United States Institute of Peace

The Iran Primer

U.N. Report: Iran Cut Nuclear Stockpile 75%

            Iran is ahead of schedule in implementing the interim nuclear deal, according to the U.N. nuclear watchdog. The International Atomic Energy Agency (IAEA) reported that Tehran has cut its most sensitive uranium stockpile by 75 percent and is set to dilute or convert the rest soon. Under the Joint Plan of Action, the Islamic Republic committed to stop enriching uranium beyond five percent and to neutralize its entire 20 percent stockpile. The period for implementation will end on July 20, 2014. The following is the full text of the IAEA report.

 
Status of Iran’s Nuclear Programme in relation to the Joint Plan of Action
Report by the Director General
 
1. As foreshadowed in GOV/2014/2, this report provides information on the status of the IslamicRepublic of Iran’s (Iran’s) nuclear programme in relation to the “voluntary measures” that Iran has agreed to undertake as part of the Joint Plan of Action (JPA) agreed between the E3+3 and Iran on 24 November 2013.1 According to the JPA, the first step would be time-bound (six months) and renewable by mutual consent. The JPA took effect on 20 January 2014.
 
2. The Agency confirms that since 20 January 2014, Iran has:
 
i. not enriched uranium above 5% U-235 at any of its declared facilities;
 
ii. not operated cascades in an interconnected configuration at any of its declared facilities;
 
iii. completed the dilution – down to an enrichment level of no more than 5% U-235 – of
half of the nuclear material that had been in the form of UF6 enriched up to 20%
U-235 on 20 January 2014;
 
iv. fed 50.1 kg4 of UF6 enriched up to 20% U-235 into the conversion process at the Fuel
Plate Fabrication Plant (FPFP) for conversion into uranium oxide;
 
v. had no process line to reconvert uranium oxides back into UF6 at FPFP;
 
vi. not made “any further advances” to its activities at the Fuel Enrichment Plant (FEP),
the Fordow Fuel Enrichment Plant (FFEP) or the Arak reactor (IR-40 Reactor), including the manufacture and testing of fuel for the IR-40 Reactor;
 
vii. provided an updated Design Information Questionnaire (DIQ) for the IR-40 Reactor and agreed to hold a meeting with the Agency on 5 May 2014 to start discussions
aimed at agreeing on the conclusion of a Safeguards Approach for the reactor;
 
viii. continued the construction of the Enriched UO2 Powder Plant (EUPP) for the conversion of UF6 enriched up to 5% U-235 into oxide and consequently has yet to begin converting to oxide the UF6 “newly enriched” up to 5% U-235;
 
ix. continued its safeguarded enrichment R&D practices at the Pilot Fuel Enrichment Plant (PFEP), without accumulating enriched uranium;
 
x. not carried out reprocessing related activities at the Tehran Research Reactor (TRR)
and the Molybdenum, Iodine and Xenon Radioisotope Production (MIX) Facility or at
any of the other facilities to which the Agency has access;
 
xi. provided information and managed access to the uranium mine and mill at Gchine;
 
xii. continued to provide daily access to the enrichment facilities at Natanz and Fordow;
and
 
xiii. provided regular managed access to centrifuge assembly workshops, centrifuge rotor
production workshops and storage facilities, and provided information thereon.
 
 

Rand Report: The Days After a Nuclear Deal

            On April 3, the Rand Corporation convened a day-long conference on Iran in the days after a nuclear deal. Participants concluded that that an agreement could herald a new era for Iran and its relationship with the outside world. But experts warned that Tehran would still likely be cautious of relations with Washington and that Israel and Saudi Arabia would still be concerned about Iranian intentions in the region.

          Both Tel Aviv and Riyadh “are likely to adapt to the new reality of a deal rather than actively attempt to derail it,” according to the report. The following are excerpts from the perspective, which assumes that Britain, China, France, Germany, Russia, the United States and Iran will reach an agreement based on the Joint Plan of Action.

