security? They need [a] sense of security,” said Erdogan. Turkey also joined a 34-state coalition of solely Sunni states, led by Saudi Arabia, to fight terrorism. Shiite Iran’s exclusion from the group highlighted the deepening sectarian divide.
South and Central Asia
Iran had greater success strengthening ties with its eastern neighbors in 2015. India and Pakistan were among the first countries Zarif visited after the nuclear deal’s announcement in July.
India remained Iran’s top oil buyer after China in 2015. As of October, it was India’s seventh largest supplier. Before international sanctions severely curtailed Iran’s exports around 2010, it was India’s second largest supplier. “India has been a friend of Iran in difficult times, and we don’t forget that,” Zarif told reporters in New Delhi in August. India moved to secure its interests in Iran’s natural gas reserves, the second-largest in the world. In December, a consortium of Indian companies reached an initial agreement to develop the Farzad B gas field under a $3 billion contract. Tehran and Delhi were also reportedly discussing a plan to build a $4.5 billion undersea gas pipeline to connect southern Iran to western India.
In an effort to increase bilateral trade of other goods, India and Iran signed a memorandum of understanding in May to develop the strategically important Chabahar port on Iran’s southern coast. In October, India said it was ready to invest some $196 million in Chabahar, but stipulated that investments would depend on the price of Iran’s natural gas. India and Iran both aim to seal the deal by January. Just 44 miles west of Pakistan’s Gwadar port, Chabahar could help India expand trade ties into Central Asia. India would also be less dependent on land routes through Pakistan to Afghanistan.
India-Iran economic cooperation is likely to continue expanding in 2016, when both are expected to become members of the Shanghai Cooperation Organization (SCO). The intergovernmental group, founded in 2001, promotes cooperation among its six member states and six observer states in the political, economic, cultural, security and science spheres. Prime Minister Narendra Modi and President Rouhani actually met on the sidelines of a BRICS/SCO summit in July. 
Tehran was also keen on strengthening ties with Islamabad. Zarif visited Pakistan three times in 2015. In April, Zarif discussed the Yemeni crisis and Iran-Pakistan border security with Pakistani Prime Minister Nawaz Sharif and other top officials. The shared 500-mile border runs through the homeland of the Baloch —a Sunni ethnic group that has waged a decades-long insurgency against both countries.
In August, Zarif met with Sharif in Islamabad again. Zarif said they discussed ways to increase cooperation “in sectors ranging from oil to gas, energy, transportation and others.” Security cooperation was also high on the agenda again. Islamabad assured Iran of its resolve to start work on its part of the gas pipeline. Iran completed its part of the $1.5 billion project in 2013, but Pakistan stalled due to international sanctions on Iran’s nuclear program.
In December, Zarif visited Islamabad for the fifth Heart of Asia – Istanbul Process Ministerial Conference aimed at helping bolstering regional security and economic cooperation with a focus on Afghanistan. Representatives from 14 countries participated.
Afghan President Ashraf Ghani visited Tehran in April. He and Rouhani announced plans to enhance security cooperation to counter ISIS and drug smuggling. They agreed to expand economic cooperation, especially regarding trade, transit, energy, industry and mining. Both countries had a shared interest in shoring up security along their porous 585-mile border. Smugglers have long taken advantage of the difficult terrain to sneak drugs into Iran. In 2015, however, Tehran became increasingly concerned about the possibility of a border attack by ISIS. In November, Iran conducted exercises near the border to simulate one. 
Garrett Nada is the assistant editor of The Iran Primer at USIP.
Photo credits: Syria talks by US Dept of State via Flickr Commons; Erdogan and Rouhani and Ghani and Rouhani via President.ir;   


Ambassador Mull on Iran Deal Status

On December 17, the U.S. lead coordinator for implementing the nuclear deal said Iran has been “making tangible progress on a number of key commitments.” Iran has “begun dismantling its uranium enrichment infrastructure by removing thousands of centrifuges and transferring them for storage under continuous IAEA surveillance,” Ambassador Stephen D. Mull told the Senate Foreign Relations Committee.
