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After Iran’s nuclear pact, Iranian state firms win most foreign deals

A staff member removes the Iranian flag from the stage after a group picture with foreign ministers and representatives of Unites States, Iran, China, Russia, Britain, Germany, France and the European Union during the Iran nuclear talks at the Vienna International Center in Vienna, Austria

By Yeganeh Torbati, Bozorgmehr Sharafedin and Babak Dehghanpisheh

WASHINGTON (Reuters) – When world powers agreed in 2015 to lift sanctions on Iran in return for curbs on its nuclear program, the deal’s supporters in the United States, Europe and Tehran hoped renewed trade and investment could boost Iran’s private sector and weaken the state’s hold on the economy.

But a Reuters review of business accords reached since then shows that the Iranian winners so far are mostly companies owned or controlled by the state, including Iran’s Supreme Leader, Ayatollah Ali Khamenei.

Of nearly 110 agreements worth at least $80 billion that have been struck since the deal was reached in July 2015, 90 have been with companies owned or controlled by Iranian state entities, the Reuters analysis shows.

U.S. President-elect Donald Trump, who takes office on Friday, has threatened to scrap the accord, which came into force in January 2016. In Iran, Khamenei and other anti-Western hardliners have repeatedly criticized it because they are concerned it would open the door to Western involvement in Iran’s economy. The accord also promises to dominate Iran’s presidential elections due in May. Khamenei’s criticism has helped hardliners undermine President Hassan Rouhani, who supported the deal, as he tries to win a second term.

No matter what hardliners have said about the nuclear pact, though, the Reuters analysis shows that businesses which answer ultimately to the Supreme Leader stand to gain from it. This could help shield the accord from its Iranian critics, according to one analyst.

“Iran’s leaders have probably calculated that ensuring politically connected businesses benefit from sanctions relief will protect the deal,” said Richard Nephew, a former U.S. negotiator with Iran on the deal and now a scholar at Columbia University.

Officials at Iran’s mission to the United Nations and Rouhani’s office did not respond to requests for comment. No one at Khamenei’s office could be reached.

WINNERS

The Reuters analysis drew on interviews with company officials, statements by Iranian, European and Asian companies, Iranian news reports, ownership data from the Tehran Stock Exchange, filings with Iran’s official company registry and statements by the U.S. Treasury.

Many deals are preliminary agreements with no published financial value. The deals span energy, infrastructure, pharmaceuticals, and other key sectors. South Korean, Italian, French, German, and Russian companies have signed the most.

The review found that beneficiaries of the nuclear pact include Setad Ejraiye Farman-e Hazrat-e Emam, also called EIKO, an organization overseen by Khamenei with stakes in nearly every sector of Iran’s economy. It found companies in which entities controlled by Khamenei have a large or majority stake, including those that are part of the economic empire of the Islamic Revolutionary Guard Corps (IRGC), have struck at least nine foreign deals worth more than $11 billion in the last 18 months.

Setad said in a statement to Reuters that Iran’s private sector “is reluctant to make large and long-term investments.” Setad and groups like it “create a favorable atmosphere for investment, private-sector development, and the downsizing of the government,” it said. The IRGC declined to comment.

The state dominates Iran’s economy, so state-controlled firms were always likely to win most business after sanctions were lifted. Iranian officials estimate that the private sector makes up only 20 percent of Iran’s economy.

In Iran, “you make money if you’re close to the centers of power,” said Ali Ansari, an Iran scholar at the University of St. Andrews in Scotland. “The economy hasn’t been restructured or reorganized. You’re recycling wealth through the elite.”

Only 17 deals have gone to private companies, by Reuters’ tally. These include a hotel management pact between France’s AccorHotels and Tourism Financial Group, a large conglomerate. Its chief executive is the brother of Iran’s vice-president, Eshaq Jahangiri.

Tourism Financial Group and AccorHotels did not respond to requests for comment on the deal.

Counter to the hopes of supporters of the nuclear accord, the initial wave of investment looks likely to further strengthen the power of the state, including Khamenei, whose power far surpasses Rouhani’s. Supreme Leader since 1989, the cleric controls the judiciary and security forces and the Revolutionary Guards, which direct Iran’s military efforts in Syria and Iraq.

