The US has received plenty of criticism for acceding to Iran’s policy of hostage-led negotiation for which Tehran has plenty of form. But there are a number of very knowledgeable Middle East hands in President Joe Biden’s administration with significant experience in the demanding theatre of negotiations with Iran. They include Biden himself, who was Barack Obama’s vice president when the Joint Comprehensive Plan of Action (JCPOA) was negotiated and signed. So, they are neither neophytes on this issue nor naive about the risks involved in achieving an obviously humanitarian outcome in this manner. Rather, to understand why the administration took this step it’s necessary to first understand how it viewed the detainee situation as part of its broader Iran policy.

First, the security priorities of both the Obama and the Biden administrations with respect to Iran have focused on counterproliferation. The JCPOA, as flawed as it was, represented the Obama administration’s belief that only a negotiated approach to limiting Tehran’s nuclear development program could work effectively. The unilateral trashing of the agreement under Donald Trump’s presidency provided the proof, if any was needed, of what Iran could do in the absence of any negotiated constraints on its program.

By contrast, Iran’s influence-peddling and military support for regional non- and semi-state actors represents a real, but nevertheless second-order, security priority. The prevailing political and social realities in countries such as Lebanon, Syria and Iraq mean that Iranian-supported groups are significant, if not the dominant political actors, and therefore eliminating Tehran’s influence is essentially impossible. Without changing the political system of the country or the behaviour of actors in that system, constraining Iran’s behaviour, rather than eliminating its influence, becomes the achievable short- and medium-term aim.

Given this, the Biden administration’s decision to secure the hostages’ freedom and to release Iranian funds frozen in South Korea is easier to understand. The release of detainees has been high on Biden’s list of priorities. As he said in March: ‘Returning wrongfully detained and people held hostage—and particularly Americans and their families—is a top priority for this administration. And we’ll continue our work to bring home all Americans held hostage or unjustly detained.’

Nobody begrudges the fact that the detainees have been returned to the United States. Rather, the questions are whether the type of exchange that was undertaken should have been done, the price that was paid and whether this simply reinforces the utility of such a strategy in the eyes of the Iranians. The price paid was probably the least contentious—the difficulty with blanket sanctions against totalitarian regimes is that those who suffer are often the least culpable. The funds frozen in Seoul were for Iranian oil imported by South Korea that hadn’t been paid for by the time Trump imposed his unilateral sanctions.

To the Biden administration, those funds were a casualty of a Trump decision it never agreed with, so it doesn’t feel beholden to. The current agreement also requires that the disbursement of the funds will be overseen by Qatar and they will be used only for humanitarian purposes. Whether that is the case in practice will remain to be seen, but throughout all the years of sanctions against it, Tehran was still able to fund its regional activities and so the release of these funds is no game-changer.

As to whether the exchange will lead to more detentions of US citizens, it’s easy to make that argument because the logic appears straightforward. Yet the jury is out on whether this has been the case in the past (given the current detainee exchange is by no means the first of its kind).

With that in mind, the Biden administration has taken a calculated risk while it continues to warn American citizens about the risks of travelling to Iran and the fact that Washington can’t guarantee their return if they are detained.

On the question of whether this swap should have been done (outside of the obvious benefit for the freed detainees), one must understand it as part of the broader counterproliferation policy of the Obama and now the Biden administrations.

If one accepts that the JCPOA was effective in limiting Iran’s nuclear program and the Trump policy of ‘maximum pressure’ achieved the exact opposite, then a negotiated limit to Iran’s nuclear program is the only real way to achieve meaningful counter-nuclear-proliferation outcomes with Tehran. And to get to the negotiating table, viewing the detainee swap as a preliminary step to such an outcome makes a lot of sense.

There has been media reporting that Iran’s supreme leader has given approval for direct talks with the US on the issue, though both countries have denied this report. Whether the restart of negotiations is possible therefore remains up in the air.

The Biden administration likely thinks the prisoner swap was worth trying as the only way of achieving its broader non-proliferation goal. But if it doesn’t establish the conditions for future negotiations, at least five people are no longer detained in Iranian prisons.