           In planning for the regional response to a final nuclear agreement, Israel and Saudi Arabia come to the forefront, as they are the two actors with the most capacity to affect the success and durability of the deal following its signing. Both also view Iran as a regional rival to a greater extent than other neighbors.
 
Israel
 
Israel Is More Likely to Adapt to a Final Deal Than Immediately Reject It
 
            Based on the dominant views toward Iran among Israel’s security establishment (where Iran is linked to most hostile actions against Israel), as well as the likely contours of a nuclear deal, Israel is not likely to embrace a final agreement. The Israeli responses to and actions after a final deal will thus largely fall into two general categories: rejection or adaptation. Although distinct in that Israeli rejection of a deal would lead to immediate confrontational actions while Israeli adaptation would allow for the implementation of the final deal to play out, these responses are not necessarily mutually exclusive -- rejection of a deal would lead to immediate confrontational actions while Israeli adaptation would allow for the implementation of the final deal to play out, these responses are not necessarily mutually exclusive.
 
Rejection
 
            Israeli leaders could openly denounce a final deal along the lines that we outlined above because, in their view, such an agreement will not set the Iranian program back far enough to prevent its ultimate attainment of nuclear weapons, and also because Israel is
still concerned about an array of other Iranian actions in the region that are threatening to Israel. A number of Israeli steps aimed at derailing a deal could accompany public and acrimonious official rejection of a final nuclear agreement.
 
            Perhaps the Israeli course of action that should most likely be expected in the aftermath of a final deal it rejected would be encouraging the U.S. Congress to delay or prevent a lifting of sanctions against Iran in an attempt to slow or undermine the implementation of a final agreement.
 
Adaptation
 
            Rather than publicly rejecting a final deal and pursuing actions that could lead to the deal’s collapse and open rift with the United States, Israel might instead adapt to, even if it does not welcome, a final nuclear agreement.
 
            Particularly if Israel is able to influence the final deal in ways such that the details of the agreement would meet what some Israeli security analysts assess to be Israel’s minimum requirements (e.g., on levels of enrichment, the fate of the Arak reactor, and Iran’s
missile research), Israel’s official position could quietly shift away from the current maximalist positions expressed by Netanyahu. In this case, Israel could refrain from attempts to derail the deal and adapt Israeli security policies to the new reality through measures
such as continued missile-defense development, and possibly new debates about Israel’s current nuclear opacity posture, as Israel considers ways to further bolster its regional deterrence. Israel may also attempt to strengthen its de facto cooperation with Saudi
Arabia and other regional states wary of Iranian regional influence, although anti-Israel public opinion across the Arab world would limit the extent of such cooperation absent a resolution of the Israeli-Palestinian conflict.
 
Saudi Arabia
 
Saudi Arabia Might Adapt to a Deal but Increase Competition Against Iran Elsewhere in the Region
 
            Like Israel, Saudi Arabia may grudgingly accept a final nuclear deal along the lines of that described at the outset of this report, even if it has reservations about the fact that Iran will retain some residual nuclear program. Indeed, given that Riyadh does not have the
same military capabilities as Tel Aviv – namely, to launch a strike on Iranian nuclear infrastructure – it may be that Saudi acquiescence is more likely than the Israelis. Despite Saudi skepticism that genuine change is afoot in Tehran, the Kingdom does not have a recent history of seeking better relations with Iran when opportunities present themselves. For example, there was some warning of relations between the two Gulf rivals during the Rafsanjani and Khatami presidencies, and the combination of Rouhani and a final nuclear agreement could be the impetus for another thaw. Iranian Foreign Minister Zarif’s visit to the GCC states in December 2013 raised the possibility of some warming in Iranian-GCC relations, although it is important to note that Zarif was not welcomed in either Riyadh or Manama.
 
Should Riyadh conclude that the final agreement is not in its best interests, it possesses several counters that could complicate implementation and diminish the chances that an agreement could translate into a broader Western-Iranian détente.
 