Most sanctions on Iran were lifted under the nuclear accord, so there is no suggestion any partners doing business in the country after the agreement would be breaking any laws.

A U.S. State Department spokesman said the nuclear deal “solves a specific problem, which is making sure that they don’t possess a nuclear weapon … We are not standing in the way of legitimate, permissible business with Iran.”

SUPREME LEADER

Of the 90 deals signed between foreign firms and Iranian state-controlled or state-owned entities, 81 were with companies controlled by Iran’s elected government. These include entities such as the National Iranian Oil Company, large semi-public conglomerates whose top executives are chosen by ministers, and companies owned by government pension funds.

Though Iran holds regular elections and the president has sway over much domestic policy, Khamenei has the final word on state matters, including through his constitutional authority over institutions such as the Guardian Council, which vets candidates hoping to run for office.

Five of the 90 deals went to conglomerates or foundations whose leaders Khamenei directly appoints. These entities – several of which have vast business activities but which Iranian officials have said do not pay full tax – include the religious institution Astan-e Qods-e Razavi, whose economic arm lists 36 subsidiary companies and institutes on its website.

One of them is Razavi Oil and Gas Development Co., which agreed in April to discuss developing a gas field with Saipem, an Italian oil and gas company. A Saipem spokeswoman said it was a preliminary agreement. Officials at Razavi did not respond to requests for comment.

Another winner in this category is Setad. A 2013 investigation by Reuters found Setad built an empire worth about $95 billion on the seizure of thousands of properties belonging to religious minorities, business people, and Iranians living abroad.

In 2013, the U.S. Treasury sanctioned Setad, calling it a “major network of front companies controlled by Iran’s leadership.” The nuclear deal lifted sanctions, allowing foreign companies to do business with the conglomerate.

Reuters identified three deals between foreign companies and Setad units, including the proposed construction of a $10 billion oil refinery.

The other two deals were with Barakat Pharmed, a Setad-owned pharmaceutical company. Nasrallah Fathiyan, a Barakat official, told Reuters that Khamenei doesn’t own Barakat, but that “his supervision is basically guiding all of this investment.” Some of Barakat’s profits, Fathiyan said, go to Setad’s charity arm.

Setad said it is independent, and its income goes toward “economic empowerment, building houses for the underprivileged, building schools and cultural centers” and other activities to help the disadvantaged in Iran.

REVOLUTIONARY GUARDS

Four of the 90 deals with government entities involve firms in which the Revolutionary Guards have large or controlling stakes. Khamenei, as commander in chief, ultimately controls the IRGC.

Even after the nuclear deal, some U.S. sanctions remain in place. These state that foreign companies which knowingly conduct “significant” transactions with the Revolutionary Guards, or other sanctioned Iranian entities, risk penalties. The sanctions effectively banish those targeted from the global financial system.

However, many companies in which the IRGC has an interest are not blacklisted. Three of the four deals Reuters found with IRGC-linked companies are with non-sanctioned Iranian companies that are wholly or significantly owned by the IRGC. A fourth IRGC company is still on the sanctions list and is indirectly involved in one foreign deal.

Sanctions lawyers say the fine print of the remaining U.S. sanctions allows foreign companies to continue to deal with some IRGC-held firms indirectly.

A Treasury spokeswoman declined comment on individual deals, but said a transaction by foreigners with a company in which the IRGC or another sanctioned entity had a “passive, minority” stake “is not necessarily sanctionable.” The foreign party should ensure the deal does not involve a sanctioned entity, she said.

“At a policy level I think this is a gap that needs to be closed,” said Peter Harrell, a former State Department official who helped develop sanctions against Iran. “As problematic and troubling as some of these deals may appear to be from a policy perspective, on the face of it, there’s not a strict legal problem.”

(Additional reporting by Isla Binnie and Crispian Balmer in Rome, Stephen Jewkes in Milan, Seoul bureau, Vladimir Soldatkin in Moscow, Georgina Prodhan in Frankfurt, Brenda Goh in Shanghai and Aizhu Chen in Beijing; Edited by Sara Ledwith and Richard Woods)

U.S. says Navy ship fired warning shots at Iranian vessels

By Idrees Ali

WASHINGTON (Reuters) – A U.S. Navy destroyer fired three warning shots at four Iranian fast-attack vessels after they closed in at a high rate of speed near the Strait of Hormuz, two U.S. defense officials told Reuters on Monday.