At the same hearing, Thomas M. Countryman, assistant secretary of the Bureau of International Security and Nonproliferation, provided an update on Iran’s missile program. And Lieutenant General Frank G. Klotz (Ret), the undersecretary for nuclear security, discussed the Department of Energy’s role in implementing the deal. The following are their prepared remarks.

Lead Coordinator for implementing the JCPOA Ambassador Stephen D. Mull, U.S. Department of State
Chairman Corker, Ranking Member Cardin, distinguished Members of the Committee – I appreciate the opportunity to provide an update on the status of implementation of the Joint Comprehensive Plan of Action, or the JCPOA.
My name is Ambassador Steve Mull. I have served as a career member of the Foreign Service for 33 years. Shortly after the JCPOA was concluded, Secretary Kerry asked me to return to Washington from my last post as U.S. Ambassador to Poland to serve as Lead Coordinator for implementing the JCPOA. In this job, I’m leading a terrific team of colleagues within the Department of State, as well as at the Departments of Energy, the Treasury, and Commerce, among others, to make sure that the JCPOA is fully implemented to enhance the security of our country, and that of our friends and allies around the world.
I am pleased that two of my colleagues, Department of Energy Undersecretary for Nuclear Security and Administrator of the National Nuclear Security Administration, General Frank Klotz, and Assistant Secretary of State for International Security and Nonproliferation, Tom Countryman, are here with me today.
As you all know, our government continues to engage Iran on a host of issues unrelated to this nuclear deal. For example, we continue to raise concerns about Iran’s actions when it comes to its support for terrorism or human rights abuses. But my job is focused solely on the critical task of making sure the JCPOA achieves its one, crucial objective – preventing Iran from obtaining a nuclear weapon. When fully implemented, the JCPOA will dramatically scale back Iran’s nuclear program and provide unprecedented monitoring and verification tools to ensure that it is exclusively peaceful moving forward.
Steady progress is being made toward this objective. October 18th marked Adoption Day under the JCPOA when the deal formally came into effect. On this day, all participants began making the necessary arrangements for implementation of their JCPOA commitments.
This included Iran informing the International Atomic Energy Agency – the IAEA – that it would provisionally apply the Additional Protocol and fully implement Modified Code 3.1, which provides for early declaration of nuclear facilities before they are built, starting on Implementation Day. These are two important mechanisms which will ensure the international community has much greater insight into Iran’s nuclear program than it’s ever had before.
The P5+1 and Iran have also issued an Official Document outlining the plan for redesigning the Arak Heavy Water Research Reactor so that it will not produce weapons-grade plutonium. And the United States and European Union have taken actions to lift nuclear-related sanctions upon reaching Implementation Day.
Implementation Day is the next major milestone in the JCPOA. It will occur only after the IAEA verifies that Iran has completed all of the key nuclear steps specified in the JCPOA. These are the technical steps that push Iran’s breakout time to at least a year, from the current estimate of less than 90 days. At that time, Iran will receive relief from U.S., EU, and UN nuclear-related sanctions. The timing for reaching Implementation Day is primarily within Iran’s control. However, I reiterate that Iran will receive no sanctions relief under the JCPOA until it has verifiably met all of its key nuclear commitments.
Since Adoption Day, Iran has been working to fulfill its commitments and reach Implementation Day making tangible progress on a number of key commitments. For example, Iran has begun dismantling its uranium enrichment infrastructure by removing thousands of centrifuges and transferring them for storage under continuous IAEA surveillance. It has already removed more than 5000 of its machines and is likely to move quickly to remove the rest in the coming days.