The most concerning, but also the least likely, is that Saudi Arabia will lay the groundwork for the acquisition of its own nuclear weapon to balance against an Iran it sees as a threshold
nuclear power given the advanced stage of the Iranian program.
 
The second Saudi counter, and one that is more likely, is that Saudi Arabia will further roil the regional waters in an effort to complicate the emergence of a broader détente between the United States and Iran, which many Saudis fear would come at the price of the United States recognizing an Iranian sphere of influence. The Kingdom is already engaged in strategic competition with Iran in Lebanon, Syria, Iraq, and within the Arabian Peninsula when
it comes to countering Iranian influence among the GCC states’ Shi‘a populations.
 
Click here for the full report.
 
 

Khamenei’s Red Lines on Nuclear Talks

            On April 9, Supreme Leader Ayatollah Ali Khamenei outlined six red lines on nuclear talks in an address to the Atomic Energy Organization of Iran. The semi-official government website NuclearEnergy.ir pulled out his six points and distributed the graphic below. The following are excerpts from his speech marking National Nuclear Technology Day.  

 
 
Address to the Atomic Energy Organization of Iran
 
             The purpose of agreeing with these negotiations was to change the atmosphere of hostility that the camp of arrogance [the West] has created against Iran. These negotiations should continue, but everyone should know that despite this, the activities of the Islamic Republic in the area of nuclear research and development will not stop in any way. None of the nuclear achievements of the country can be given up. Besides, the relations of the International Atomic Energy Agency with Iran should be normal and ordinary relations.
 
       Another plot that global arrogance [the West] has tried very hard to implement against the Islamic Revolution is to influence the major policies of Iran and to shatter the willpower of the political management of the country. But the camp of arrogance has failed to do this until today and by Allah's favor, it will continue to fail in the future.
 
       The nuclear issue is an example of this, through which they tried to create an environment against the Islamic Republic and to spread lies. Their goal is to preserve the international environment against Iran with this excuse. This was why there was an agreement with the new plan of the administration for the nuclear issue. The purpose of this agreement was to remove the international environment against Iran, to seize the initiative from the other side and to reveal the truth for public opinion in the world. Of course, these negotiations do not mean that the Islamic Republic will compromise its scientific-nuclear movement.
 
             The nuclear achievements that have been made so far are, in fact, a message to the people of Iran that they can take the paths which lead to the lofty peaks of science and technology. Therefore, this scientific-nuclear movement should not be stopped in any way or slowed down.
 
             None of the nuclear achievements of the country can be given up. No one has the right to trade these achievements and no one will do this.
 
             At that time [a few years ago], a formula was devised for producing fuel. But the Americans created obstacles in the way of this process. This was contrary to what they had said to their friends in the regions and to a South American country - and these people believed what the Americans said. The Americans foolishly thought that they had put Iran in dire straits.
 
             At that time, I said that America does not want to solve this issue. Later on, everyone saw that when a nuclear agreement was in its final stages, the Americans did not allow it to be finalized.At that time, westerners began to ridicule our experts who had announced that they have the capability to produce fuel plates for the Tehran research reactor. But our youth accomplished this feat in less than the arranged time and as a result, the enemies were astonished.
 
             If some people think that the price of nuclear achievements has been sanctions and pressures, we should remind them that even before the nuclear excuse, sanctions and pressures existed against Iran.
 
             During the time when there was no nuclear excuse, a western court put Iran on a trial in absentia. Of course, in the present time, they do not have the courage to do this because of the national power of the country. Sanctions and pressures do not exist because of the nuclear issue. Rather, they are opposed to the independent identity - which originates from Islamic faith and belief - and the future prospects of the people of Iran and the Islamic Republic and to their refusal to be bullied by anyone.
 
             Therefore, if it is said that sanctions and pressures are the price that we have paid for our nuclear achievements, this is not true because even if sanctions did not exist, they would make another excuse, as the Americans bring up the issue of human rights in today's negotiations.
 
             Even if the issue of human rights is resolved, they will find another excuse. Therefore, the only way is to continue our path of progress with complete power and to stand up against their bullying.
 