The incident, which occurred Sunday and was first reported by Reuters, comes as U.S. President-elect Donald Trump prepares to take office on Jan. 20. In September, Trump vowed that any Iranian vessels that harass the U.S. Navy in the Gulf would be “shot out of the water.”

The officials, speaking on the condition of anonymity, said the USS Mahan established radio communication with the Islamic Revolutionary Guard Corps boats but they did not respond to requests to slow down and continued asking the Mahan questions.

The Navy destroyer fired warning flares and a U.S. Navy helicopter also dropped a smoke float before the warning shots were fired.

The Iranian vessels came within 900 yards (800 meters) of the Mahan, which was escorting two other U.S. military ships, they said.

The IRGC and Trump transition team were not immediately available for comment.

Years of mutual animosity eased when Washington lifted sanctions on Tehran last year after a deal to curb Iran’s nuclear ambitions. But serious differences still remain over Iran’s ballistic missile program as well as conflicts in Syria and Iraq.

One official said similar incidents occur occasionally.

Most recently in August, another U.S. Navy ship fired warning shots towards an Iranian fast-attack craft that approached two U.S. ships.

In January 2016, Iran freed 10 U.S. sailors after briefly detaining them in the Gulf.

The official added that the warning shots fired on Sunday were just one of seven interactions the Mahan had with Iranian vessels over the weekend, but the others were judged to be safe.

(Reporting by Idrees Ali; Editing by Mohammad Zargham, Chizu Nomiyama and Paul Simao)

Iran to work on nuclear-powered boats after U.S. ‘violation’ of deal

By Bozorgmehr Sharafedin

BEIRUT (Reuters) – Iran’s President Hassan Rouhani ordered scientists on Tuesday to start developing systems for nuclear-powered boats, in reaction to what he called the United States’ violation of a global atomic deal.

The announcement marked Iran’s first concrete response to a U.S. Congress decision last month to extend legislation making it easier for Washington to reimpose sanctions on Tehran.

Rouhani described the technology as a “nuclear propeller to be used in marine transportation,” but did not say whether that meant just ships or possibly also submarines. Iran said in 2012 that it was working on its first nuclear-powered sub. http://reut.rs/2gVr80g

His words will stoke tensions with Washington, already heightened by comments from U.S. president elect Donald Trump who has vowed to scrap the deal, under which Iran agreed to curb its nuclear activities in exchange for lifted sanctions.

There was no immediate reaction from the Vienna-based International Atomic Energy Agency, which monitors Iran’s nuclear work.

“The United States has not fully delivered its commitments in the Joint Comprehensive Plan of Action (the nuclear deal),” Rouhani wrote in a letter published by state news agency IRNA.

“With regards to recent (U.S. congress) legislation to extend the Iran Sanctions Act, I order the Atomic Energy Organization of Iran to … plan the design and construction of a nuclear propeller to be used in marine transportation to be used in marine transportation.”

U.S. Congress members have said the extension of the bill does not violate the nuclear deal agreed last year to assuage Western fears that Iran is working to develop a nuclear bomb. The act, Congress added, only gave Washington the power to reimpose sanctions on Iran if it violated the pact.

Washington says it has lifted all the sanctions it needs to under the deal between major powers and Iran.

But Iran’s Supreme Leader, Ayatollah Ali Khamenei said last month that the extension was a definite breach and Iran would “definitely react to it”.

Iran always argued its nuclear program was for peaceful purposes.

(Reporting by Bozorgmehr Sharafedin; Additional reporting by Shadia Nasralla in Vienna; editing by John Stonestreet and Andrew Heavens)

Looking ahead to Trump presidency, Netanyahu refocusses on Iran

Israel's Prime Minister Benjamin Netanyahu participates in a forum hosted by the Center for American Progress in Washington November

By Jeffrey Heller

JERUSALEM (Reuters) – Israel’s Benjamin Netanyahu has resumed his attacks on a nuclear deal with Iran, seeking Donald Trump’s help to smash a cornerstone of the Obama administration’s foreign policy legacy.

