Fakhrizadeh killing could speed lifting of sanctions

December 5, 2020 / Rory Fyfe / Comments Off on Fakhrizadeh killing could speed lifting of sanctions
  • The Fakhrizadeh incident should actually increase the urgency for the Biden Administration to restore the JCPOA nuclear agreement
  • Although this requires Iran to maintain strategic patience in responding to the attack, despite pressure from hardliners in parliament
  • However, further attacks could spark a cycle of escalation that would make future negotiations more difficult for both the US and Iran
  • The oil market doesn’t appear to have priced in a particular impact as of yet

What happened?

  • Mohsen Fakhrizadeh, thought to be Iran’s top nuclear scientist, was killed on Friday when his convoy was attacked in a rural area east of Tehran. 
  • There are conflicting reports from Iranian sources of the method of the attack ranging from dozens of assailants on motorbikes, possibly related to opposition group MEK, to a remotely controlled machine gun – possible both were involved (NYT). No assailants appear to have been killed or captured. Whatever the mode, the interception of his convoy suggests infiltration into Iran’s security and intelligence system (Rt).
  • This is the third in a series of attacks on Iran this year, starting with the US’s open assassination of General Qassem Soleimani in January, followed by an explosion at a centrifuge assembly plant at its main Natanz nuclear site in July (and several other possible sabotage operations around that time).
  • Israel is widely assumed to be responsible, including by unnamed American officials (NYT). Fakhrizadeh named and seemingly threatened by Benyamin Netanyahu in 2018 during a presentation of details from a trove of documents seized by Mossad. It is unknown if the Trump Administration had any foreknowledge. 
  • The timing is clearly aimed to disrupt efforts to restore the JCPOA and possibly to trigger an escalation that spurs the US to launch an attack.

International responses

  • The Gulf states split into three groups, with Qatar and Oman, who have the closest relations with Iran quickly condemning it in personal calls; Kuwait, UAE and Bahrain condemned it later through statements and Saudi Arabia has remained silent.
  • Qatar’s foreign minister condemned it on Saturday in a call with his Iranian counterpart, Javad Zarif (Jaz) and Oman’s foreign minister did the same on Sunday (Rt).
  • Kuwait, the UAE and Bahrain issued condemnation statements from their foreign ministries on Monday (MoFA, BB, KUNA, Rt). An Iranian foreign ministry spokesman pointed to these statements in response to a media question about whether UAE and Bahrain might have provided Israel with assistance (TNA).
  • Saudi Arabia has made no official comment except for rebuffing a suggestion from Iran’s foreign minister of a link between the killing and last week’s Pompeo-Netanyahu-MBS meeting in NEOM (Rt).
  • The US has made no official comment. This contrasts with the Obama administration which did condemn the last assassination of an Iranian nuclear scientist (Jaz).
  • The EU described the killing as a “criminal act” but urged restraint (EU).
  • Iran has asked the UN Security Council to address the killing, but as of yet none of the 15 members of the council has formally requested a discussion on it and even if it was addressed, the US veto would presumably be used to shield Israel (Rt).

Iran’s response

  • President Rouhani’s initial response was to maintain the policy of strategic patience, meaning Iran will respond “at the proper time” rather than fall into what he called Israel’s trap to create chaos (WSJ, Rt). Ayatollah Khamenei and several other hardliners have expressed similar positions.
  • While there is popular anger, it is not comparable to that seen after the assassination of Soleimani, who was widely known and marketed as a hero for his role in defeating Islamic State. By contrast, Fakhrizadeh, by design, was well out of the public eye.
  • The Iranian parliament – which does not have the authority to determine policy – called for an expansion of nuclear enrichment to 20% purity, larger stockpiles and reduced access for IAEA inspectors. This is up from 4.5% enrichment currently and 3.7% permitted in the JCPOA; a move to 20% would halve the enrichment time needed to reach the 90% level required for a weapon. The vote split along hardline/moderate lines and was led by the speaker, Mohammad Ghalibaf, who is one of the leading candidates for the presidency in June (FT).
  • Iran has seemingly showed restraint in the past, not responding to a serious of assassinations of scientists in 2010-12, although that might have been partly due to a lack of accessible targets and capacity. Israel accused Iran of attempted attacks on several of its diplomats in 2012 (WSJ) and three Iranians were charged in Thailand of a plot at the time – they were actually released last week in exchange for an Australian academic were accused of planning an attack that year, timing that may just be coincidental.

What next?

  • If Iran maintains restraint, by not attacking Israel or expanding nuclear enrichment, then this might further spur the Biden Administration to prioritise action to lift sanctions and restore the JCPOA. Europe is expected to play a key role in mediating this and the European Council of Foreign Relations issued a statement signed by several former ministers calling for a deliberate strategy to achieve this. The remaining E3+2 signatories (Germany, France, UK, China and Russia) meet with Iran on 16 December in Vienna and the UN Security Council has a scheduled biannual meeting on JCPOA compliance on 22 December.
  • However, there could be further assassinations before 20 January, or even a full-scale airstrike on Natanz (something which Trump reportedly considered a few weeks ago in response to Iran’s growing uranium stockpile), which would severely test Iran’s strategic patience and prompt a response that would make a restored JCPOA much more difficult.
  • Our baseline scenario remains a fairly quick lifting of JCPOA related sanctions by Biden, permitting a restart of oil exports, followed by broader negotiations that could trade the lifting of non-nuclear US sanctions for concessions from Iran in additional areas of concern. This differs from market expectations that the sanctions won’t be lifted until 2022 and could weigh on oil prices in H2.
  • As regards the nuclear program, Fakhrizadeh is thought to have played a key role in its development, but his loss alone is unlikely to significantly erode its capability or breakout speed. US intelligence concluded that Iran’s direct weapons program ended in 2003, but its missile technology has improved considerably since then and it is likely has much of the knowledge required for weaponization once it has sufficient supplies of uranium. In a worst-case scenario, where further attacks in the coming weeks undermine prospects for a lifting of sanctions, a hardliner wins the presidency in June and IAEA inspectors are expelled, experts think that Iran would be about 1-2 years away from creating a nuclear missile.

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Rory Fyfe