Iran is also making progress on reducing its stockpile of various forms of enriched uranium to no more than 300 kg of up-to-3.67% enriched material. It will accomplish this primarily by shipping a significant amount of such material outside Iran, while also diluting the remaining excess to the level of natural uranium or below. Commercial contracts are in place for Iran to ship its enriched uranium stockpiles to Russia. We expect that this material – approximately 25,000 pounds of material enriched up to 20 percent LEU – could leave Iran as soon as later this month. This step alone will significantly lengthen Iran’s breakout time.
As I have briefed members of this Committee before, Iran must also remove and render inoperable the existing calandria – or core – of the Arak Reactor by filling it with concrete before Implementation Day can occur. These actions will effectively cut off Iran’s ability to produce weapons-grade plutonium. Iran and the P5+1 are also continuing work to advance the redesign and reconstruction of the Arak reactor. The P5+1 have set up a working group to facilitate this project, which we expect will begin to meet soon after the New Year.
Regarding the Possible Military Dimensions of Iran’s past nuclear program – an issue on which I know you all have been very focused – on October 15, the IAEA announced that Iran had fulfilled its commitments under the “Roadmap for Clarification of Past and Present Outstanding Issues” as agreed to with the IAEA. Subsequently, on December 2nd, the IAEA Director General released the “Final Assessment on Past and Present Outstanding Issues regarding Iran’s Nuclear Programme.”
The report confirmed what the international community has long known – that Iran had a structured nuclear weapons program up until 2003 and there are no indications that it is continuing today. This candid assessment gives us further confidence that the IAEA will perform its duties related to the JCPOA honestly and vigorously.
And just this week, on December 15, the IAEA Board of Governors in a special session adopted by consensus a resolution addressing the Director General’s report on PMD. This resolution, submitted by the P5+1, turns the Board’s focus from confirming what we already knew about Iran’s past weapons-relevant nuclear activities toward fully implementing the JCPOA. This will give the IAEA much better tools for deterring and detecting weapons-related activities in the future.
We also continue to work closely with the IAEA as it makes preparations to implement the JCPOA’s unprecedented monitoring and verification provisions of Iran’s entire nuclear program. The IAEA will have continuous monitoring of all of Iran’s key declared nuclear facilities. This includes its uranium mills as well as its centrifuge production facilities, a first for the IAEA. These measures specific to the JCPOA will give us increased confidence Iran is not diverting material or equipment to a covert program. We’ve always said that this deal isn’t based on trust but on intense verification of Iran’s program. That’s why we’re working so closely with the IAEA to make sure it has everything it needs to do this crucial job going forward.
Meanwhile, we continue to engage with our international partners on other matters pertaining to implementation of the JCPOA and reaching Implementation Day. U.S. experts continue to meet with our P5+1 partners and others, including the EU and Iran, on setting up the procurement channel – the mechanism by which the Joint Commission and United Nations Security Council will review and approve or disapprove transfers of NSG-controlled items and technology for Iran’s nuclear and non-nuclear civilian industry, as well as any other items if a State determines it could contribute to activities inconsistent with the JCPOA.
And on sanctions, we continue to work within the US government, as well as with the EU and others, to make the necessary arrangements to lift nuclear-related sanctions once the IAEA confirms Iran has completed its key nuclear commitments and we reach Implementation Day.
Full implementation of the JCPOA is in our and our partners’ national security interest. It will place Iran’s nuclear program under an unprecedented verification and monitoring regime, and when fully implemented it will give the international community the tools necessary to ensure that Iran’s nuclear program is exclusively peaceful going forward. It will make us, Israel, our Gulf partners, and the whole world safer.
Assistant Secretary for International Security and Nonproliferation Thomas M. Countryman, U. S. Department of State
Chairman Corker, Ranking Member Cardin, and Members of the Committee, thank you for inviting me to talk to you today about our efforts to address Iran’s ballistic missile program. Iran’s efforts to develop increasingly capable ballistic missile systems remain one of our most significant nonproliferation challenges and a very real threat to regional and international security. As we have for many years, we continue to rely on a wide range of multilateral and unilateral tools to work to address Iran’s ballistic missile development efforts and our use of these tools remains unaffected by the implementation of the Joint Comprehensive Plan of Action (JCPOA).