Following up on remarks he made this month to a Washington think tank, the conservative Israeli prime minister said on CBS’s “60 Minutes” on Sunday “there are ways, various ways of undoing” last year’s accord.

The Republican president-elect is also no fan of the deal between Iran and six world powers under which Tehran agreed to suspend a suspected drive to develop atomic weapons in return for a lifting of most sanctions against it.

During the U.S. election campaign, Trump called the pact – against which Netanyahu lobbied long and hard – a “disaster” and “the worst deal ever negotiated”. But he has also said it would be hard to overturn an agreement enshrined in a U.N. resolution.

Asked if he had any ideas on how to unravel the deal, Netanyahu said on the television program: “Yeah, I have about five things in my mind”. Pressed for specifics, he said: “I’ll talk about it with President Trump.”

That discussion will likely take place soon after Trump’s Jan. 20 inauguration. Shortly after the election, Netanyahu said he and Trump had agreed to meet at the first opportunity.

Scrapping the deal would, at the very least, be complicated.

“It’s difficult to see the advantage for the U.S. in abrogating the deal at this stage,” said Jacob Parakilas, an expert on U.S. foreign policy at Chatham House, a London-based think tank.

“It would be nearly impossible to convince Europe, Russia and China to restore their sanctions on Iran in the absence of clear evidence of Iranian violations of the deal. So any sanctions the U.S. restored would have much less impact on the Iranian economy,” he said.

Yair Lapid, an Israeli opposition leader, said he doubted whether the deal could be undone given “the Chinese, Russians and Europeans are already in Iran signing deals”, and he said any discussion on it should take place “behind closed doors”.

In the run-up to Trump’s inauguration, Netanyahu has been laying the groundwork for a closer relationship with Trump.

The two met in September on the sidelines of the U.N. General Assembly in New York, when the Israeli leader also held talks with Democratic presidential candidate Hillary Clinton. A week after the election, Netanyahu sent his U.S. ambassador, Ron Dermer, to see the president-elect and his transition team.

Dermer hailed Trump as “a true friend of Israel”.

CHEMISTRY

Netanyahu has used similar language to describe Obama, but the superlatives have done little to mask a lack of personal chemistry and a relationship strained by policy differences over Iran and Jewish settlement on occupied land.

In recent months, however, Netanyahu had largely refrained from attacking the Iran deal as Israel finalised a 10-year, $38 billion military aid package with the Obama administration.

Nearly a year ago, the commander of Israel’s armed forces, Lieutenant-General Gadi Eisenkot, offered a nuanced view of a deal that Netanyahu had dubbed a historic mistake. The agreement, Eisenkot said in a speech, presented many risks but also “many opportunities”.

Trump, himself, could also face opposition from within his new administration to cancelling the Iran deal.

James Mattis, the former general who Trump said he intends to nominate as secretary of defence, has called for strict enforcement of the agreement but stopped short of calling for its abrogation.

“It may be possible in time to build up support for a multilateral restoration of sanctions,” Parakilas said. “But at the moment that’s just not really the case – and ending U.S. participation in the deal right now would make it more, not less, difficult.”

Last year, before the agreement was signed, Netanyahu angered the White House by addressing the U.S. Congress, where he argued that the deal would pave Iran’s path to nuclear arms.

Three years earlier, he famously held up a cartoon bomb at the United Nations, drawing a red line just below a label reading “final stage” to a nuclear device.

But Netanyahu seemed to backtrack in the interview.

Asked if Iran, which has denied seeking atomic weapons, would move quickly towards a bomb if the agreement was undone, Netanyahu said that was not the case prior to its signing.

“I think Iran didn’t rush to the bomb before there was a deal,” he said.

“Really?” his questioner asked.

“No, because they were afraid of retribution,” Netanyahu said.

(Editing by Luke Baker and Alison Williams)

Netanyahu to discuss ‘bad’ Iran deal with Trump, Kerry stresses settlements

By Jeffrey Heller and Arshad Mohammed

JERUSALEM/WASHINGTON (Reuters) – Israeli Prime Minister Benjamin Netanyahu said on Sunday he would discuss with Donald Trump the West’s “bad” nuclear deal with Iran after the U.S. president-elect enters the White House.