Despite media reporting last month that an agreement enabling the US to rejoin the Iran nuclear deal was close, negotiations have stalled. What’s not clear, at least publicly, is why. Are there lingering differences over previously identified issues, new demands or side effects of Russia’s invasion of Ukraine?

In early February, before the Russian invasion began, well-informed and reliable reporting claimed that both sides expected to resolve the remaining sticking points, and that the US would rejoin the nuclear agreement (officially the Joint Comprehensive Plan of Action or JCPOA) very soon. The implication was that it would all be done in less than a month. But more than a month has now passed.

Although specifics of the negotiations have not officially been made public, two major points of contention were likely: agreement on which sanctions would be lifted and establishment of a process to verify that sanctions had, in fact, been lifted.

Iran wanted sanctions lifted across three categories: those directly related to the JCPOA; those indirectly identifiable with the agreement (such as sanctions allegedly rebadged under other pretexts, including human rights, to blur the direct relationship); and unrelated sanctions imposed for other reasons on individuals (such as the Iranian leadership), organisations (such as the Islamic Revolutionary Guard Corps (IRGC), which the US designated as a foreign terrorist organisation in 2019) and businesses (such as those in defence industries).

It’s unlikely for domestic political reasons that the US could, or would, cede many, if any, concessions on the unrelated sanctions, but there’s scope for progress on the first category and for some inroads on the second.

As for verification of the lifting of sanctions, Russia’s invasion of Ukraine should enable that to be quickly tested. An immediate indicator would be the readiness of the West, especially the Europeans, to pay hard cash for Iranian oil and gas in order to reduce the large shortages they’re now experiencing due to sanctions on Russia.

The Iranians have no known new demands. They had sought to include a new clause in the agreement that would have prohibited a member country from unilaterally withdrawing, as the US had done in 2018 under Donald Trump’s administration. Iran wanted this because the Republicans had made it clear that they’d rip up any new nuclear agreement if they won the US presidency in 2024. Former vice president Mike Pence confirmed that publicly on 8 March during a visit to Israel. My understanding is that Iran dropped this demand given the political and legal realities.

The only new card on the table was an apparent optimistic attempt by Russia earlier this month to leverage the nuclear negotiations to exempt bilateral trade with Iran from Russian sanctions. The tactic was firmly rejected by the US and Western allies, and Iran. Iran’s foreign minister, Hossein Amirabdollahian, stated clearly on 15 March that ‘developments in Ukraine’ (Russia’s invasion and related sanctions) wouldn’t have an impact on the nuclear negotiations.

A subsequent Russian ‘clarification’ on ‘written assurances’ was interpreted as a reference to existing Russian JCPOA-related contracts, which include importing Iran’s excess enriched uranium and spent nuclear fuel. Senior US White House and State Department officials indicated last week that if Russia resumed those imports, related contracts would be exempt from sanctions. That effectively put the issue to bed.

The only possible wild card in the pack was an Iranian missile strike against what Tehran said was an Israeli operational base in Erbil in northern Iraq on 8 March. Some Western media initially reported it as an attack on a new US consulate in Erbil. Had that been the case, the US would have immediately denounced the attack and ceased all nuclear negotiations. It didn’t. The IRGC publicly took responsibility for the attack, claiming the target was a Mossad base responsible for mounting physical attacks and other operations against Iran. It was also described as retaliation for recent lethal Israeli attacks against IRGC personnel in Syria.

Senior Iranian embassy officials in Canberra, who described the attack as ‘defensive’, claimed the Mossad compound was adjacent to the US consulate for both ‘cover’ and protective reasons, hence the misunderstanding. They didn’t know if the Iraqi government knew beforehand of the Mossad base’s existence.

However, the absence of any protest or other action by the US, or comment by Israel, suggests the target was Israeli, not the US, and the long-running, covert Israeli–Iranian grey-zone conflict shouldn’t directly affect negotiations.

This strongly suggests the negotiations have stalled over one or two strong sticking points that could be resolved if the political will is there.

