Factors shaping Iran’s current JCPOA calculations

For the past year, negotiations over the revival of the 2015 Iran nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), have not been conclusive. It appears that Iran’s current JCPOA calculations are shaped by three key factors: the future transition of power, lessons learned from the Ukraine war, and changes in the emerging international order.

Transition of power

The single most important factor guiding Iran’s foreign and domestic calculations is the coming transition of power in the near to medium-term future. The country’s core elites are making all of the meticulous preparations and contingencies needed for the eventual transition. For more than three decades, the country has been accustomed to a certain hierarchy of relations and a particular culture of statecraft. On foreign policy, Iran has projected consistency by pursuing wide-ranging regional involvement and maintaining a calculated distance from the West. While all indications point to continuity and a minimum re-ordering of objectives in the future, there will certainly be an overhaul of personnel.

As examples from the Global South demonstrate, periods of transition in highly centralized countries generally involve turbulence and uncertainty. Given Iran’s fractious domestic politics, the future leader(s) will need considerable time to consolidate power and authority. There is one overriding presumption about the transition era, namely that dealing with foreign policy challenges will be far more complicated than domestic issues. For the purposes of regime security then, it appears that continuity of foreign policy will be essential. Iran has openly announced that it does not aim to become a normal country, meaning, for example, another Turkey or Malaysia — countries that are integrated into the global economic and political system. Thus, there are no signs of a paradigm shift toward the West on the horizon.

In this context, a robust nuclear program and deterrence posture are taking on growing importance as the most reliable means for ensuring the continuity of the polity, and more importantly, managing the transition process. Iran will most likely continue to advance its nuclear program but remain short of reaching nuclear threshold status. Tehran seems to recognize the severe global consequences that would likely follow if it were to cross the threshold and acquire a nuclear weapon.

Moreover, for the foreseeable future, and especially through the period of transition, Iran will make every attempt to preserve its regional leverage. Though one expects long-standing ideological fixations in Iran’s analytical calculations, its leadership is likely aware and analytically capable of understanding the potential political developments in Washington. Thus, the question arises: Why does Iran continue to raise impractical demands in both previous and recent JCPOA negotiations? The most plausible reason is that it is pursuing a policy of deliberate protraction. Through this stalemated process, Iran will continue to hold the United States responsible for the resulting impasse. During a period of political uncertainty in Washington and when facing the prospects of limited short-term economic relief, closer Arab-Israeli alignment, and the inevitable domestic challenges associated with political transition, Iran likely sees retaining its nuclear deterrence and regional influence as a reliable foreign policy strategy to ensure the status quo.

The Ukraine war

Before the Russia-Ukraine war began in late February, Iran was torn between two competing interests: economic development and nuclear deterrence, but the level of devastation in Ukraine decisively shifted the balance in the country’s internal debates in favor of nuclear deterrence. Hundreds of billions of dollars are now needed to rebuild Ukraine’s infrastructure and restore it to its pre-war condition. For the Iranian leadership the lesson of the Ukraine war is that in the absence of a deterrence capability and reliable international partners, Iran faces a great risk of military strikes and perhaps even a prolonged war.

Moreover, the impact of the war in Ukraine underscored the reality of Iran’s geopolitical loneliness. What heightened Tehran’s anxiety was the fact that half the world remained neutral as a European nation was devastated. As Iran watched the gradual destruction of Ukraine over several months, it realized the potential consequences of an international/regional military alliance targeting the country. Amid an ongoing shadow war with Israel, economic contraction, biting U.S. sanctions, budgetary constraints, national strikes, and incessant creeping inflation, the results could be crippling.

With this in mind, nuclear deterrence seems even more important than security cooperation with Moscow, which has been at the forefront of Iran’s national security outlook in recent years. As Russia was hit with some 11,000 sanctions and was politically marginalized on the global level as a result of its invasion of Ukraine, it set off alarm bells among Iranian officials, underscoring just how marginalized their country could become. Therefore, the Ukraine war has been quite consequential in shaping Iran’s JCPOA calculations, especially at a time of transition. When it comes to defending the polity, no other tool seems as powerful and effective as nuclear deterrence.

Emerging international order

There is an underlying consideration that impacts all foreign policy and national security calculations by the Iranian state: the desire to postpone normalization with the United States as long as possible. For decades now, Tehran has remained committed to a policy of no normalization and no confrontation with Washington. This stance is based on the understanding that normalization with the U.S. would gradually transform the structure of power in Iran and consequently its political economy.

