IEEJ：April 2015

○ｃ IEEJ 2015

Special Bulletin

A Japanese Perspective on the International Energy Landscape (213)

April 3, 2015

Agreement Reached on Framework for Comprehensive Resolution of Iran Nuclear
Development Problem
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn April 2, the five United Nations Security Council permanent members and Germany,
known as the P5+1, and Iran announced they agreed on a framework for the comprehensive
resolution of Iran's nuclear development problem. The Lausanne agreement, named after the Swisscity where their negotiations took place, lists various conditions to limit Iran's nuclear development
including (1) restricting and curbing uranium enrichment, (2) dismantling and converting theFordow uranium enrichment facility, (3) redesigning a heavy water reactor in Arak to bar theproduction of weapons grade plutonium, and (4) Iran’s acceptance of strict inspections by theInternational Atomic Energy Agency. Under the framework agreement, Iran will receive sanctions
relief in exchange for its acceptance and implementation of the above conditions.

Iran's uranium enrichment developed into an international problem immediately after its
revelation in 2002. It became an even more serious problem as an IAEA report in 2011 noted that theIranian nuclear energy research was similar to a nuclear weapon development program. Militaryattack options to prevent Iran's nuclear development became a media topic, and the Iran problem
was positioned as one of the most significant geopolitical risks in the Middle East. The problem wascombined with the Arab Spring democratic movements to destabilize the Middle East, triggering
crude oil price hikes. Western countries then toughened financial sanctions on Iran and embargoes
on Iranian oil, dealing a severe blow to the Iranian economy.

Both Iran and Western countries then stuck to their respective basic stances on the nuclear
development problem, sustaining confrontational attitudes. As Iran launched a conciliatory approach
following the inauguration of the Hassan Rouhani administration in August 2013 and the U.S.
Obama administration grew keener about attaining a resolution to the Iran nuclear problem as aforeign and security policy achievement, the way was paved for efforts to resolve the problem by adiplomatic approach. In November 2013, the Geneva agreement for restricting Iran's uranium
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IEEJ：April 2015

○ｃ IEEJ 2015enrichment and freezing Western economic sanctions on Iran came as the first step to resolving theproblem, leading to negotiations toward a comprehensive resolution. The six-month deadline for thenegotiations was extended twice, with Iran and the P5+1 group pursuing a final agreement at the endof June this year. They produced the Lausanne agreement through difficult negotiations to set theframework for the final resolution in June. Negotiators including U.S. Secretary of State John Kerryand Iranian Foreign Minister Mohammad Javad Zarif held energetic talks beyond the March-end
deadline for the framework agreement.

The Lausanne agreement includes some specific Iranian actions to be put into the final
agreement: (1) reducing the number of centrifuges for enriching uranium from about 19,000 atpresent to 5,060 for actual operation, (2) limiting the uranium content of low-enriched uranium forproduction with these centrifuges to 3.67% for 15 years, (3) reducing Iran’s current stockpile ofabout 10 tons of low-enriched uranium to 300 kilograms, (4) building no new facilities for thepurpose of enriching uranium for 15 years, (5) enriching uranium only at the Natanz facility and (6)refraining from enriching uranium at the Fordow facility and from producing plutonium in Arak.
These actions are designed to reduce Iran’s production capacity for weapons grade nuclear materials
from one bomb per two to three months at present to one bomb per more than one year at least overthe next 10 years. It is important that strict inspections are planned to secure the purpose. If Iranianactions are implemented as agreed, a significant brake may be put on Iran’s nuclear development. In
this sense, the Lausanne agreement indicates a realistic choice based on the realities of Iran’s nuclear
development status.

Iran will not lose all nuclear development capabilities nor close any nuclear facility under
the agreement. It will be allowed to continue limited research and development of thenext-generation centrifuges in line with its insisted demand. If Iran’s implementation of these actions
is confirmed, it will pave the way for Western countries to ease or lift economic sanctions that haveplagued the Iranian economy. The Lausanne agreement thus represents appreciable achievements
both for Iran and the P5+1 group.

As a matter of course, the Lausanne agreement is positioned as a framework for thecomprehensive resolution of the problem. Iran and the P5+1 group will have to agree on technicaland other details regarding the actions in the framework toward the end of June. At the same time,these countries will have to secure their respective domestic understanding of and support for theframework. It may not be so easy for them to do so while nailing down the details toward the end ofJune. The Lausanne agreement could invite repercussions from U.S. Middle East allies Israel andSaudi Arabia, leading the United States and other P5+1 group members to deal with the agreement
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IEEJ：April 2015

○ｃ IEEJ 2015as a diplomatic problem linked to their respective domestic politics. For the next three months to theend of June, we may have to closely watch discussions and negotiations on the final resolution ofIran’s nuclear development problem as one of the most important issues that would influenceinternational politics, geopolitics in the Middle East and international energy problems.

Contact: report@tky.ieej.or.jp
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