The Iranians are aware that the Republicans’ stated intention to again scrap the JCPOA if they win the White House in 2024 is a major deterrent to most foreign investors, and there won’t be the flood of investment and reinvestment Iran is hoping for if sanctions are lifted. That means Iran doesn’t see Europe as a reliable trading partner. Iran sees its economic stability in the foreseeable future to be conditioned by its relationship with member states of the Shanghai Cooperation Organisation. China is expected to remain Iran’s major trading partner and investor, especially in transport infrastructure supporting its Belt and Road Initiative. India is likely to be another significant investor, again primarily in transport infrastructure, supporting its interests in the International North–South Transport Corridor linking India to Europe.

Both routes include transit through Russia, so how sanctions mighty affect routing and profitability remains to be seen.

Despite the limited benefits of a rejuvenated JCPOA, in my opinion they are certainly worth the effort, if the will is there and related compromises are politically acceptable. The short-term benefits should include access to frozen funds and other assets and the opportunity to reposition them. The agreement should also enable investment and reinvestment in key infrastructure, including petroleum and transport. Exploitation of the increased European and global demand for Iranian oil, gas and related products will be a major source, however short term, of much-needed foreign revenue.

Shortages of oil and gas due to sanctions on Russia are expected to be long term, so Iran should benefit from related global dependency on its resources. Potentially, that could provide Iran with leverage to negotiate the lifting of other contentious US and European sanctions.

The eighth round of negotiations to resurrect the 2015 Iran nuclear deal (the Joint Comprehensive Plan of Action, or JCPOA), which resumed in Vienna in mid-February, is looking likely to be the decisive one. It seems all that’s left is approval from Washington and Tehran for an agreement to be reached.

From the beginning, the talks were a clash between completely opposite negotiation styles.

On the US side, President Joe Biden promised to restart diplomacy to ‘strengthen and extend’ the JCPOA. Later, it turned out that American officials were aiming for a limited ‘less for less’ agreement. Now the US’s goals appear to have been downgraded to reaching any deal, at almost any cost, so the administration can close the Iran file and focus on the immense challenges from China and Russia.

On the other side of the table, Tehran has presented tough and uncompromising positions from day one. The Iranians’ negotiating tactics could be described as those of ‘hard bargainers’.

In their book Beyond winning: negotiating to create value in deals and disputes, legal experts Robert Mnookin, Scott Peppet and Andrew Tulumello describe the negotiation techniques used by ‘hard bargainers’.

Typical of such hard bargainers, Iran introduced extreme demands and offered minimal concessions in return. Tehran insisted on immediate removal of most, if not all, sanctions to enable free and unobstructed Iranian oil exports and the swift flow of revenues into the regime’s coffers. Other Iranian preconditions for a deal were a US guarantee not to impose new sanctions or to reimpose previously lifted sanctions and a promise that no future US administration would ever withdraw from a new agreement—both impossible demands for political and legal reasons in the US.

Tehran also chose a slow pace of talks—constantly pausing negotiations and inviting the other parties to lure it back to the negotiating table—in an effort to gradually wear down the Americans and Europeans into bending to Iran’s maximalist demands.

Aware of Biden’s eagerness to quickly reach a deal, Iranian President Ibrahim Raisi taunted Washington by pessimistically stating on 11 February that Iran didn’t ‘pin any hopes on Vienna and New York’.

All the while, the Iranians kept rejecting requests from US officials who were virtually begging them to hold direct talks to seal a deal. Supreme Leader Ayatollah Ali Khamenei in 2018 forbade direct negotiations with the US following President Donald Trump’s decision to withdraw from the JCPOA, and since then the Iranians have been speaking only to European negotiators.

Tehran’s persistently rigid stance reaped success. The Americans were first to cave in, allowing South Korea to use sanctions-frozen Iranian funds to pay Tehran’s debt to the UN. Meanwhile, dialogue between Tehran and Seoul resumed on restarting oil sales from Iran and releasing US$7 billion of Iranian funds held frozen in Korea. Then Washington lifted secondary sanctions on parts of Iran’s nuclear program, allowing non-American companies to redesign nuclear facilities such as the Arak heavy-water reactor and the Fordow enrichment plant, remove nuclear materials such heavy water from Iran, and service the Bushehr nuclear power plant.