             The negotiators of the country should not give in to any bullying of the other side. Besides, the relations of the International Atomic Energy Agency with Iran should be normal and ordinary relations.

IMF: Iran’s Economy Stabilizing

            Iran’s economy has shown signs of stability since President Hassan Rouhani took office in August 2013, according to a new report by the International Monetary Fund (IMF). Inflation declined to about 29 percent in January 2014, down from about 40 percent in late 2013. But Iran’s “near-term economic outlook remains uncertain,” according to IMF economists. The economy is expected to contract this fiscal year due to continued restraints on oil revenues and inability to access the international financial system.

            A final nuclear deal between Iran and the world’s six major powers could improve the outlook for Iran. The due date for a deal is July 20. Domestic reforms, however, are also badly needed — especially on subsidies that have hampered the economy for decades. The following are excerpts from the IMF survey.

 
           In their annual health check of the economy, the first in 2½ years, IMF economists say that Iran’s near-term economic outlook remains uncertain. Facing continued constrained prospects for oil revenues and international transactions, Iran is expected to see its real GDP growth begin to stabilize in the current fiscal year after two consecutive years of sharp contraction. The still-weak recovery is expected to benefit from potential improvements in the external environment and some early signs of modest revival in growth in domestic demand.
 
           The new Iranian administration that took office in August 2013 has made some headway in improving the external environment and confidence in the outlook, the report notes. The authorities have reached an interim agreement with the P5+1 group of countries (the five permanent members of the United Nations Security Council plus Germany). This agreement (which took effect in January 2014 and provides for a limited, temporary easing of sanctions) allows Iran to stabilize oil exports, grants some access to Iran’s funds held abroad, and temporarily waives sanctions on petrochemical exports and the automobile industry.
 
           Iran now needs to focus on the domestic reform agenda to fully benefit from the country’s economic potential. “This window of opportunity to advance comprehensive reforms should not be missed,” said Martin Cerisola, Assistant Director of the IMF’s Middle East and Central Asia Department.
 
Staff Appraisal
 
            Iran had achieved considerable progress in raising per capita income in previous decades, but large shocks and weak macroeconomic management in recent years have had a significant impact on macroeconomic stability and growth. A combination of shocks, associated with the implementation of the first phase of the subsidy reform, social-programs inadequately funded, and a marked deterioration in the external environment have weakened the economy. Inflation and unemployment are high, while the corporate and banking sectors are weak. The experience over the past several years has exposed structural weaknesses in the economy and in the
policy framework.
 
            The economic outlook remains highly uncertain. Facing continued constrained prospects for oil revenues and international transactions, the economy is expected to have continued to contract in 2013/14. With some positive tailwinds from the external side and incipient signs that the pace of contraction in domestic demand is slowing, economic activity would begin to stabilize in 2014/15. But the current outlook remains highly uncertain and subject to downside risks. The authorities are taking steps to make the regulatory framework for foreign investment in the oil sector more attractive, while the interim agreement with the P5+1 brings upside risks.
 
            The opportunity to advance comprehensive reforms should not be missed. There is a need to advance reforms to the product, labor, and credit markets to promote stability, investment, and productivity. The authorities should avoid postponing reforms and “muddling-through” in the hope of an improved external environment. Advancing reforms would lay the basis for sustained high growth and employment, especially should the external environment continue to improve.
 
            Dealing with stagflation requires several measures, careful sequencing and coordination. A three-pronged strategy should be centered on tightening monetary policy, some balanced fiscal consolidation, and structural reforms to boost the supply side. Staff welcomes the steps taken to remove the financing of the Mehr program from the Central Bank of Iran’s balance sheet, which bode well for stabilizing inflation in the future. The authorities are encouraged to find an alternative noninflationary source of financing for this program to minimize macro-stability risks ahead. Increasing profit rates gradually would help to firmly anchor expectations and contain second-round effects from the planned increases in domestic energy prices. The 2014/15 budget continues with the government’s decision to consolidate fiscal policy and would help balance the support for disinflation and needs of the economy. Staff welcomes the proposed measures to begin broadening the revenue base away from oil, most notably, the decision to bring forward and increase the scheduled VAT rate, as well as the reforms to strengthen tax administration and reduce exemptions. Staff sees scope to further increase the VAT rate in the years ahead—as it remains well below those of other resource-intensive countries—as well as to expand the taxation to specific activities that have experienced large gains. These measures would help to improve the quality of the fiscal adjustment and help lay the ground for a sustainable fiscal policy ahead.
 