Iran’s official statements and burgeoning economic relations confirm a strategic decision to pivot toward engagement with China and Russia. Apprehensions about the coming transition are compelling the Iranian deep state to make national security a higher priority than economic development. Reinvigorated relations between core Iranian elites and the West would bring with them the threat of greater Western influence and the gradual erosion of the Iranian state’s authority over politics, economics, and culture. The Iranian interpretation of integration with the West is incremental capitulation of its political and economic autonomy. Understandably, economic connectivity and political integration with the West will upset the class structure of the country and potentially unseat governing elites. Insularity and self-assured exceptionalism are therefore valuable since they allow further centralization of power.

The dilemma, however, is that even economic transactions with the East require working relations with the West. Perhaps Iran is hopeful it can use digital currencies and structure its commercial transactions with China and Russia in such a way as to free itself of its financial dependence on the West. Even if Iran were to become a member of BRICS — the international grouping of major emerging economies — along with Argentina, perhaps making it BRIICSA, it will not have a substantial impact on its banking system and foreign investment status. Some 3,500 sanctions will still remain in place. Ultimate membership in the Shanghai Cooperation Organization will also have more of a symbolic rather than a practical importance. A pivot to Russia and China may help to bolster the country’s security, but economic development will suffer dramatically. Technology transfer, diversified foreign direct investment, and educational opportunities will all be greatly curtailed.

Trends ahead

Due to its substantial oil export revenues, Iran could previously afford to act as a centrifugal state; however, with its current shrinking financial resources, the country is now facing piercing centripetal threats. In other words, domestic challenges may gradually overwhelm deterrence aims and efforts. While diplomacy with Washington has been pursued under all governments, the main objective is to protract settlement of the U.S.-Iranian disputes, maintain lingering hope, and vie for a stronger position in the Middle East. Consequently, how to balance the domestic-foreign equation will be the most challenging component of Iranian statecraft in the coming months and years.

One can expect Russia to play a crucial role during the transition period and therefore JCPOA outcomes are closely coordinated with Moscow. Negotiations will continue; they have been conducted for some 20 years now. There appears to be no motive for Iran to rush to reach a settlement, since there are no huge economic benefits waiting beyond the horizon. At least until January 2025, when the new U.S. administration takes office, there will not be any enthusiasm among Western companies for foreign direct investment in Iran. Given the intensifying Russian and Chinese divergences with the U.S., Iran appears to have committed to relations with the East in the long term over those with the West. In the contours of Iran’s foreign policy behavior, power politics are far more decisive than ideological constraints. In this context, the preservation of contradictions with the U.S. is essential for the continuity of polity.

Iran has assiduously learned how to game and recalibrate regional and international dynamics through mixed signaling. The nuclear program appears to be irreversible. The hovering presence of Israel in close proximity and the military consequences of the Abraham Accords are unifying forces within the diverse factions of the present and emerging leadership. A considerable part of economic activity in Iran (including energy, mines, and major industries) is in the hands of the state. Such a level of concentration leads to an underlying challenge: How can the government generate new financial resources while paying “lip service” to the JCPOA?

At this point, the potential resumption of diplomatic relations with Saudi Arabia could finally bring about a change after a number of unrequited overtures. Improved relations with Riyadh could initiate a broader reset with the Arab world and reshape Iran’s overall standing in and relationship with the Middle East. With so many contradictory forces at play, one can observe a constant in Iranian politics: Consistency in policy is considered naïveté, especially for a lonely geopolitical actor. The continuum of international engagement oscillating between cooperation and confrontation is managed by short-term moves. While economic development demands predictability, overpowering security concerns press in the opposite direction. In other words, as Iran focuses on security issues, it is in its interest to remain unpredictable. According to government announcements, Iran is only saddled with scarce financial resources; all other matters are secondary. Simultaneously, momentum dictates a direction — that while maintaining its nuclear and regional leverage, the country should eschew military confrontation. Iran is adamant about diversifying its foreign economic relations, but without reorienting its foreign policy this will remain impossible.

The emerging multipolar international order suggests that Iran will be able to mobilize the political and economic resources needed to perpetuate the status quo — at least to an extent. Yet history and tradition may make this increasingly difficult in the coming years: To what extent will Iran’s society, educational system, and even industry, accustomed to Western habits and ideas, be willing to adapt to Russian and Chinese practices and orientations? Even if Iran, for the sake of security, intends to diversify its national security and economic options, it will still have to reach a modus vivendi with the West.

Mahmood Sariolghalam is a non-resident scholar at MEI. The views expressed in this piece are his own.

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