Now, judging by leaks from Vienna, a deal is imminent, with the Iranians having achieved most of their stated goals. According to the agreement’s draft, the US will begin gradually removing sanctions within a few days of signing the deal, while Iran will offer mostly reversible token steps in return. A mechanism is being discussed to shield Iran’s economy and nuclear program from possible future reinstatement of sanctions.

Prior to an agreement, a prisoner-swap deal is expected in which Iran would be rewarded with hefty undisclosed sums for its cruel tactic of jailing Westerners on trumped-up charges to be used as hostages.

Tehran reportedly wants an agreement by the Iranian New Year on 20 March. This may sound symbolic, but in fact the timing may be intended to prevent a strong condemnation of Iran when the International Atomic Energy Agency’s board of governors convenes within a few weeks. The IAEA is expected to again publish damning reports about Tehran’s ongoing cat-and-mouse games with UN inspectors.

Reports suggest that, at least initially, Iran would limit uranium enrichment to 5% (above the JCPOA 3.67% cap), but would resume 60% enrichment—very close to military grade—if it judges that the US is not meeting its expectations regarding the deal.

One thing is certain: much of the progress in Iran’s nuclear program over the past two years—for example, in enriching uranium to military-grade levels and producing uranium metal—is irreversible and a return to the JCPOA framework is impossible.

Iran’s drive towards nuclear-threshold status is not merely a bargaining chip for the Vienna talks; it is the prime target of the regime. Tehran’s actions amount to a slow ‘breakout’ towards the bomb, in an effort to secure the regime’s survival.

A new deal, if reached, would likely leave Iran in a position to amass enough highly enriched fissile material for at least one nuclear bomb within weeks.

A new agreement is also not expected to tackle Iran’s ballistic-missile capabilities or its development of a warhead to carry a nuclear payload over long distance. Nor will it likely address Tehran’s lack of cooperation with the IAEA’s many years’ long investigation into its illegal atomic weapons activities.

Worse, the sanctions would release huge funds to the regime that could be spent on terror operations, subversion across the region and oppression of the Iranian people. It would provide crucially needed oxygen to the failing tyranny in Tehran, ensuring its likely survival for years to come.

Taking all this into account, a ‘no agreement’ option—featuring continuing pressure on, and containment and isolation of, Iran—looks far less damaging than a modified, weaker nuclear deal that would allow Iran to enjoy a huge financial windfall while scoring legitimacy to continue racing towards a nuclear bomb.

In a qualifying match last November for the 2022 soccer World Cup, Iran trailed Lebanon 0–1 at the end of the scheduled 90 minutes. On social media, sceptical Iranians were getting ready to blame their team’s imminent defeat on Iran’s hardline leaders, who supposedly wanted to lose the match in order to please Iran’s Lebanese proxy, Hezbollah. But in the four minutes of stoppage time, Iran scored two goals to secure victory.

Today, the clock is ticking for Iran’s leaders in the high-stakes negotiations in Vienna aimed at reviving the 2015 nuclear deal. According to their American counterparts, at least, they are not showing the requisite urgency.

But it was former US president Donald Trump who unilaterally withdrew in 2018 from the Joint Comprehensive Plan of Action (as the 2015 deal is formally known) and reimposed harsh economic sanctions on Iran. Despite the crushing blow, Iran remained in the agreement for another 14 months before increasing its nuclear enrichment level beyond the limits set by the JCPOA.

After six weeks of talks in Vienna, even reports of slow progress helped spark a 10% rebound in Iran’s currency, the rial, which had fallen to new lows late last year when the negotiations started badly. But prospects are slim that the parties will reach a deal before the US and Europe lose patience with Iran’s rapid march towards weapons-grade enrichment.

Failure in Vienna would jeopardise peace across the Middle East. Israel is trying to slow down Iran’s nuclear program, which directly threatens its regional hegemony, but its acts of sabotage and assassinations may trigger a wider regional conflict that could drag in the US.