            Reforms to the monetary and fiscal policy frameworks are also essential to entrench macroeconomic stability. The Central Bank of Iran’s mandate needs to be simplified and refocused toward price stability. To build a solid foundation for the future, it is essential to bring the institutional decision-making setup at the Money and Credit Council in line with those of countries that have successfully resolved high chronic inflation. Reforms to the fiscal policy framework should strengthen its countercyclical role, limit fiscal risks, and enhance macroeconomic coordination. The current framework supported by the Oil Stabilization Fund (OSF) and the National Development Fund of Iran (NDFI) could better balance the goals of macroeconomic stability, intergenerational equity, and development. For this, OSF resources need to be replenished soon to support noninflationary budget financing and build buffers for future shocks. Decisions on how to save and invest NDFI resources should be better coordinated explicitly with macro policies and underpinned by more explicit safeguards and transparency. Adopting a multi-year budget planning and expanding the coverage of the general government should enhance the operational conduct, monitoring, and accountability of fiscal policy, and thus limit fiscal risks. Staff encourages the authorities to review how best to bring quasi-fiscal activities into the budget to make them explicit so as to reform or discontinue them.
 
            The authorities’ intention to unify the foreign exchange market by mid-2015 is
welcome. In the transition, the authorities should manage the exchange rate flexibly in light of external risks and still high inflation. The assessment of the official exchange rate is subject to an unusual degree of uncertainty. In the current circumstances, the official exchange rate would be moderately overvalued, with the bureau/parallel market rate closer to equilibrium. Staff recommends Executive Board approval of the retention of the exchange restrictions and multiple currency practices referred to in paragraph 20 since these are maintained for balance of payments reasons, are nondiscriminatory, and are temporary in light of the authorities’ commitment to unify the exchange rate regime and to remove the restrictions by mid-2015.
 
            The subsidy reform needs to proceed with the right supporting framework and macroeconomic policies. Iran’s design of the subsidy reform has been exemplary and the reform remains a priority. The implementation of the first phase has faced significant and varied difficulties and there is a need to make the lessons known to the public. Plans to increase domestic prices gradually are prudent but should be underpinned by an adjustment mechanism with strong political backing to support full implementation. The proposed distribution of resources among households and specific sectors presents a departure from the original design. The process for identifying and excluding less vulnerable groups requires criteria that are simple, transparent, and perceived as fair. In addition, the distribution of resources for supporting energy-intensive sectors needs to ensure a framework that fosters the adoption of new technologies and tighter budget constraints. In subsequent stages of the reform, transfers could be made more conditional on social goals and tilted toward private savings for the broader population.
 
            There is an urgent need to strengthen the Central Bank of Iran’s supervisory powers and enforcement capacity. The CBI should be able to swiftly take action in case banks fail to abide by regulatory standards. Staff welcomes the CBI’s initial steps toward a risk-based approach to supervision. Staff shares the view of some market participants about the scope for leveling the field of competition in the system through further privatization and reforms to government-mandated credit policies. Current proposals to deal with nonperforming loans and recapitalize public banks need to be supported by restructuring plans and reforms to enhance their risk management and accountability. In terms of crisis preparedness, it would be important to strengthen the bank resolution framework and putting the deposit guarantee fund on a sustainable financial footing.
 