Speaking separately to a conference in Washington, Netanyahu and U.S. Secretary of State John Kerry clashed over the Iran deal and Israel’s settlement construction on the occupied West Bank, which Kerry depicted as an obstacle to peace.

During the U.S. election campaign, Trump, a Republican, called last year’s nuclear pact a “disaster” and “the worst deal ever negotiated”. He has also said it would be hard to overturn an agreement enshrined in a U.N. resolution.

“Israel is committed to preventing Iran from acquiring nuclear weapons. That has not changed and will not change. As far as President-elect Trump, I look forward to speaking to him about what to do about this bad deal,” Netanyahu told the Saban Forum, a conference on the Middle East, in Washington, via satellite from Jerusalem. Trump takes office on Jan. 20.

Netanyahu has been a harsh critic of the nuclear deal, a legacy foreign policy achievement for Democratic President Barack Obama. But he had largely refrained from attacking the pact in recent months as Israeli and U.S. negotiators finalised a 10-year, $38 billion military aid package for Israel.

Before the nuclear agreement, Netanyahu, a conservative, strained relations with the White House by addressing the U.S. Congress in 2015 and cautioning against agreeing to the pact.

The Obama administration promoted the deal as a way to suspend Tehran’s suspected drive to develop atomic weapons. In return, Obama agreed to lift most sanctions against Iran. Tehran denies ever having considered developing nuclear arms.

Under the deal, Iran committed to reducing the number of its centrifuges by two-thirds, capping its level of uranium enrichment well below the level needed for bomb-grade material, reducing its enriched uranium stockpile from around 10,000 kg to 300 kg for 15 years, and submitting to international inspections to verify its compliance.

“The problem isn’t so much that Iran will break the deal, but that Iran will keep it because it just can walk in within a decade, and even less … to industrial-scale enrichment of uranium to make the core of an arsenal of nuclear weapons,” Netanyahu told the forum.

‘NO, NO, NO AND NO’

Appearing later in person, Kerry defended the deal, arguing its monitoring provisions provided the ability to detect any significant uptick in Iran’s nuclear programs, “in which case every option that we have today is available to us then.”

Kerry pushed Israel to rein in construction of Jewish settlements on West Bank land it occupied in a 1967 war that the Palestinians want for a state. He also bluntly rejected the idea advanced by some Israelis that Israel might make a separate peace with Arab nations that share its concerns about Iran.

“No, no, no and no,” Kerry said. “There will be no advance and separate peace with the Arab world without the Palestinian process and Palestinian peace.”

On settlements, Kerry said: “There’s a basic choice that has to be made by Israelis … and that is, are there going to be continued settlements … or is there going to be separation and the creation of two states?”

The central issues to be resolved in the conflict include borders between Israel and a future Palestinian state, the future of Jewish settlements in the West Bank, which most nations regard as illegal, the fate of Palestinian refugees and the status of Jerusalem.

(Additional reporting by Larry King; Editing by Peter Cooney)

Iran warns of retaliation if U.S. breaches nuclear deal

By Bozorgmehr Sharafedin

BEIRUT (Reuters) – Extending U.S. sanctions on Iran for 10 years would breach the Iranian nuclear agreement, Iran Supreme Leader Ayatollah Khamenei said on Wednesday, warning that Tehran would retaliate if the sanctions are approved.

The U.S. House of Representatives re-authorized last week the Iran Sanctions Act, or ISA, for 10 years. The law was first adopted in 1996 to punish investments in Iran’s energy industry and deter Iran’s pursuit of nuclear weapons.

The Iran measure will expire at the end of 2016 if it is not renewed. The House bill must still be passed by the Senate and signed by President Barack Obama to become law.

Iran and world powers concluded the nuclear agreement, also known as JCPOA, last year. It imposed curbs on Iran’s nuclear program in return for easing sanctions that have badly hurt its economy.

“The current U.S. government has breached the nuclear deal in many occasions,” Khamenei said, addressing a gathering of members of the Revolutionary Guards, according to his website.

“The latest is extension of sanctions for 10 years, that if it happens, would surely be against JCPOA, and the Islamic Republic would definitely react to it.”

The U.S. lawmakers passed the bill one week after Republican Donald Trump was elected U.S. president. Republicans in Congress unanimously opposed the agreement, along with about two dozen Democrats, and Trump has also criticized it.

