Analysis |

Awash in Oil Money, Iran Has All the Time in the World – Unlike Israel

Tehran is managing rather well with the U.S. sanctions. Not only is Washington not intensifying them, it is even being lenient – in an effort to urge Iran to move toward a deal in the nuclear talks

Yossi Melman head
Yossi Melman
A gas flare on an oil production platform is seen alongside an Iranian flag. The Islamic republic reportedly banked $25 billion in oil sales last year.
A gas flare on an oil production platform is seen alongside an Iranian flag. The Islamic republic reportedly banked $25 billion in oil sales last year.Credit: Raheb Homavandi/REUTERS
Yossi Melman head
Yossi Melman

Iran’s oil exports increased 40 percent in 2021 to more than 417.7 million barrels, compared with the previous year. The price of oil almost doubled in that time and is now about $70 a barrel. Conclusion: Iran’s revenues from oil sales soared in the past year to about $25 billion.

This wad of cash is one of the reasons it has been procrastinating in recent months during negotiations with the five world powers (and the United States as a behind-the-scenes participant) over whether to proceed with the nuclear deal.

The Iranian foot-dragging, along with the weakness of the U.S. administration and its refusal so far to adopt a resolute approach, reinforces the Israeli intelligence assessment that the chances of an agreement are slim. Furthermore, even if some kind of a deal is reached, they believe it will be temporary and won’t halt the Islamic republic’s nuclear program.

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This is extremely frustrating for Israel, but it has no intention of repeating the mistakes of then-Prime Minister Benjamin Netanyahu when he defied and clashed with the Obama administration.

The talk of “painful” and “paralyzing” sanctions is just wishful thinking. The regime in Tehran is successfully managing the Iranian economy without being forced to pay what it considers too high a price.

Oil Minister Javad Owji recently estimated that next month his country’s production will be restored to its level before the U.S. withdrawal from the nuclear deal in May 2018 and the imposition of unilateral sanctions.

The Iranians’ customers are China, which receives about 75 percent of Iran’s oil exports; Syria, which buys about 7 percent; 1 percent goes to Venezuela; a negligible amount to Russia; and the rest to unknown destinations.

Even the United Arab Emirates, which is the target of rockets from Iranian proxies in Yemen, purchased some 12 million barrels of Iranian oil in 2021, in doing so contributing about $600 million to the Iranian economy.

Abu Dhabi is playing a double game: the UAE buys oil from Iran while whispering to Israel that Tehran is a threat to it, the region and the entire world, and that it is disappointed with the U.S. position and urges Israel to demand heavy sanctions.

The surveillance of oil sales is carried out via spy satellites by the intelligence community in the West, including Israel, and by civilian research groups. It is difficult and Sisyphean work, since Iran makes every effort to mislead and confuse. It turns off transponders that are intended to identify the oil tankers, changes the names of ships, and uses the flags of convenience of other countries and companies registered in tax havens.

In this satellite photo from Planet Labs PBC, the Iranian oil tanker Starla is seen off the coast of Barcelona, Venezuela, last month.Credit: Planet Labs PBC/AP

Infuriating conciliation

Not only is the United States refraining from intensifying the sanctions and forcing its allies to implement them – it is even showing leniency. Last Friday, the U.S. State Department announced that it has agreed to lift the sanctions against a series of civilian nuclear sites in Iran, including the Arak heavy water reactor for producing plutonium, the Fordo uranium enrichment plant, the Bushehr nuclear power station and the Tehran Research Reactor.

The decision is designed to enable companies in Russia, China and Europe to participate in civil nuclear initiatives in Iran, such as the development of nuclear medicine, and to prevent them from being paralyzed and shuttered. The Israeli defense establishment believes such acts of leniency are “technical” in nature and not substantial.

Another lenient act, which took place about two weeks ago and has not been mentioned in Israel, is of greater significance: The United States allowed South Korea to pay $18 million of Iran’s dues to the United Nations, thus restoring its right to participate in votes.

This sum was taken from $7 billion frozen in Korean bank accounts due to the U.S. sanctions. Iran used this exorbitant sum for shipping transactions with the South Koreans.

Washington hopes these conciliatory steps will spur the Iranians on to seek progress in the talks and conduct them with the desire to reach an understanding. To date, the negotiations are being managed on behalf of Iran by envoys holding monetary and economic positions, in order to make it clear to the world powers that Iran’s goal is first and foremost to get the sanctions lifted.

The conduct of the U.S. administration, including the defrosting of money in order to settle the UN debt, is foolish and attests to naivete. Most members of the administration refuse to accept that with Iran, one has to be resolute, tough and bargain over every step. There’s a reason why Iran has a poor reputation for being whizzes at negotiations in which they promise to do one thing and immediately break that pledge.

The chief U.S. conciliator is Special Envoy for Iran Robert Malley, who is conducting the talks in Vienna. The weakness that he is demonstrating made Prime Minister Naftali Bennett so angry that he decided – with typical petulance – not to meet with him when he visited Jerusalem last November.

A diplomatic source in Jerusalem told Haaretz that U.S. Secretary of State Antony Blinken and senior officials in the National Security Council and the U.S. intelligence community are gradually losing patience with Malley’s approach.

On the other hand, those who are demonstrating genuine toughness in the talks are the representatives of Great Britain and France. Foreign Minister Yair Lapid heard about that in the positive discussions he held recently with British Foreign Secretary Liz Truss and French President Emmanuel Macron.

U.S. Special Envoy for Iran Robert Malley in Vienna last June.Credit: Florian Schroetter/AP

In the spirit of Russia

It’s important to note that even if an agreement is reached in Vienna, it will be in two stages and in the spirit of the proposal by Russia – whose position was reported here a few months ago. According to the diplomatic source, Russia, with Chinese support, is proposing an interim agreement in the first stage – a kind of road map for the return to the original agreement of July 2015 (the Joint Comprehensive Plan of Action). At this stage, the United States will lift some of the sanctions in exchange for several confidence-building measures on the part of Iran, which would roll back its nuclear program. In the second stage, the sides would return to the original deal.

In Israel, both in the defense establishment and among the political leadership headed by Lapid, they understand that the handling of the Iranian military nuclear program must be based on two objectives:

1. To prevent a public confrontation with the United States. After initial criticism, Bennett, IDF Chief of Staff Lt. Gen. Aviv Kochavi and Mossad chief David Barnea have apparently accepted the idea that quiet must be maintained in relations with Washington, and that it’s necessary to develop a positive discussion, to coordinate viewpoints and expectations, and to cooperate in the intelligence sphere.

2. To continue to gather information about the Iranian nuclear program, and to disrupt and thwart it.

The assessment of Israeli intelligence is that Iran, at least at this point, does not wish to manufacture nuclear weapons but does wish to be a nuclear threshold state. In other words, to be able to assemble nuclear weapons within a short time if it so desires. In Israel, there is broad consensus that it has to try to prevent that. It is Barnea’s most important mission since taking up his position about eight months ago.

The Mossad chief understands that the organization must be adapted to a highly technological era which makes classic espionage activity difficult. In light of that, and past precedents, several department heads have left the Mossad. The organization is strengthening itself by relying on artificial intelligence and cyberwarfare, but without abandoning human intelligence (HUMINT).

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