Currently, multiple United Nations Security Council resolutions (UNSCRs) that target Iran’s missile development, procurement, and proliferation activities remain in effect. In particular, resolution 1929 prohibits Iran from undertaking any activity related to ballistic missiles capable of delivering nuclear weapons, including launches using ballistic missile technology. These resolutions require all states to prevent transfers from their territory or by their nationals of missile related items, materials, equipment, goods, and technology to and from Iran. However, even with these strong provisions in place, Iran has continued to engage in activities that clearly violate these restrictions. This has been the case since the adoption of UNSCR 1737 in 2006, and we have continued to draw attention to Iranian violations of these provisions. For example, in October 2015, the United States, in conjunction with the United Kingdom, France, and Germany, reported an Iranian test of a medium range ballistic missile to the United Nations Security Council's Iran sanctions committee as an UNSCR violation. Other Security Council members joined the United States in condemning the launch as a violation, which the UN's own Iran Panel of Experts also agreed was contrary to UNSCR 1929. We will continue to call on the UN Security Council to address this serious matter, shine a spotlight on such destabilizing activities by Iran, and increase the cost to Iran of its behavior.
At the same time, we note that missile tests, such as the October launch reported to the UN, are not a violation of the JCPOA. The focus of the JCPOA is cutting off all of Iran's pathways to a nuclear weapon. We have long said that the JCPOA was not predicated on any change in Iranian behavior -- including its missile development efforts -- other than specific changes that would have to be made to its nuclear program. Full implementation of the JCPOA by Iran will ensure that Iran’s nuclear program remains peaceful going forward and thus Iran will not be able to produce a nuclear warhead.
Under the JCPOA, after the IAEA verifies that Iran has implemented key nuclear-related measures, the provisions of previous relevant UNSCRs will terminate but the measures in UNSCR 2231, which was adopted last July after the JCPOA was finalized, still impose restrictions on Iran’s missile-related activities for a period of eight years or the IAEA reaches the Broader Conclusion that all nuclear material in Iran remains in peaceful activities. Specifically, UNSCR 2231 prohibits all States from transferring all items, materials, equipment, goods, and technology set out in the Missile Technology Control Regime (MTCR) Annex to Iran unless the Security Council decides in advance on a case-by-case basis to permit such activities. As a permanent member of the Security Council, we would not expect to approve such activities.
While these provisions will reinforce our overall missile nonproliferation efforts with respect to Iran, we also rely on a broad set of other multilateral and unilateral tools to impede and disrupt Iran’s missile development efforts. Specifically, we continue to work with many of the over one hundred governments around the world that have endorsed the Proliferation Security Initiative (PSI) to interdict weapons of mass destruction (WMD), their delivery systems, and related items, including Iran’s prohibited missile-related imports or exports. We also use our participation in the MTCR to prevent the spread of critical missile technologies and raise awareness among the 33 other MTCR Partners (members) of the proliferation concerns posed by Iran’s missile development, procurement, and proliferation activities. We bolster these multilateral efforts through our bilateral cooperation with countries to prevent transfers to Iran’s missile program, promote thorough UNSCR implementation, and target Iranian missile proliferation activities in third countries. In addition, we continue to use unilateral authorities to impose sanctions on entities connected to Iran’s ballistic missile programs and procurement network.
We have no intention of reducing our focus and determination to prevent the development of Iran’s ballistic missile capabilities, even as we take steps to implement the JCPOA. Thank you again for the opportunity to discuss this important security issue with you. I look forward to your questions.
