Iranian Nuclear Accord Advances

Iranian Nuclear Accord Advances
http://online.wsj.com/news/articles/SB10001424052702304549504579316643349109898
Obama Threatens Veto of Sanctions
By Jay Solomon, Carol E. Lee and Laurence Norman
Updated Jan. 12, 2014 7:44 p.m. ET

World powers and Iran agreed to begin implementing a pact to curb Tehran's nuclear program on Jan. 20, setting the stage for six months of diplomacy intended to end Tehran's atomic weapons threat, officials said.

Under Sunday's deal, Iran will stop producing near-weapons grade nuclear fuel and start rolling back or freezing other nuclear work next week, said U.S., European and Iranian officials.

In turn, the U.S. and European Union will start easing some of their punitive economic sanctions on Iran, starting next week with suspending a ban on Iran's trade of petrochemicals, autos and precious metals.

U.S. and European officials hailed the latest milestone as a way to peacefully contain Iran's nuclear program, while acknowledging that failure was a real possibility given the complexity of the talks.

Still, the accord fueled political friction within the U.S. Senior U.S. lawmakers quickly criticized the deal for not going far enough to rein in Iran's nuclear capabilities, setting up a likely political showdown between the White House and Capitol Hill in the coming weeks.

The reaction prompted President Barack Obama to signal his determination to protect the pact by threatening a veto over new sanctions sought by lawmakers in Congress.

"Today's agreement…marks the first time in a decade that the Islamic Republic of Iran has agreed to specific actions that halt progress on its nuclear program and roll back key parts of the program," Mr. Obama said in a statement on Sunday. "Taken together, these and other steps will advance our goal of preventing Iran from obtaining a nuclear weapon."

A growing coalition of Republican and Democratic lawmakers are pushing legislation to enact new economic sanctions on Iran. They argue their bill will ensure Tehran doesn't renege on its commitments or back out of the diplomacy.

"I am worried the administration's policies will either lead to Iranian nuclear weapons or Israeli airstrikes," said Sen. Mark Kirk (R., Ill.), a leading supporter of the bill. "It's time for the United States Senate to pass common-sense bipartisan legislation, now co-sponsored by 59 senators, to ensure this process leads to the peaceful dismantlement of Iran's nuclear program."

Senate Majority Leader Harry Reid (D., Nev.), a close White House ally, has no plans to soon bring the bill to the floor for a vote, people familiar with the process said. But, given the legislation's strong bipartisan support, it was unclear how long Mr. Reid can buck pressure to hold a vote, making the Obama administration's lobbying of individual senators even more critical. The lawmakers said they have a veto-proof number of 67 supporters in the Senate.

Israel didn't immediately react to the Iran deal but it has criticized the diplomacy with Tehran in the past, saying the terms should be tougher.

The implementation agreement reached Sunday was negotiated between Iran and the five permanent members of the United Nations Security Council—the U.S., U.K., France, Russia and China—plus Germany, a diplomatic bloc called the P5+1. It followed by more than six weeks the signing of the provisional pact in Geneva.

U.S. and European diplomats said the complexity of the talks illustrated how difficult it will be to forge a final agreement, which will address evidence Tehran has clandestinely developed nuclear weapons technologies. Iran denies that charge.

The next stage—talks aimed at making the final agreement—are expected to begin in two to three weeks, said U.S. and Iranian officials. A senior U.S. official said the Americans judge chances of a final deal to be about "50-50."

"But there is a real opportunity here," the official said.

U.S. and European officials said the most important elements of the interim agreement includes Iran's commitment to stop its production of near weapons grade fuel—which is uranium enriched to 20% purity—and to eliminate its stockpile of that type of nuclear fuel.

Iran also agreed to cap its production of lower-enriched uranium during the negotiations and to halt its plans to commission the Arak heavy water reactor capable of producing weapons usable plutonium.

U.S. officials cited enhanced inspections of Iranian nuclear facilities by the U.N.'s watchdog, the International Atomic Energy Agency, as a vital benefit of the interim deal. Washington and the IAEA are particularly focused on better understanding Iran's enrichment capabilities and the status of the Arak heavy water reactor.

Tehran has refused, however, to give the IAEA access to its military sites, particularly the Parchin base, where weapons work is believed to have occurred.

The U.S. officials acknowledged that crucial elements of Iran's nuclear infrastructure will remain operational. Iran will continue to be allowed to conduct research and development on the centrifuge machines it uses to produce nuclear fuel, though no new machines will be allowed to be installed. Some work on the Arak reactor also will be allowed to continue, U.S. officials said.

Critics of the agreement on Capitol Hill also argued that the deal risked providing Iran with too many economic benefits, therefore eroding Tehran's incentive to negotiate. U.S. officials said the sanctions relief offered Iran equaled $7 billion, $4.2 billion of which are oil revenues frozen in offshore accounts.

Under the implementation agreement announced Sunday, Iran would get a first installment on that money, $550 million, on Feb. 1.

But Iran has already benefited from a significantly strengthened currency and financial market since the deal was signed in November. That deal set in motion negotiations to work out the technical aspects of the agreement.

"Iran's economy is showing signs of recovery after years of sanctions, due in no small part to the recent sanctions relief…and a perception that the Obama administration may no longer be committed to ratcheting up the economic pressure," said Mark Dubowitiz of the Foundation for Defense of Democracies, a conservative think tank which advises Congress on Iran sanctions.

The Obama administration has strongly denied that it is easing pressure on Tehran and said it would move quickly to impose new sanctions if Iran didn't reach a final agreement. "Unprecedented sanctions and tough diplomacy helped to bring Iran to the negotiating table, and I'm grateful to our partners in Congress who share our goal," Mr. Obama said.

Iranian officials hailed the agreement as an important step in President Hasan Rouhani's efforts to re-engage with the Western world. The cleric and politician took office in August vowing to revitalize Iran's economy by rolling back the economic sanctions. But he has faced stiff resistance from conservative factions in Tehran, including from the elite Revolutionary Guards. Iranian leaders on Sunday said the extension of the diplomacy will strengthen Mr. Rouhani's hand.

"We reached a good agreement very quickly, no one believed this could be done," former President Hashemi Rafsanjani told Iranian media Sunday. "This is a win-win for both sides."

—Farnaz Fassihi and Naftali Bendavid contributed to this article.

Write to Jay Solomon at jay.solomon@wsj.com, Carol E. Lee at carol.lee@wsj.com and Laurence Norman at laurence.norman@wsj.com