            Reforms to improve the business environment and the labor market are
complementary and essential to restore stability and boost employment and growth. The scope to improve the business environment is large and can provide a significant boost to productivity and growth in the years ahead. Enhancing the enforcement of the rule of law and property rights, maintaining policy and macroeconomic stability, and enhancing the transparency of policy making are fundamental pillars that would also pave the way for taking advantage of the growing foreign investor interest. Advancing reforms on AML/CFT would also help reinsert the domestic financial system into the global economy, lower transaction costs, and provide an important impetus to productivity. With large potential entrants to the labor force in the years ahead, reforms are needed to facilitate the reallocation of labor across sectors and lower nonwage labor costs. Staff encourages the authorities to review labor regulations to ease the rigidity of contracts and nonwage costs.
 
            There is a good opportunity to improve the timeliness of official statistics publication and to reaffirm the underlying methodology behind consumer price and unemployment data. In recent years, the quality and timeliness of price and unemployment statistics have come under increased scrutiny. The authorities have taken some steps under difficult circumstances, but there is scope for further improvement in the reporting and timeliness of official statistics. Technical assistance in these areas would help address these issues.
 
Click here for the full report.
 

Iran Nuke Odyssey 1: Under the Shah

Ali Vaez, Karim Sadjadpour (via Carnegie Endowment for International Peace)

 
Conception (1957–1979)
 
      The genesis of Iran’s nuclear program can be traced back to 1957. Ironically, it was the United States—then Tehran’s key strategic patron—that sowed the seeds of nuclear development by signing an agreement with Iran under the auspices of President Dwight Eisenhower’s Atoms for Peace initiative. The American Machine and Foundry Company supplied Iran’s first nuclear facility at Tehran University with a 5 megawatt (MW) reactor at the cost of $1 million. Another American firm, General Dynamics, provided 5.15 kilograms of weapons-grade highly enriched uranium to Iran for fueling the Tehran Research Reactor. Initial progress, however, was slow, with the reactor only becoming operational in November 1967.
 
            In 1968, Iran was among the first countries to sign the NPT, which was ratified by the Iranian parliament two years later. Tehran completed its safeguards agreement with the IAEA in 1974. In the same year, the Atomic Energy Organization of Iran was established, and Akbar Etemad, a French- and Swiss-educated reactor physicist, was appointed its president.
 
            Boosted by the 1974 oil boom, Shah Mohammad Reza Pahlavi abruptly decided to make nuclear energy a priority for his government. The official narrative was that oil, “a noble material,” should not be wasted, and thus Iran’s energy portfolio should be diversified. For the shah, nuclear technology was not only essential to modernity, but it also symbolized Iran’s newly attained power and prestige.
 
            An American firm, the Stanford Research Institute, determined that if Iran were to achieve energy autonomy fit for a “great power,” it needed to generate 23,000 megawatts electrical (MWe) from nuclear power by 1994. Partly based on this advice, the shah then announced an ambitious plan to rapidly develop several full-fledged nuclear reactors in record time. Although no decision was made on the total number of reactors, the unrealistically ambitious goal was to develop one reactor per year.
 
            Meanwhile, Iran’s nuclear cadre was being trained. The Atomic Energy Organization of Iran signed special contracts with prestigious universities and technical centers around the world to cultivate the human capital for its nuclear program. Among these institutions was the Massachusetts Institute of Technology, which received a $20 million endowment from Iran in return. Many of the future decisionmakers in the Islamic regime’s nuclear program, including Ali Akbar Salehi, the current foreign minister and former head of Iran’s Atomic Energy Organization, were among the trainees of this program.
 
            By 1977, with exceptional royal support, the Atomic Energy Organization of Iran had undergone a stunning expansion and employed more than 3,800 experts, engineers, technicians, and interns. Students sent abroad for training returned home as nuclear experts. The organization witnessed a twelve-fold increase in the number of its nuclear scientists, from 67 in 1974 to 862 in 1977. In the last years of the Pahlavi monarchy, the organization had the second-highest budget in the country following the National Iranian Oil Company. Its employees were among the highest paid in Iran. Etemad had the monarch’s carte blanche for his agency’s expenditures, and the annual budget skyrocketed from $30.8 million in 1975 to $1.3 billion in 1976 and over $3 billion (corresponding to more than $11 billion in 2012 dollars) in 1977.
 