Lt. Gen. Frank G. Klotz, USAF (Ret.) Under Secretary for Nuclear Security, U.S. Department of Energy
Chairman Corker, Ranking Member Cardin, and Members of the Committee, thank you for the opportunity to discuss the status of implementation of the Joint Comprehensive Plan of Action (JCPOA) reached between the P5+1 (China, France, Germany, Russia, the United Kingdom, and the United States), the European Union, and Iran. I appreciate the opportunity to be here to discuss the role the Department of Energy (DOE) plays in support of the Administration’s implementation of the JCPOA. The JCPOA provides unprecedented verification of Iran’s nuclear program to ensure that Iran does not obtain a nuclear weapon. As we move toward and beyond Implementation Day, the technical expertise within DOE, including the National Nuclear Security Administration (NNSA), and at our national laboratories will be called upon to ensure that Iran meets all of its nuclear commitments.
As Secretary Moniz has said, the JCPOA ensures that Iran’s nuclear program is exclusively peaceful, provides unprecedented verification measures, constrains Iran’s nuclear program in a manner that give us ample time to respond if Iran chooses to violate its terms, and takes none of our options off the table.
As noted by Ambassador Mull, the Department of State is leading the Administration’s efforts to oversee implementation of the JCPOA. DOE, including NNSA, plays an important role by providing technical support to implementation efforts. In addition, the Department and its national laboratories will continue to provide technical support and analysis throughout implementation of the JCPOA to help ensure that Iran carries out its commitments.
I will detail for you a few examples of the technical support to JCPOA implementation that the Department is providing.
· The JCPOA blocks Iran’s pathway to producing and using nuclear weapons-grade plutonium by requiring the rebuilding and redesign of the Arak Reactor, effectively eliminating a potential source of weapons grade material. The calandria, or reactor core, from the old design will be filled with concrete and made inoperable. The JCPOA calls for a working group to cooperate with Iran to develop the final design of the modernized reactor, and provides for the final design of the reactor to be approved by the Joint Commission. DOE/NNSA technical experts will provide technical support and review the design of the modernized reactor as well as analyze the fuel design and safety standards to verify that it conforms to the characteristics set forth in the JCPOA, including that Iran cannot use this reactor for prohibited purposes.
· The JCPOA establishes a process for review and approval of procurement by Iran of specified nuclear-related items. This process is conducted through a Procurement 2 Working Group of the Joint Commission. Technical experts in NNSA’s Office of Nonproliferation and Arms Control will review and make recommendations to the Department of State, which coordinates the U.S. government efforts regarding the Procurement Working Group, on such procurement proposals. The JCPOA prohibits any procurement by Iran of these items outside the Procurement Working Group process.
· As Secretary Moniz has noted, the JCPOA provides the most rigorous inspections that we have ever had in Iran. DOE/NNSA’s technical expertise and training supports the International Atomic Energy Agency’s (IAEA) monitoring and verification activities that will be important to ensuring that Iran carries out its commitments under the JCPOA. DOE/NNSA is highly engaged with the IAEA in providing training, technologies, and people to support this critical organization.
The IAEA is responsible for applying international nuclear safeguards, through which the IAEA is able to confirm to the international community that nuclear material and facilities are not being used for the illicit manufacture of nuclear weapons. Nuclear safeguards include, for example, on-site inspections, nuclear material accountancy, physical measurements, containment and surveillance, and environmental sampling.
Let me take a moment to expand on the support that DOE/NNSA provides to the IAEA, and share with the Committee a few examples of the substantial nuclear safeguards work that we support. Every year, the Department hosts training courses for IAEA inspectors and analysts on a wide range of topics including measuring nuclear materials, inspector access under the Additional Protocol, advanced plutonium verification, enrichment technology, export controls and commodity identification. These courses are organized and implemented with the support of experts from our national laboratories and take place in the United States, at IAEA facilities in Vienna, and at international nuclear facilities in collaboration with other IAEA Member States. For example, every new IAEA inspector since 1980 has had nuclear materials measurement training at the Los Alamos National Laboratory, in New Mexico.
