BICOM

What happened: The UK, France and Germany, also known as the E3, have triggered the dispute resolution mechanism (DRM) in the 2015 JCPOA Iran nuclear deal.

• Under JCPOA Article 36, a party to the agreement can claim significant non-compliance by another party. To resolve the dispute, the claim goes to a Joint Commission, then a 3-person advisory board, and if required to the UN Security Council. If the UNSC are unable to resolve the dispute, UN multilateral sanctions snap back after 65 days.
• The E3 said in a joint statement: “We do not accept the argument that Iran is entitled to reduce compliance with the JCPOA. Contrary to its statements, Iran has never triggered the JCPOA Dispute Resolution Mechanism and has no legal grounds to cease implementing the provisions of the agreement.” The E3 said that they “have therefore been left with no choice, given Iran’s actions, but to register today our concerns that Iran is not meeting its commitments under the JCPOA”.
• Foreign Secretary Dominic Raab told the House of Commons: “The UK, France and Germany will remain committed to the deal and will approach the DRM [dispute resolution mechanism] in good faith, striving to resolve the dispute and bring Iran back into full compliance with its JCPOA obligations.”
• Iran’s judiciary has said it considers the UK ambassador to Tehran “persona non grata” for his alleged participation in anti-government protests at the weekend, escalating diplomatic tensions between the two countries. Rob Macaire denied participation in protests, saying that he had attended a vigil for the victims of the Ukrainian airline flight but left before the crowd began protesting.
• The ruling could lead to the Ambassador’s expulsion from Tehran. Dominic Raab, told the House of Commons: “I think it would be deeply regrettable if that were the case. We need to keep the diplomatic channels open and therefore futile gestures like that are not going to resolve the problems that the regime in Tehran face.”
• Speaking in New Delhi at the Raisina Dialgoue, Iranian Foreign Minister Zarif said that he and President Hassan Rouhani only learned that a missile had shot down Ukrainian airlines flight 752 on Friday, two days after the incident.
• Overnight, Israeli aircraft reportedly bombed the T-4 airbase near Homs in Syria, likely targeting Iranian assets. It is reported that at least 3 people were killed.

Context: The latest move by the E3 aims to buy time to try and save the nuclear deal that is currently on life support after the US withdrawal in May 2018 and incremental Iranian violations since May 2019.

• In May 2019 Iran announced it would cease meeting some of its commitments under the JCPOA in retaliation for the US reinstating unilateral sanctions. Since then, Iran has announced five violations.
• An Israel Defence Forces (IDF) Intelligence assessment published yesterday said that Iran currently possesses 850 kg of uranium enriched to 4 per cent (compared to 300 kg last July). If it so chose, Iran could move to enrich its uranium stockpile to 20 per cent by this autumn, and after that reach the required weapons-grade material for one bomb – 40 kg of uranium enriched to 90 per cent – by the end of the year. It added that Iran’s actual time-frame for one deliverable nuclear weapon – especially developing the correct missile capabilities – stood at two years.
• The E3 have tried to address Iran’s concerns and bring it back into compliance with its commitments under the nuclear agreement through several economic and diplomatic efforts, such as setting up a trade mechanism (INSTEX) to avoid US sanctions and a French initiative to bring Iran and the US to the negotiating table for a comprehensive negotiated solution.
• The Israeli Intelligence assessment yesterday said that after the killing of Iranian General Qassem Soleimani there was a window of opportunity to increase airstrikes against Iranian forces inside Syria in order to substantially degrade Iranian assets. The IDF assess that, given the vacuum at the top of the Islamic Revolutionary Guard Corps’ Quds Force, the ‘Shiite axis’ will be focused on more internal matters.
• According to the IDF, there is still a low chance that Hezbollah or other Iranian-allied forces will initiate a war against Israel, although retaliation by Hezbollah to strikes inside Lebanon or the killing of its personnel in Syria could lead to a response that may escalate into a war.

Looking ahead: While dramatic, some European officials believe that the triggering of the Dispute Resolution Mechanism will compel Iran to come to the table and, along with President Trump, negotiate a new agreement.

• The dispute mechanism process will take weeks – if not months – to play out, with a likely Russian and Chinese veto on snapback sanctions waiting at the end.
• In Israel, there appears to be a growing consensus shared by the IDF, Defence Minister Naftali Bennett and Prime Minister Benjamin Netanyahu, that now is the appropriate time to escalate air strikes against Iranian forces inside Syria when the regime is distracted by domestic turmoil and the IRGC Quds Force is dealing with the impact of the death of Qassem Soleimani.
• Iranian leaders would prefer to play for time and only make a decision on talks with the US after the US Presidential election in November. But the increasing diplomatic and economic pressure, together with domestic dissent after it shot down Flight 752, may force it to seek a faster diplomatic route out of the current crisis.