(CNN)President Joe Biden took office at a moment of global crisis, and tensions with Iran are among his most pressing foreign-policy challenges. After four years of nonstop hostility between Washington and Tehran, the first weeks of his presidency could determine the level of danger moving forward.
President Donald Trump famously yanked the US out of the 2015 nuclear deal despite the fact that Iran was abiding by its terms, and European allies fiercely opposed the move. He ordered the killing of a top Iranian general and sustained a "maximum pressure" campaign of unparalleled financial sanctions against Iran. Soon after his election loss to Biden, Trump reportedly asked advisers for options to strike Iran militarily. That Trump's presidency concluded without open US-Iran conflict may be lucky for everyone.
Biden has stated an intent to rejoin the nuclear deal, while also signaling he hopes a more expansive agreement can be reached soon after. If he is serious about a diplomatic course correction on Iran that contains its nuclear activities, his administration needs to move fast in doing so.
As part of its response to mounting pressure from the Trump administration, Iran recently announced it will enrich uranium at more than five times the rate permitted under the nuclear deal. It also has threatened to restrict access to international inspectors if economic sanctions rallied by the Trump administration are not eased.
As the UN's atomic watchdog chief warned on Jan. 11, there is a matter of weeks rather than months to salvage the nuclear deal.
Most importantly, Biden should steer clear of the fallacy that President Trump's flawed policy of maximum-pressure sanctions provides the US with ample leverage and time to skip over the nuclear deal and squeeze more concessions from Iran. As the future of the nuclear accord was debated during confirmation hearings for Biden's top appointees, some senators and observers argued just that. They suggest that even if Trump was wrong to pull America out of the deal, his successor could benefit from the "leverage" that Trump-era sanctions created, to force a broader deal that not only further restricts Iran's nuclear activities but also curtails Iran's ballistic missile program and its support for militant groups in the Middle East. Trump had squeezed Iran's economy to such an extent that its leaders are willing to make more concessions than they had in 2015, the logic goes.
But it is unclear why Tehran, having resisted similar maximalist demands under Trump and having already absorbed heavy costs of US sanctions, would be willing to make a deal with Biden under such terms.
Those arguing to maintain sanctions wrongly claim that the Iranian economy is in such dire straits that Tehran will be forced to capitulate. Against the backdrop of unprecedented sanctions and the Covid-19 pandemic, Iran's economy has demonstrated resilience to external shocks and will likely limp along. Recent projections from the World Bank, the International Monetary Fund and the Institute of International Finance predict Iran will achieve growth rates of anywhere from 1.5% to 3.2% this year even if sanctions remain in place. As at least one Trump official admitted, there are so many sanctions on Iran that they've become an exhausted tool.
At this stage, maximum pressure is delivering dismal marginal returns. Iran's non-oil economy, which accounts for more than 85% of GDP according to Iranian government statistics, can grow under sanctions given both significant non-oil export revenue and also Iran's massive domestic market. Plus, China has continued to buy Iranian oil in defiance of US sanctions, according to the US government, The New York Times, and others.
Low levels of growth will not fully alleviate the fiscal pressure facing Iran's government nor the weakness of the Iranian currency, but would mark a significant improvement after three years of steep contraction. The expectation that Iran's economy will return to growth this year has already seen the Iranian rial gain more than 9% against the dollar since the beginning of January.
Not only is Iran retooling its economy to sustain US sanctions, but the maximum pressure campaign has reinforced hardline security logic in Iran that means the country's leaders are unlikely to cave. Iran's leadership and public alike are increasingly skeptical of any promises that sanctions will be eased — even under the Obama administration, which concluded the nuclear deal that saw much of the US sanctions regime rolled back, the hesitancy of international banks to transact with Iran stymied economic growth. Iran is unlikely to expand the scope of negotiations beyond the nuclear accord until it can have more confidence that a lifting of US sanctions would deliver real benefits.
If Biden intends to contain Iran's nuclear program through diplomacy, he should make concrete economic relief felt on the Iranian streets. The cost of US sanctions have so far been felt most by ordinary Iranians, who have been hit with high inflation. The worsening economic situation did not lead to regime collapse or capitulation as the Trump administration had bet on, but instead contributed to low election turnout in Iran and protests that were met with brutal force by the security apparatus. Public sentiments around diplomacy with the West are much more negative than when the nuclear deal was first agreed. The Trump experience has given ammunition to hardline camps inside Iran to argue the US will never negotiate in good faith.
If Biden adopts a gung-ho approach to renegotiating the deal, instead of honoring America's international commitments, Iranian proponents for talks won't have a leg to stand on.
In reality, the leverage argument is a fig leaf for a continued maximum pressure policy that has backfired on US security interests. It produced an expanded Iranian nuclear program and escalation in the Middle East. If Biden is seen to be holding back from sanctions relief to drive a hard bargain, Tehran will likely continue to build up leverage of its own.
In response to the November assassination of a top Iranian nuclear scientist, widely suspected to have been perpetrated by Israel, Iran passed legislation that could restrict international oversight of its nuclear facilities if Western sanctions aren't eased by late February. Iran's leap to 20% uranium enrichment this month signals it is not bluffing. Unless Iran's leaders see early signs that Washington is serious about a deal, they are likely to escalate further.
Iran has also been explicit that it will not renegotiate the nuclear agreement or broaden it to restrict Iran's regional activities or missile capabilities. While Iranian officials have not shut the door to wider diplomacy with the West, the implementation of the nuclear deal is clearly a necessary prelude to any broader negotiations.
As such, Biden should focus on a two-step approach toward diplomacy with Iran. First, the US and Iran should agree on technical steps required for mutual compliance with the nuclear deal, cool regional tensions and build confidence. A second step will then be for the US -- together with European allies -- to pivot toward follow-up talks that could give both Iran and the West greater benefits.
The US can keep Iran walking the path of diplomacy not by sustaining Trump's sanctions, but by reentering the deal and restoring its ability to snap sanctions back into place in the future if Iran violates its obligations or blocks follow-up talks.
By providing the sanctions relief required of the US under the nuclear deal it agreed to, the Biden administration can restore confidence that America sticks to its words as well as create an opportunity cost for Iran in the future. Today's incentives are tomorrow's leverage. And if Biden gives diplomacy with Iran a real shot, he may find he won't need that leverage after all.
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