Iran Pact Faces Stiff Opposition

Israel and Some U.S. Lawmakers Blast Interim Deal to Curb Nuclear Program, Ease Sanctions

By JAY SOLOMON

A groundbreaking deal to curb Iran's nuclear program faces towering obstacles at home and abroad to becoming a permanent agreement, starting with the U.S. Congress and two of America's closest allies.

The leaders of both the Democratic and Republican parties are threatening to break with President Barack Obama's policy and enact new punitive sanctions on Iran, arguing that the interim deal reached in Geneva on Sunday yields too much to the Islamist regime while asking too little.

"The disproportionality of this agreement makes it more likely that Democrats and Republicans will join together and pass additional sanctions when we return in December," said Sen. Charles Schumer (D., N.Y.), an influential member of the

Such a move could kill the nascent nuclear accord, U.S. and Iranian officials agree, and add to more recent political embarrassments for the White House.

Reaching a comprehensive deal with Iran also faces formidable diplomatic and technical challenges, said U.S. and European officials. Washington wants to eventually dismantle much of Iran's nuclear infrastructure, including a heavy water reactor and enrichment facilities, steps Tehran has so far refused to take.

The White House has signaled it would defend the agreement by directly appealing to lawmakers and to foreign leaders. Mr. Obama on Sunday spoke by telephone to Israeli Prime Minister Benjamin Netanyahu, who has campaigned against the pact. The U.S. leader said he wanted to consult with Israelis on talks, and agreed Mr. Netanyahu "has good reason to be skeptical about Iran's intentions."

Iran celebrated the deal on Sunday as a political victory for President Hasan Rouhani and a step toward economic relief.

A final agreement could underpin broader American efforts to stabilize the Middle East and end conflicts in Syria and between Israel and the Palestinians, where Tehran actively supports militant groups, these officials said.

Senior U.S. officials said Sunday that a successful conclusion of an Iran accord could redefine the U.S.-Iran relationship, which has been marked by open hostilities since the 1979 Islamic revolution in Tehran.

"I think this is potentially a significant moment, but I'm not going to stand here in some triumphal moment and suggest to you that this is an end unto itself," Secretary of State John Kerry said Sunday, following two days of exhaustive negotiations.

As a side benefit, experts expect to see the easing of tensions with Iran lead to a reduction in world oil prices, although the effects will depend in part on how much Iranian oil returns to the market.

Despite the lures of a permanent deal, the Obama administration's outreach to Tehran carries great risks, said U.S. and Mideast officials. Key American allies, including Saudi Arabia and Israel, are publicly challenging the U.S. policy, claiming it directly threatens their security.

Any further rupture of the security ties with these countries threatens to undermine a U.S. defense system that has been in place in the Mideast for three decades, said regional observers.

"The U.S. diplomacy offers great opportunities but is also very dangerous," said Emile El-Hokayem, a Dubai-based Persian Gulf expert at the International Institute for Strategic Studies. "Many American allies see Washington reorienting itself away from its traditional allies."

The interim deal announced Sunday between Iran and the five permanent members of the U.N Security Council and Germany requires Iran to freeze its program and the world powers to ease some sanctions. A permanent accord would require each side to go much further, taking steps that Mr. Obama said "won't be easy."

The deal calls for Tehran to curb central parts of its nuclear program in exchange for a rollback of economic sanctions. Iran agreed to freeze its production of near-weapons grade fuel—which is uranium enriched to 20% purity—and to remove its stockpile of the fissile material.

Iran also committed to defer the startup of a heavy-water nuclear reactor in the city of Arak that could begin producing weapons-grade plutonium for potential use in making a nuclear bomb within 18 months.

The U.S. views the deal as a six-month confidence-building phase to allow for talks on a permanent agreement. Mr. Kerry and other U.S. officials said it provides U.N. monitors significantly more time and ability to detect if Iran is secretly preparing to "break out" and assemble an atomic weapon.

Israel and Arab states blasted the deal in part because for the first time the West has accepted that Iran will continue enriching uranium on its soil to use in power plants and for other civilian purposes. Successive U.S. administrations, as well as the U.N. Security Council, have called for Iran to suspend all its enrichment activities.

Mr. Netanyahu on Sunday said his nation wasn't bound to respect the new accord—a warning that the Jewish state might still consider military strikes on Iran's nuclear facilities.

Saudi officials have privately suggested in recent months that it could be forced to pursue nuclear weapons if Iran was seen benefiting from a weak deal with the global powers, which form a diplomatic bloc called the P5+1.

Proliferation experts said the new agreement contains no specific commitments to address evidence that Iran has clandestinely developed technologies used in creating a nuclear warhead. U.N. officials cite suspected tests in 2000 of implosion devices that are used in making atomic weapons.

"What happens if Iran is caught again procuring equipment for such tests?" said George Perkovich of Carnegie Endowment for International Peace. "There's nothing in the agreement that addresses this."

Sanctions relief under the agreement is expected to provide Tehran between $6 billion and $7 billion in badly needed foreign-exchange earnings over the next half-year, U.S. officials said. Of this, $4.2 billion will be Iran's earnings from oil sales that have been trapped in overseas bank accounts due to the international sanctions.

The U.S. and Europe are also suspending bans on Iran's trade in petrochemicals, precious metals, automobiles and airplane spare parts.

Mr. Kerry and other American officials stressed that Western financial pressure wouldn't slacken during the six months and that all of the sanctions on Tehran could be reimposed if Iran didn't live up to its commitments.

U.S. officials estimated that Iran would still lose around $25 billion in oil revenue during this confidence-building phase and that $14 billion to $16 billion of its oil revenue will be locked up in overseas banks.

"We are committed to maintaining our commitment to vigorously enforcing the vast majority of the sanctions that are currently in place," Mr. Kerry said.

Israel and the Obama administration's critics on Capitol Hill challenge these numbers, and voiced fears that Washington was letting Tehran get off the financial hook.

Experts on Iran sanctions said it took nearly a decade to bring to bear the financial pressure Tehran is currently facing, and that removing just some of the penalties could weaken the global business community's commitment to their implementation.

Indeed, a number of European companies announced on Sunday that they were preparing to resume operations in Iran.

"Iran has broken the back of the Western sanctions regime," said Mark Dubowitz of the Foundation for Defense of Democracies, a think tank that advises Congress on Iran. "It is an illusion to believe the sanctions will not be eroded significantly by this deal.

Many Iranians stayed up all night to follow the news from Geneva on Persian Satellite channels like BBC Persian and Iranian official news websites. Others woke up to the news of the historic deal, storming social media with messages of congratulations as a sense of euphoria and hope filled the capital Tehran. Commuters on their way to work in Tehran honked their horns and flashed their lights.

Mr. Netanyahu and other Israeli officials say Iran will use this economic lifeline to stabilize their economy but still will be allowed to conduct nuclear work. At the end of the six months, they warned, Iran still will have the capacity to rapidly move toward an atomic weapon.

In Iran, markets immediately started responding to news that some sanctions—such as shipping insurance, petrochemical goods and auto and airplane parts—would be rolled back.

Iran's currency increased value against the dollar on Sunday by about 3%, according to money exchangers in Tehran's currency market. The currency had lost half of its value in the past two years because of the sanctions.

Tehran's stock market reported that investors were rushing to buy shares in industries benefiting from sanctions relief such as petrochemical and shipping. Iranian media reported long lines forming at the Tehran stock exchange.