Lawmakers from both parties said they hoped bipartisan support for a tough line against Iran would continue under the new president.

President-elect Trump once said during his campaign that he would “rip up” the agreement, drawing a harsh reaction from Khamenei, who said if that happens, Iran would “set fire” to the deal.

The House of Representatives also passed a bill last week that would block the sale of commercial aircraft by Boeing <BA.N> and Airbus <AIR.PA> to Iran.

The White House believes that the legislation would be a violation of the nuclear pact and has said Obama would veto the measure even if it did pass the Senate.

(Reporting by Bozorgmehr Sharafedin, editing by Larry King)

U.N. nuclear watchdog criticises Iran for overstepping deal limit

An Iranian flag flutters in front of the International Atomic Energy Agency (IAEA) headquarters in Vienna, Austria,

VIENNA (Reuters) – Iran must stop repeatedly overstepping a limit on its stock of a sensitive material set by its landmark deal with major powers, the U.N. nuclear watchdog said on Thursday.

The International Atomic Energy Agency (IAEA), which is policing the deal, said in a report last week that Iran had slightly exceeded the 130-tonne soft limit on its stock of heavy water for a second time since the deal was put in place in January.

Officials from the six other countries that signed the deal, including the United States, have expressed frustration over the breach and said the limit should be seen as firm.

Iran’s overstepping of the 130-tonne threshold also raises questions about how U.S. President-elect Donald Trump – who has strongly criticized the deal and said he will “police that contract so tough they (the Iranians) don’t have a chance” – would handle any similar case once he takes office.

“It is important that such situations should be avoided in future in order to maintain international confidence in the implementation of the JCPOA,” IAEA chief Yukiya Amano said in the text of a speech to his agency’s Board of Governors, using the acronym for the deal’s full name, the Joint Comprehensive Plan of Action.

Last week’s report said Amano had expressed “concerns” to Iran over its stock of heavy water, a material used as a moderator in reactors like Iran’s unfinished one at Arak, which had its core removed and made unusable under the deal.

The agreement places restrictions on Iran’s atomic activities – monitored by the IAEA – in exchange for the lifting of international sanctions against the Islamic Republic.

Rather than setting a strict limit on heavy water as it does for enriched uranium, the deal estimates Iran’s needs to be 130 tonnes and says any amount beyond its needs “will be made available for export to the international market”.

“Iran has … made preparations to transfer a quantity of heavy water out of the country,” Amano said, without saying when the transfer would take place. “Once it has been transferred, Iran’s stock of heavy water will be below 130 metric tonnes.”

(Reporting by Francois Murphy; Editing by Gareth Jones)

Iran says has options if nuclear deal fails

BRATISLAVA (Reuters) – Iran wants all parties to stick to an international nuclear deal but has options if that does not happen, its foreign minister said on Thursday after the U.S. election victory of Donald Trump, who has vowed to pull out of the pact.

“Of course Iran’s options are not limited but our hope and our desire and our preference is for the full implementation of the nuclear agreement, which is not bilateral for one side to be able to scrap,” Foreign Minister Mohammad Javad Zarif said.

President Barack Obama’s outgoing administration touted the July 2015 deal reached between Iran and six world powers as a way to pre-empt Tehran’s suspected drive to develop atomic weapons by curbing its enrichment of uranium. In return Obama, a Democrat, agreed to a lifting of sanctions on Iran.

The Republican Trump called the nuclear pact a “disaster” and “the worst deal ever negotiated” during his election campaign and said it could lead to a “nuclear holocaust”.

The accord removed sanctions in return for Iran reducing the number of its uranium-enrichment centrifuges by two-thirds, capping its level of uranium enrichment well below the level needed for bomb-grade material, reducing its enriched uranium stockpile, and accepting U.N. inspections to verify compliance.

“Our strong preference as a party that has remained fully committed and implemented its side of the bargain (…) is for every member and participant and for international community to continue to remain committed to the agreement,” Zarif a news conference in Bratislava after meeting his Slovak counterpart Miroslav Lajcak.

“But it doesn’t mean we don’t have other options if the USA unwisely decides to move away from its obligations under the agreement,” he said when asked whether Tehran would start enrichment again if the Trump administration ditched the deal.