            The shah’s insistence on mastering the complete fuel cycle and on possessing plutonium reprocessing capabilities—at the time an easier way to fuel a nuclear weapon than enriched uranium—intensified U.S. concerns about Iran’s proliferation intentions. Washington, still reeling from India’s nuclear test in 1974, was suspicious, and the administration of Gerald Ford required assurances that Iran’s intentions were peaceful. 

            Recently declassified documents reveal striking details about the bitter U.S.-Iranian nuclear negotiations from 1974 to 1978. Surprisingly, the same issues that have caused the current nuclear showdown between Iran and the West—access to sensitive technology, fuel stockpiles, and additional safeguards—were in contention then. When no agreement could be reached, the U.S. government barred American companies from selling nuclear technology to Iran. The shah reciprocally decided that, “unless it was clear that Iran was not being treated as a second-class country,” he would look for alternative vendors.
 
            France and West Germany filled the gap. The Atomic Energy Organization of Iran commissioned the German firm Kraftwerk Union (a joint venture of Siemens AG and AEG Telefunken) to build two 1,196 MWe pressurized water reactors. The turnkey contract, which would deliver the power plate in a completed state, was worth $4.3 billion (nearly $21 billion in 2012 dollars). Construction began in August 1975, with a planned completion date of 1981. The choice of location, the southeastern city of Bushehr, rendered the enterprise particularly costly, as it was prone to seismic activity and located in an underdeveloped region that lacked essential physical infrastructure. Yet Bushehr was chosen mainly due to its location on the shores of the Persian Gulf to facilitate shipping of the nuclear power plant’s machinery and equipment.
 
            The shah also had an extensive plan for acquiring nuclear fuel. In 1975, he provided a $1 billion (and another $180 million in 1977) loan for the construction of the Eurodif nuclear consortium enrichment plant in France. As part of the agreement, Sofidif  enterprise was established with Iran and France holding 40 and 60 percent of its shares, respectively. Subsequently, Sofidif acquired a quarter of Eurodif stocks, which gave Iran a 10 percent share of the enriched uranium produced. Furthermore, Iran signed a $700 million contract to purchase 600 tons of uranium yellowcake from South Africa and obtained a 15 percent stake in the RTZ uranium mine in Namibia. In parallel, Iran started an extensive uranium exploration effort both inside and outside the country. 
 
            An agreement was also reached with French company Framatome to build two 900 MWe nuclear power generators valued at $2 billion at Darkhoveen, near the city of Ahwaz on the banks of the Karun River. Moreover, France indicated its willingness to build eight additional plants for Iran if the United States continued to bar American firms from selling Iran nuclear power plants at an estimated price of $16 billion.
 
            Finally, in 1978 there was a breakthrough in nuclear negotiations between Tehran and Washington. The shah agreed to forego plans to build a plutonium processing plant, to put Iran’s nuclear activities under enhanced monitoring, and to send spent nuclear fuel to the United States. Reciprocally, the Carter administration agreed to allow American companies to sell reactors to Iran. The coming political tumult in Tehran, however, would render these agreements moot.
 
            Income disparity and economic malaise had begun to fuel domestic discontent with the shah’s rapid modernization programs, which many Iranians perceived as profligate and corrupt. The monarch was forced to rein in his atomic dreams. The storm of an Islamic revolution was brewing on the horizon, and the government of Prime Minister Jamshid Amouzegar began a review of the nuclear program. In 1979, Prime Minister Shahpour Bakhtiar began to roll the program back. When the country descended into revolutionary turmoil later that year, one of Bushehr’s reactors was 85 percent complete and the other was half constructed.
 
Click here for the full report.
 
Click here for Ali Vaez's article "Iran Sanctions: Which way out?"
 
Click here for Karim Sadjadpour's chapter on Supreme Leader Ayatollah Ali Khamenei.

 

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