Deal blocks every path to a nuclear weapon, says Obama
This is a sign of hope for the entire world. And we all know that this is very much needed in these times
IRAN and six world powers sealed a historic accord to curb the Islamic Republic’s nuclear programme in return for ending sanctions, capping two years of tough diplomacy with the biggest breakthrough in relations in decades.
Diplomats reached the deal in Vienna yesterday, their 18th day of talks. President Barack Obama said it blocked “every path to a nuclear weapon” for Iran, while Iranian Foreign Minister Mohammad Javad Zarif called it a “win-win” solution.
The deal’s full implementation depends on Iran meeting obligations to curb its nuclear programme and address concern about possible military dimensions of its work.
Iran has until December 15 to answer 12-year-old questions about its weapons capabilities. Once inspectors verify compliance, the oil-rich nation will be allowed to ramp up energy exports, re-enter the global financial system and access as much as $150bn in frozen assets.
“This is probably going to go down in history as one of the biggest diplomatic successes of the century,” Ellie Geranmayeh, a policy fellow at the European Council of Foreign Relations, said by phone from London.
The US Congress has 60 days to review the document in Washington, where it will meet resistance from legislators who oppose making any nuclear compromises with Iran.
Israel, which has threatened military action to prevent Iran from getting a nuclear bomb, said it would use “every means” possible to persuade the US Congress to reject it, a move Mr Obama vowed to veto. The House and Senate would each need a two-thirds majority to override a veto.
Israeli Prime Minister Benjamin Netanyahu denounced the deal as a “historic mistake”, saying “sweeping concessions were made in all areas meant to block Iran from the ability to arm itself with nuclear weapons”.
Should the agreement survive review, it would become one of the biggest foreign policy achievements for Mr Obama, who kicked off the initiative with a call to Iranian President Hassan Rouhani almost two years ago. The US cut diplomatic ties with Iran in 1980, after revolutionaries seized the US embassy in Tehran and held hostages for more than a year.
Iran agreed to cut 98% of its stockpile of enriched uranium and eliminate two-thirds of its centrifuges.
“This is a sign of hope for the entire world,” European Union (EU) foreign policy chief Federica Mogherini said in Vienna. “And we all know this is very much needed in these times.”
Relief will be phased in after December 15 if Iran complies. The United Nation’s (UN’s) International Atomic Energy Agency will negotiate access to all suspect sites, including military bases. Once UN monitors verify Iran has taken all steps to curb its nuclear activities, the US and EU will lift restrictions on most of its financial institutions except those sanctioned for terrorism or human rights abuses.
Iranian banks will be able to process transactions once again through SWIFT, the leading global financial messaging system, US officials said.
The US and EU will allow any nation to buy Iranian oil and ease curbs on trading refined products, chemicals and natural gas. Iran holds the world’s secondlargest gas reserves, after Russia.
“If Iran violates the deal, all these sanctions will snap back into place,” Mr Obama said.
The UN ban on conventional weapons imports and exports by Iran will remain in place for five years, while the UN embargo on ballistic missiles will hold for eight years, according to the draft. The unilateral US arms embargo will stay in place.
Banks including Goldman Sachs and Barclays say it would take six to 12 months for the holder of the world’s fourthlargest crude reserves to revive production by about 500,000 barrels a day.
Sanctions cut Iran’s crude exports by more than half from a peak of more than 6-million barrels a day in the 1970s.
With new oil flows expected to hit an oversupplied market, Brent, the global benchmark, fell as much as 2.1% to $56.63 a barrel and traded at $57.78 in London. Iran’s benchmark TEDPIX index, led by oil and gas companies, advanced 0.3% at the close, the highest since April.
The accord will reverberate across the Middle East, where Shiite Iran’s prominence has been growing amid a regional conflict with Sunni Muslim extremists, alarming Gulf rivals led by Saudi Arabia. Iran is a key backer of embattled governments in Iraq and Syria, and supports rebels who control Yemen’s capital, and Lebanon’s powerful Hezbollah militia.
In China, Europe and Russia, the agreement will be welcomed by companies eager to access an untapped market of 77-million people. With an economy bigger than Thailand’s and oil reserves rivalling Canada’s, Iran is the most important market that remains closed to major equity investors.
Sanctions will remain in place at least until UN monitors report on the nation’s compliance with the deal in December
A DEAL that may allow Iran to add to a global oil glut pushed energy prices lower and weakened Russia’s ruble yesterday. The pound strengthened and gilts dropped on the outlook for higher interest rates.
US oil approached $50 a barrel, dragging the Bloomberg commodity index down 0.6% in early morning trading in New York. Energy producers posted some of the biggest declines in the Stoxx Europe 600 index and the ruble weakened for a second day.
Sterling climbed to a one-week high against the dollar after Bank of England governor Mark Carney said the time for a rate increase was nearing. Chinese stocks halted a three-day rally.
Iran and world powers sealed a historic agreement to curb Iran’s nuclear programme in return for the lifting of sanctions on a timetable yet to be announced.
US Federal Reserve chairwoman Janet Yellen’s testimony from today may provide clues on the timing of any interest rate increases.
JPMorgan Chase, Wells Fargo and Johnson & Johnson were among companies reporting earnings yesterday.
“News about the imminent deal has triggered a surge of expectations and fears that Iran will turn out to be a further supply source for an oversupplied market,” said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. “But many unknowns remain, making a price slump on expectation of a swift comeback in Iranian exports overdone.”
The accord promises to end a 12-year standoff over Iran’s nuclear activities that has drawn threats of military action from the US as well as from Israell.
West Texas Intermediate oil slid 2% to $51.17 a barrel and Brent dropped 1.8% to $56.80.
Over time, the lifting of penalties would enable oil-rich Iran to ramp up its energy exports, access international finance and open the doors to global investors. But sanctions would remain in place at least until United Nations monitors report on Iran’s compliance with the deal in December, diplomats involved in the talks said yesterday.
The International Atomic Energy Agency will issue a report by December 15, said the organisation’s directorgeneral, Yukiya Amano.
The yield on 10-year gilts rose four basis points to 2.16% and the pound jumped 0.6% to $1.5575. The FTSE 100 index of stocks slipped 0.4%.
“The point at which interest rates may begin to rise is moving closer given the performance of the economy,” Mr Carney said in London.
This was “counterbalanced somewhat by disinflation”, he said.