Iran’s need for respite from sanctions is equally urgent, because its hardline president, Ebrahim Raisi, must deliver on his promise of economic growth. Annual inflation has been running at 44% since Raisi’s election in June 2021. In the absence of new revenue from oil exports, his administration won’t be able to jump-start the economy without pushing inflation higher. Iranians, whose living standards have declined to the level of 20 years ago, are thus nervously waiting for good news from Vienna.

In particular, the risk that the United Nations will reimpose its own pre-JCPOA sanctions—and thus tighten the economic siege of Iran—hangs over Raisi’s presidency like a sword of Damocles. But, for practical and ideological reasons, Raisi’s team brought new demands to Vienna, setting aside the framework that his predecessor, Hassan Rouhani, had agreed to last June before the talks recessed.

Iranian hardliners believe that the 2015 accord suffered from two fundamental defects. The first flaw, exposed by Trump, was the asymmetry in the respective prices paid by Iran and the US for America reneging on the deal. The US has refused to pledge that, should it rejoin the JCPOA, it won’t leave the agreement again in the future. The fact that US officials repeat a long list of potential reasons for sanctioning Iran—including the country’s poor human-rights record, missile arsenal and regional proxy forces—makes compromise even more difficult.

The JCPOA’s second defect was apparent during the presidency of Barack Obama, who had signed the agreement. Foreign firms hesitated to trade with or invest in Iran, fearing that the US might still prosecute and fine them under non-nuclear sanctions.

With no clear solution to these problems in sight, Iran has tried to raise the cost of any future US exit. It frustrated US negotiators by waiting for five months (from June to November) before starting the current round of Vienna talks, and refuses to seat its delegation in the same room with the Americans. Iran has also continued to enhance its nuclear enrichment, reducing the time it needs to make a bomb from one year under the JCPOA to a few weeks today. Whether these steps will result in a more advantageous agreement for Iran is doubtful.

In any case, some hardliners believe that Iran’s economic malaise is essentially domestic and can thus be cured even with US sanctions in place. The country’s import dependence and banking crisis, they argue, should be fixed before entering nuclear negotiations, because greater economic resilience would do more for Iran than a deal reached from a weak position. This is the logic behind Iran’s ‘resistance economy’, as well as Raisi’s campaign pledge not to tie the country’s economic fate to the JCPOA.

Other Iranian hardliners think a rising regional power with strict Islamic values will gain little from engaging with the West. They see the current nuclear standoff as an opportunity to redirect Iran’s economy eastward, including through long-term partnership agreements with China and Russia.

But Raisi’s ambitious promises of new jobs and housing will be impossible to fulfill if the economy fails to recover. The government’s predicament is reflected in the proposed budget for 2022–23, which assumes that US sanctions will continue and is the most contractionary in years. While total government expenditure is set to increase by 9.6%, inflation is likely to reach 40% this year. Wages and salaries are expected to rise by 10%, resulting in a 30% decline in the real incomes of more than three million public-sector workers.

With Iran’s main pension funds in the red and having to draw on public money to stay afloat, another six million retirees also may face a loss of real income. It is therefore a rare week when teachers or pensioners are not protesting against economic austerity.

Perhaps Raisi’s deepest fear is of repeating the singular failure of former president Mahmoud Ahmadinejad, a fellow conservative and hardliner, whose negligence regarding international concerns about Iran’s nuclear program led the UN to impose sanctions in 2010. A desire to avoid presiding over their return may be Raisi’s strongest incentive to reach a compromise in Vienna.

Against this backdrop, the recent statement by Iran’s supreme leader, Ayatollah Ali Khamenei, that negotiating with the enemy doesn’t amount to surrender may be just the signal that Iranian nuclear negotiators need to reach a deal in the few weeks left to play ball before the final whistle.

Negotiations between Iran and the United States on Iran’s nuclear activities are set to resume on 29 November. But while many will welcome this development, they should bear in mind that the talks are unlikely to succeed. And even if they do, any agreement won’t resolve Iran’s push for regional primacy—or for nuclear weapons.

First, some history. In 2015, Iran and the US, along with China, France, Germany, Russia, the European Union and the United Kingdom, entered into the Joint Comprehensive Plan of Action (JCPOA), an agreement that reduced Iran’s stockpile of uranium, the level to which it could enrich its uranium, and the number of centrifuges it could operate. Extensive international inspections were put in place. Iran pledged never to develop nuclear weapons.