When asked whether he hoped for a similarly good working relationship with Trump’s future secretary of state as he had with the outgoing John Kerry, Zarif said it would not be necessary.

“We had a long nuclear negotiation between Iran and the United States. I do not expect another negotiation, certainly not on the nuclear issue, but nor on any other subjects so that I would need to establish a same type of contact with the new secretary of state, whoever that may be,” he said.

Former U.S. House of Representatives speaker Newt Gingrich – who has said he would renegotiate the nuclear deal with Iran, has been floated as a potential secretary of state under Trump, political sources said.

(Reporting by Tatiana Jancarikova; editing by Mark Heinrich)

Trump election puts Iran nuclear deal on shaky ground

By Yeganeh Torbati

WASHINGTON (Reuters) – Donald Trump’s election as president raises the prospect the United States will pull out of the nuclear pact it signed last year with Iran, alienating Washington from its allies and potentially freeing Iran to act on its ambitions.

Outgoing President Barack Obama’s administration touted the deal, a legacy foreign policy achievement, as a way to suspend Tehran’s suspected drive to develop atomic weapons. In return Obama, a Democrat, agreed to a lifting of most sanctions.

The deal, harshly opposed by Republicans in Congress, was reached as a political commitment rather than a treaty ratified by lawmakers, making it vulnerable to a new U.S. president, such as Trump, who might disagree with its terms.

A Republican, Trump ran for the White House opposing the deal but contradictory statements made it unclear how he would act. In an upset over Democrat Hillary Clinton, Trump won on Tuesday and will succeed Obama on Jan. 20.

A businessman-turned-politician who has never held public office, Trump called the nuclear pact a “disaster” and “the worst deal ever negotiated” during his campaign and said it could lead to a “nuclear holocaust.”

In a speech to the pro-Israel lobby group AIPAC in March, Trump declared that his “Number-One priority” would be to “dismantle the disastrous deal with Iran.”

He said he would have negotiated a better deal, with longer restrictions, but somewhat paradoxically, he criticized remaining U.S. sanctions that prevent American companies from dealing with Iran.

By contrast, he has conceded it would be hard to destroy a deal enshrined in a United Nations resolution. In August 2015, he said he would not “rip up” the nuclear deal, but that he would “police that contract so tough they don’t have a chance.”

Iran denies ever having considered developing atomic weapons. But experts said any U.S. violation of the deal would allow Iran also to pull back from its commitments to curb nuclear development.

Those commitments include reducing the number of its centrifuges by two-thirds, capping its level of uranium enrichment well below the level needed for bomb-grade material, reducing its enriched uranium stockpile from around 10,000 kg to 300 kg for 15 years, and submitting to international inspections to verify its compliance.

‘DIVISIVE DEAL’

“Say goodbye to the Iran deal,” said Richard Nephew, a former U.S. negotiator with Iran now at Columbia University.

“There is very little likelihood that it stays, either because of a deliberate decision to tear it up by Trump, or steps that the U.S. takes which prompt an Iranian walk back.”

The spokesman of the Atomic Energy Organization of Iran, Behrouz Kamalvandi, was quoted as saying by Tasnim news agency: “Iran is prepared for any change,” adding that Iran would try to stand by the deal.

The nuclear deal was divisive in Iran, with hardliners opposed to better relations with the West arguing that pragmatist President Hassan Rouhani was giving up too much of the country’s nuclear infrastructure for too little relief.

Rouhani said on Wednesday the U.S. election results would have no effect on Tehran’s policies, state news agency IRNA quoted him as saying. [nL8N1DA46H]

Some of Washington’s closest Middle East allies have been skeptical of the nuclear deal. Israeli Prime Minister Benjamin Netanyahu has been outright hostile. Gulf leaders say the deal has emboldened Iran’s pursuit of regional hegemony in part through support for proxy groups fueling regional conflicts.

Iranian Supreme Leader Ali Khamenei, whose power supersedes that of Rouhani, regularly criticizes the United States and says it should not be trusted, but ultimately assented to the terms of the deal, known by its acronym JCPOA.

KHAMENEI BIG WINNER

“The big winner in the aftermath of a Trump victory is Iran’s Supreme Leader,” said Suzanne Maloney, a foreign policy expert at the Brookings Institution.