The Department’s national laboratories have played a major role in developing and improving safeguards technologies and providing expertise since the IAEA’s inception in 1957. They develop and transfer various technologies to the IAEA for use in safeguards systems all over the world. This equipment goes through a rigorous evaluation process by the IAEA before being accepted into routine use, including vulnerability analyses by independent parties. The On-line Enrichment Monitor (OLEM), developed by the Oak Ridge National Laboratory, Los Alamos National Laboratory, the Pacific Northwest National Laboratory and the IAEA, is one example of a technology jointly developed by our national laboratories and the IAEA. The OLEM is an innovative safeguards technology that can be used to continuously monitor the enrichment levels of uranium in gaseous form at a centrifuge enrichment plant. In other words, it will allow the IAEA to determine if Iran enriches above permitted levels. And for the first time, as a result of the JCPOA, OLEM can be used in Iran.
In addition to our training and safeguards technology cooperation, five of the Department’s national laboratories participate in the IAEA’s Network of Analytical Laboratories, or NWAL, a network of 20 laboratories in 10 countries that provide analytical services to the IAEA. These 3 laboratories undergo a rigorous qualification process by the IAEA to ensure that they maintain the highest quality standards. While the IAEA analyzes material and environmental samples at its laboratory in Seibersdorf, Austria, the agency also relies upon its NWAL to assist in sample analysis for logistical purposes, quality control and to have access to state-of-the-art techniques. Environmental sampling, in particular, is a very powerful tool that the IAEA uses to determine if undeclared activities are occurring. The IAEA relies on the U.S. laboratories that are part of the NWAL because of our world class capabilities for high-precision analysis and quality control.
Finally, the United States provides personnel to the IAEA to support the IAEA’s Department of Safeguards in a variety of areas, including technology development, information and statistical analysis, and development of safeguards approaches. As of June, approximately 10 percent of the workforce of the IAEA’s Department of Safeguards was from the United States, and many of these Americans have worked for DOE or our national laboratory system. We are proud of the assistance we provide and the close collaboration we have with the IAEA.
JCPOA is not built on trust. It is built on hard-nosed requirements that will limit Iran’s activities and ensure access, transparency, and verification. The Department takes seriously its participation in efforts to implement the JCPOA and help to ensure that Iran carries out its commitments under the deal, whether that is participating in the Administration’s implementation efforts or supporting the IAEA. Thank you for the opportunity to be here. I look forward to answering your questions.

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Iran Primed for End of Sanctions

On December 16, President Hassan Rouhani declared the closing of the U.N. probe of Iran’s nuclear program a victory. In an address to the Iranian public, Rouhani announced that international sanctions would be lifted in December or January. He also invited investment from domestic and international entrepreneurs. The following are excerpts from his speech.
President Hassan Rouhani
“Yesterday, one of the stages of the Iranian people’s victory in political and international areas was achieved. For nearly 14 years, terrorist groups, intelligence organizations, and big Western powers levelled accusations at Iran claiming that Iran is enriching uranium somewhere and is engaged in secretly making a nuclear bomb and is not providing the IAEA with clear information.”
“This victory showed that this political system speaks honestly with its own people and the world as well and is committed to its vows.”
“All legal issues were based on the idea that they wanted to say Iran has not been committed to NPT [Non-Proliferation Treaty].”
“Both IAEA and the Board of Governors admitted that the Islamic Republic of Iran has never deviated from its peaceful path over years and was not busy making nuclear bombs. As Iran has repeatedly announced that is committed to its religious and moral vows and does not seek WMDs and the Supreme Leader has stressed it as an important decree.”
“Of course, the cancellation of these resolutions are subject to the obligations that Iran should fulfil.”
“Today, the path is almost paved for the implementation of JCPOA; big steps have been taken by Iran and the other side and the final steps will be taken in two weeks and we hope that the last steps be taken successfully.”
“I announce to the people of Iran that the sanction will be lifted by [the Iranian month of] Day [December-January].”
“We invite all domestic and foreign entrepreneurs, as well as Iranians residing abroad to make the best use of the investment opportunities with the people who seek constructive interaction with the world.”
—Dec. 16, 2015, in a televised speech


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