The White House released a statement from President Trump this afternoon announcing his decision to waive Iranian oil sanctions again. The full statement is available here.
But as we indicated in our pre-announcement note earlier today, Trump also issued a warning that it would be the last waiver unless the Iran nuclear deal was fixed.
In addition, he also seems to have raised the bar for the requirements of another waiver: legislation to amend the Iran deal law (INARA) and support from the Europeans to fix the deal. Both seem highly unlikely to us.
“Today, I am waiving the application of certain nuclear sanctions, but only in order to secure our European allies’ agreement to fix the terrible flaws of the Iran nuclear deal,” Trump said in the official statement. “This is the last chance. In the absence of such an agreement, the United States will not again waive sanctions in order to stay in the Iran nuclear deal. And if at any time I judge that such an agreement is not within reach, I will withdraw from the deal immediately,” Trump said.
Though it is not specified in the statement, an administration official said today in a press briefing that Trump wants EU support for a “follow-on or supplemental agreement” to the nuclear deal.
The Europeans have been highly resistant to reopening negotiations or changing the nuclear deal. Earlier this week, they held what amounted to a unity meeting with the Iranian Foreign Minister in Brussels to urge the deal be preserved. We are told that this event particularly irked the President.
On the legislative front, Trump outlined very substantial changes to the Iran Nuclear Agreement Review Act of 2015 (INARA). “I am open to working with Congress on bipartisan legislation regarding Iran. But any bill I sign must include four critical components,” Trump said.
Trump’s legislative components include: 1) demand immediate inspections of all sites by IAEA inspectors; 2) ensure Iran never comes close to possessing a nuclear weapon; 3) these provisions have no expiration date; and 4) explicitly include language subjecting Iran’s ballistic missile program to sanctions and inseparable from the nuclear agreement.
This is a big change from the previous Trump administration position when they were willing to accept very minimal changes to the US law. To date, Democrats have been reluctant to cooperate with moving Iran legislation out of fear it would undo the Obama nuclear deal. Most Republicans also want language similar to what Trump laid out in the statement.
As we said in our note earlier today, the legislative effort for an Iran deal fix that Trump is seeking now begins at a stalemate and faces significant challenges for any success.
On Wednesday we said in a client note that Trump’s decision will set up a showdown at the next waiver deadline on May 12. Trump confirmed that today.
In our view, it is unlikely that Congress or the Europeans will take any meaningful action to modify the agreement. As a result, there is significant risk of snap-back oil sanctions on Iran and the nuclear deal remains on life support.
All of this reminds us of a similar scenario from July 2017 to convince Trump to recertify the Iran deal. A national security meeting turned into an all-day lobbying effort by his advisors with Trump only relenting by requiring a plan to decertify at the next deadline in October.
Trump referenced this in his statement today. “No one should doubt my word. I said I would not certify the nuclear deal---and I did not. I will also follow through on this pledge. I hereby call on key European countries to join with the United States in fixing significant flaws in the deal, countering Iranian aggression, and supporting the Iranian people. If other nations fail to act during this time, I will terminate our deal with Iran,” Trump said.
