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A DECADE ago, suspicions hardened that Iran was in breach of its obligations under the Non-Proliferation Treaty.
On August 14, 2002, the dissident National Council of Resistance of Iran publicly revealed the existence of two secret nuclear sites under construction in Iran: the uranium enrichment facility at Natanz and the heavy water reactor at Arak. The mere threat of sanctions convinced the then reformist Khatami government to suspend its nuclear program and permit freer inspections by the International Atomic Energy Agency.

The Australian January 16, 2013 12:00AM

The Australian January 16, 2013 12:00AM

A DECADE ago, suspicions hardened that Iran was in breach of its obligations under the Non-Proliferation Treaty. On August 14, 2002, the dissident National Council of Resistance of Iran publicly revealed the existence of two secret nuclear sites under construction in Iran: the uranium enrichment facility at Natanz and the heavy water reactor at Arak. The mere threat of sanctions convinced the then reformist Khatami government to suspend its nuclear program and permit freer inspections by the International Atomic Energy Agency.

In 2004 it signed an agreement in Paris agreeing to suspend enrichment. In 2005, however, the election of hardliner Mahmoud Ahmadinejad saw Iran resume enrichment activities, breaching the Paris agreement, and moves were made by the US and Europe to have Iran referred by the IAEA to the UN Security Council.

…The Security Council re-engaged when Tehran repudiated the Paris agreement and the IAEA reported that Iran’s many failures of its Safeguards Agreement constituted “non-compliance”. In July 2006 after Iran’s April announcement that it had successfully enriched uranium, the Security Council “demanded”, in Resolution 1696 (2006), that Iran cease uranium enrichment. Sanctions were applied under Resolution 1737 (2006), on December 26, 2006.

The UNSC has applied three more rounds of sanctions in 2007, 2008 and 2010.

In September 2009, presidents Barack Obama and Nicolas Sarkozy and prime minister Gordon Brown revealed that Iran was constructing the Fordow uranium enrichment facility in secret, 60m-90m underground, as early as 2006. In November 2009 the IAEA demanded Iran cease production at the site.

The UN and Australian sanctions against Iran cover:

(1) Prohibitions relating to supplying goods and technology relating to nuclear use, enrichment, processing;

(2) Prohibitions relating to supplying certain services relating to any goods or technology referred to above;

(3) Prohibitions relating to business dealings with Iran involving nuclear materials and technology;

(4) Targeted financial sanctions;

(5) Travel restrictions on listed individuals.

The sanctions also apply to Iran’s ballistic missile program, the largest in the Middle East, developed using Russian, North Korean and Chinese technology.

On November 8, 2011, the IAEA reported Iran “may have planned and undertaken preparatory experimentation, which would be useful were Iran to carry out a test of a nuclear explosive device”.

In August last year the IAEA reported Iran had amassed three quarters of the centrifuges necessary for the production of nuclear fuel in its underground Fordow facility.

The progressively stricter sanctions applied to Iran have taken a severe toll on the Iranian economy. Many analysts claim this may push the Iranian government towards a nuclear compromise. They focus on two main impacts of the sanctions regime: oil and gas exports and the collapse of Iran’s currency.

Iranian oil exports have reportedly declined to about 1.25 million barrels a day as of December from an average of 2.5 million barrels a day in 2011. Oil exports historically provide about 70 per cent of government revenue. Tellingly, Iran’s oil exports declined to 940,000 barrels a day last July, the month the EU’s oil embargo came into effect. This could result in the loss of $US50 billion ($47bn) in hard currency revenue a year (at current prices).

With the loss of oil and gas revenue and restrictions on the financial sector, the Iranian rial has dropped by 80 per cent and as Obama said recently Iran’s economy “is in shambles”.

It is clear international efforts to peacefully restrain Iran became far more effective last June when Europe joined financial, oil and gas sanctions. This has halved Iranian oil exports in a year cutting Tehran’s budget by more than 30 per cent.

One can’t judge whether the international community’s efforts to prevent Iran from gaining nuclear weapons will succeed. Sanctions have been effective in squeezing Iran’s capability. They also put pressure on Iran’s leaders to consider the need for a nuclear compromise. The question is whether the severe impact will be sufficient to change the nuclear drive of an ideological-theocratic regime.

Preventing Iran from gaining nuclear weapons goes beyond averting their direct use. Possession would alter the power balance in the Middle East. Groups supported by Iran (Hezbollah, Hamas and Assad’s Syria) would be considerably strengthened. Other key players — Saudi Arabia, Turkey and Egypt — would be under pressure to develop their own nuclear weapons programs.

The tenuous presence of the IAEA in Iran still gives us some hope for avoiding military conflict. Iran will have stockpiled 200kg of uranium enriched to 20 per cent by the middle of this year. The last dash to weapons grade of 90 per cent is thought to take only a further six to nine weeks. At the moment Tehran is accumulating larger stockpiles of 20 per cent grade uranium. But when the IAEA sniffs further enrichment or is more likely expelled from Iran, it will become unarguable sanctions have failed.

According to The Washington Post, just before Christmas the French ambassador to the US, Jean-David Levitte, told IFRI, a leading French think-tank that the international community must now go to Iran’s supreme leader Ayatollah Ali Khamenei with a choice: restrict nuclear enrichment to 5 per cent or less and export its stockpile of higher grade enriched uranium. Or the US, having made its high-profile final effort, will gain broader international acceptance of an American-led military strike to destroy Iran’s nuclear capability at some point this year. The high-wire act continues.

Michael Danby is chairman of the Joint Standing Committee on Foreign Affairs Defence and Trade. This is from a paper delivered to the Australia, UK, Israel Dialogue in December.