“He will have the most cartoonish American enemy, he will exult in the (hopefully brief) crash of the American economy, and he will be able to walk away from Iran’s obligations under the JCPOA while pinning the responsibility on Washington.”

Further complicating any Trump effort to renegotiate the deal is that it is a multilateral agreement involving U.S. allies in Europe as well as fellow world powers Russia and China. European and Asian firms have been returning to Iran and making major investments there, meaning the United States would likely be alone in pulling out of the deal, possibly isolating it from its partners.

On Wednesday, the head of gas, renewables and power for French oil and gas company Total TOTF.PA in Iran said Trump’s election would have no impact on investments [nP6N1CW004].

Khamenei has already promised to “set fire” to the nuclear deal if the West violates it. Iran has repeatedly complained it has not received benefits promised. Though European companies have been eager to explore business prospects in Iran, few deals have been enacted in part because European banks have been reluctant to finance deals involving Iran.

“As to whether he can negotiate a ‘better’ deal, it takes two (or seven) sides to agree to begin that process, something I rate as highly unlikely,” said Zachary Goldman, executive director of the Center on Law and Security at New York University and a former U.S. Treasury official.

“And if we walk away from the deal I think we will be in the worst of all worlds – Iran will feel freed from its commitments and we may be blamed for the deal falling apart.”

(Additional reporting by Bozorgmehr Sharafedin in Beirut; Editing by Yara Bayoumy and Howard Goller)

Iran’s Khamenei says U.S., ‘evil’ Britain can’t be trusted

Iran's Supreme Leader Ayatollah Ali Khamenei

By Parisa Hafezi

ANKARA (Reuters) – Iranian Supreme Leader Ayatollah Ali Khamenei said on Friday Tehran had no intention of cooperating on regional issues with its main enemies, the United States and “evil” Britain.

Khamenei also accused Washington of not being committed to a nuclear deal reached between Tehran and six major powers, including the United States, in 2015 that aims to curb the country’s disputed nuclear program.

Under the agreement, economic sanctions were lifted in January after Iran suspended sensitive nuclear work that the West suspects was aimed at creating a nuclear bomb. Iran denies seeking a nuclear bomb.

Inflation, unemployment and other economic hardships persuaded Khamenei to support President Hassan Rouhani on the nuclear question aimed at improving the parlous state of Iran’s economy.

“America has continued its enmity toward Iran since (the 1979 Islamic) revolution … It is a huge mistake to trust evil Britain and the Great Satan (the United States),” Khamenei said in a speech broadcast live on state TV.

“We will not cooperate with America over the regional crisis,” he said, adding that: “Their aims in the region are 180 degrees opposed to Iran’s.”

Relations with Washington were severed after Iran’s 1979 Islamic revolution and enmity to the United States has always been a rallying point for hardliner supporters of Khamenei in Iran.

Tehran and Washington have common interests and threats across the Middle East. They have cooperated tactically in the past, including when Tehran helped Washington counter al Qaeda in Afghanistan and Islamic State militants (IS) in Iraq.

The United States and its allies in the Middle East accuse Iran of supporting terrorism and interfering in the affairs of regional states, including Syria, Yemen and Iraq.

Tehran is Syrian President Bashar al-Assad’s main regional ally and has provided military and economic support to his fight against rebel groups and IS.

Following the end of the sanctions on Iran, the country has started to increase trade with the West. But some U.S. sanctions remain and U.S. banks remain prohibited from doing business with Iran directly or indirectly because Washington still accuses Tehran of supporting terrorism and human rights abuses.

“They use human rights, terrorism … as pretexts to avoid fulfilling their commitments,” Khamenei said.

“If we remain strong and united and revolutionary, those who are trying to bully Iran and are against us will not succeed,” he told a gathering to commemorate the anniversary of the death of the revolution’s founder, Ayatollah Rouhollah Khomeini, in 1989.

Iran has repeatedly urged Washington to do more to remove obstacles to the banking sector.

Khamenei, whose hostility toward Washington holds together Iran’s faction-ridden leadership, said Iran should “remain cautious in its economic interaction with the West”.

(Writing by Parisa Hafezi; Editing by Gareth Jones)

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