West Texas Intermediate crude briefly pared losses as Trump announced his decision

U.S. President Donald Trump said the U.S. will withdraw from the landmark 2015 accord to curb Iran’s nuclear program and reinstate financial sanctions on the Islamic Republic, opening an uncertain new chapter for the Middle East.

His decision, widely anticipated by allies and analysts before his announcement Tuesday at the White House, was intended to force Iran to renegotiate an agreement the country’s leaders have said they will not revisit. Trump’s political opponents warned he could lead the U.S. into another Mideast war.

“The fact is this was a horrible one-sided deal that should have never ever been made,” Trump said. “We cannot prevent an Iranian nuclear bomb under the decaying and rotten structure of the current agreement. The Iran deal is defective at its core.”

West Texas Intermediate crude briefly pared losses as Trump announced his decision. The price for June deliveries of the commodity fell US$1.32 to US$69.41 a barrel at 2:28 p.m. in New York.

French President Emmanuel Macron, who personally lobbied Trump to remain in the deal during a state visit to Washington last month, said on Twitter that “France, Germany, and the UK regret the U.S. decision to leave the JCPOA,” using an acronym for the agreement.

“The nuclear non-proliferation regime is at stake,” he said.

Trump has long criticized the Iran deal, negotiated under his predecessor Barack Obama, as the “worst” ever. He has complained that it doesn’t address threats from the country’s ballistic missile program or its involvement in fomenting regional conflicts, and that provisions of the deal that expire in the next decade would allow Iran to resume nuclear work.

“If I allowed this deal to stand, there would soon be a nuclear arms race in the Middle East,” Trump said. “Everyone would want their weapons ready by the time Iran had theirs.”

He said that because of limits on international inspectors, they are “not able to prevent, detect or punish cheating” by Iran and “don’t have the unqualified right to inspect many important locations” including military bases.

U.S .President Donald Trump speaks to the press after signing a document reinstating sanctions against Iran after announcing the US withdrawal from the Iran Nuclear deal, in the Diplomatic Reception Room at the White House in Washington, D.C., on May 8, 2018.
U.S .President Donald Trump speaks to the press after signing a document reinstating sanctions against Iran after announcing the US withdrawal from the Iran Nuclear deal, in the Diplomatic Reception Room at the White House in Washington, D.C., on May 8, 2018.

Trump said in a tweet on Monday that he would announce his decision ahead of a May 12 deadline set by U.S. law to continue waiving U.S. sanctions lifted by the accord. The U.S. will be instituting the “highest level” of sanctions against Iran, Trump said.

The Treasury Department said in a statement that sanctions would be reinstated after “wind-down periods” of 90 or 180 days. Nuclear-related sanctions that had been waived under the deal would take full effect after Nov. 4, the department said.

Oil prices have climbed in recent weeks as uncertainty over the future of the agreement rose. A resumption of U.S. sanctions would threaten Iran’s ability to attract foreign investment, keeping the country’s output flat or lower through 2025, according to a research note published Monday by Barclays.

It is unclear what may unfold following the U.S. withdrawal. American and European diplomats have sought to negotiate side agreements aimed at addressing Trump’s concerns about the deal, and the delay in reinstating sanctions may allow those talks to continue — a prospect that Iran’s ally Russia, a party to the accord, raised ahead of Trump’s announcement.

Russia’s ambassador to the International Atomic Energy Agency, Mikhail Ulyanov, said the Iran deal wouldn’t end immediately as a result of Trump’s action and “we will have a certain amount of time for diplomatic efforts,” according to the Interfax news service.

Iranian President Hassan Rouhani suggested his country would continue to abide by the agreement, but that it was now between Iran and the five other signatories — not the U.S.

Last-Ditch Efforts

Diplomats engaged in the talks on side deals had signalled that they were close to a breakthrough, but key allies have been skeptical that Trump would remain part of the current pact, which curbs Tehran’s nuclear program in exchange for relaxing Western financial sanctions. French President Emmanuel Macron and German Chancellor Angela Merkel signalled after meeting with Trump last month that he seemed intent on quitting the agreement.

Ali Shamkhani, secretary general of Iran’s Supreme National Security Council, was reported to say Tuesday that “if the U.S. initiates confrontation with Iran, we won’t stay passive.”If the nuclear agreement “gets destroyed due to the U.S. assault, for sure it won’t be to their benefit,” he said, adding that the “biggest loss will be for the Europeans.”

EU trade with Iran has nearly tripled since 2015.

Following the visits by Merkel and Macron, U.K. Foreign Minister Boris Johnson was in Washington this week to make a last-ditch argument to persuade Trump to remain in the accord, arguing that it is flawed but can be improved by the side agreements.

Johnson met this week with Vice President Mike Pence, National Security Adviser John Bolton, Secretary of State Mike Pompeo and other administration and congressional officials.

Trump foreshadowed his decision on Monday, complaining on Twitter about the Iran agreement and deriding former Secretary of State John Kerry for meeting with Iranian Foreign Minister Javad Zarif two weeks ago at the United Nations to discuss salvaging the deal. “He was the one that created this MESS in the first place!” Trump said of Kerry.

Saturday Deadline

Under legislation passed by Congress, Trump has until Saturday to decide whether to keep waiving sanctions on banks of foreign countries that haven’t reduced Iranian oil imports, according to an analysis by the Congressional Research Service. Under that law, those sanctions have to be waived every 120 days.

Trump last agreed to waive the sanctions in January, but his frustration with the agreement has only grown since then. Declining to waive the restrictions again means an assessment of whether foreign countries are violating the sanctions would be due Nov. 8, according to the CRS study.

Israeli Prime Minister Benjamin Netanyahu said Sunday that the 2015 accord is fatally flawed and must be “fully fixed or nixed” to stop Iranian aggression sooner rather than later. His comments came as Iranian President Hassan Rouhani warned that the U.S. would face “historic” regret if it pulled out.

Netanyahu’s Role

Netanyahu delivered a televised presentation last week on secret Iranian files his country’s intelligence services obtained that he said prove that Tehran sought to build a nuclear weapon in the past despite its government’s denials. Trump watched the presentation, and White House Press Secretary Sarah Huckabee Sanders issued a statement declaring that the Israeli intelligence proved “Iran has a robust, clandestine nuclear weapons program.”

The White House later corrected the statement online to say Iran “had” a nuclear program, blaming a clerical error. Netanyahu did not claim that Iran currently has a nuclear program.

Members of Trump’s own party are split. Representative Mac Thornberry, chairman of the House Armed Services Committee, said Sunday he “would counsel against” Trump quitting the accord. Representative Ed Royce, who heads the House Foreign Affairs Committee, agreed, saying in a statement Tuesday, “I fear a withdrawal would actually set back these efforts” to stop Iran’s nuclear activities.

But House Majority Leader Kevin McCarthy has said he’s “very comfortable” that the president is standing up to Iran.

Bloomberg.com

via ‘Defective at its core’: Trump withdraws U.S. from Iran nuclear deal, reimposes sanctions — Financial Post

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