Experts estimated that these arrangements meant Iran would need up to a year to produce nuclear weapons if it chose to do so and that inspectors would likely catch it in the process. Most of the constraints central to the 2015 accord, however, included ‘sunset’ provisions, meaning they expire over a 10- to 15-year period.

Once those restrictions disappeared, Iran would need considerably less time to develop a full-fledged nuclear-weapons program. Still, billions of dollars of Iranian funds were unfrozen following the signing of the JCPOA, and Iran was given considerable relief from extensive economic sanctions.

Iran chose to comply with the JCPOA. Nevertheless, three years later, in 2018, under President Donald Trump, the US unilaterally exited the accord, which Trump described as ‘horrible’ and ‘one of the worst and most one-sided transactions’. He then imposed a new set of draconian sanctions. Shortly thereafter, Iran moved to keep international inspectors at a distance and steadily edged closer to being in a position to produce nuclear weapons. There is strong evidence that it has enriched sufficient uranium to near the level that one or more weapons would require.

Under President Joe Biden, the US has expressed its desire to re-enter the pact (negotiated while Biden was vice president) and has urged Iran to do the same. With a new president of its own, Ebrahim Raisi, in place, Iran has declared its readiness to do so, but only if the Trump-era sanctions are first rescinded. If the negotiations lead both sides back into the JCPOA, it would buy close to a decade of limits on Iran’s nuclear program in exchange for lifting many but not all of the economic sanctions.

But there are problems with this scenario. First, lifting sanctions would make it easier for Iran to acquire financial resources that would allow it to do more of what it is already doing to undermine stability in Yemen, Syria, Iraq, Lebanon, Gaza and elsewhere in the region. Such activity was not restrained by the 2015 accord.

Second, there’s no reason to believe that Iran would ever sign on to a ‘longer, stronger’ nuclear deal (a JCPOA 2.0) that placed more severe constraints on its nuclear program for a longer period. Nor is there reason to believe that Iran a decade hence will be fundamentally different in its political makeup or in what it seeks.

This brings us to another flaw with reviving the JCPOA: Iran could re-enter the 2015 agreement and, while complying with it, accelerate production of ballistic missiles (not covered by the pact) and, after 2030, dramatically expand its stockpile of enriched uranium. It could also carry out relevant weapons development in hidden locations that would build on what it has learned in the past few years—activity that could augment the quality and quantity of any nuclear weapons should it decide to pursue them.

The question is not if, but when, we reach this juncture: in months if the negotiations fail, or in less than a decade if they succeed. An Iran allowed to field nuclear weapons or get close to such a point (becoming a threshold nuclear-weapons country) would likely be even more aggressive in its efforts to shape the region in its image.

At the same time, an Iran with nuclear weapons or the capacity to produce them in days or weeks could prompt one or more of its neighbours—most likely Saudi Arabia, Egypt or Turkey—to follow suit. It would put a conflict-riven region on a hair trigger.

The alternative is to replace formal diplomacy with something less formal—call it tacit diplomacy or arms control without agreements. The US and other concerned governments (including Israel) would communicate to Iran the limits to their tolerance regarding its nuclear capacity.

If Iran were to cross those quantitative or qualitative red lines, it would pay a substantial price. In addition to increased sanctions, it could expect cyber as well as conventional military attacks on nuclear facilities and possibly targets of economic and military value.

This course also wouldn’t be without risks and costs. There’s no guarantee that such attacks would succeed, given that Iran could and would go to great lengths to protect important elements of its nuclear program and reconstitute them if necessary. And Iran would also have the option to retaliate with a range of instruments and against targets of its own choosing throughout the region and the world.

All of this implies difficult choices for the US. Biden and his successors might have to consider participating in or condoning attacks on Iran. They might also need to pledge that the US would retaliate against any Iranian threat or use of nuclear weapons, much as the US does for its allies in Europe and Asia against Russia and China. Both Trump and Biden made clear their desire to reduce American military involvement in the Middle East. Because of Iran, making good on that aim looks increasingly unlikely.