House of Commons - Foreign Affairs

Select Committee on Foreign Affairs Fifth Report

2 IRAN'S NUCLEAR PROGRAMME

7. Iran's ambition to develop a nuclear programme has dominated its relationship with the international community following the exposure of its secret facilities by an opposition group in 2002.[4] Iran claims that its nuclear development is for civil purposes, but this claim has inspired little confidence in Western capitals. In our predecessor Committee's Report on Iran, published in 2004, it concluded that Tehran had been "developing covertly a nuclear threat capability".[5] In light of recent developments and new intelligence, this chapter first considers the progress Iran has made on its nuclear programme and examines the evidence on how long it would take Iran to develop a nuclear threat capability should it wish to do so. In the second half of this chapter, we assess the effectiveness of the international community's diplomacy in halting or modifying Iran's nuclear programme.

Iran's Nuclear Development

8. Iran's civil nuclear programme is not new. It dates back as far as 1959, when the Shah, Mohammad Pahlavi, acquired a research reactor from the United States. Dr Frank Barnaby writes that the Shah ratified the Nuclear Non-Proliferation Treaty (NPT) in 1970, established Iran's Atomic Energy Agency, and planned to construct up to 23 nuclear power stations by the turn of the millennium with the assistance of the US. The first plant was to be constructed at Bushehr by a German firm. The revolution that replaced the Shah with the Islamic Republic of Iran brought an end to Western cooperation for Iran's nuclear activities, although Iran would later sign a contract with Russia in which the latter would complete work on the Bushehr plant (this cooperation continues to this day).[6]

9. In 2002, the National Council of Resistance of Iran (NCRI), an opposition group, publicly exposed the existence of a uranium enrichment site at Natanz, and the construction of a heavy water plant at Arak, which, once operational, would be capable of producing plutonium.[7] Neither of these activities is illegal per se as Article IV of the NPT sets out the "inalienable right" of all States Parties to develop, research and produce nuclear energy for peaceful purposes.[8] However, Iran had concluded a comprehensive Safeguards Agreement with the International Atomic Energy Agency (the UN body that monitors nuclear activity and supervises compliance of the NPT) in 1974 under which it was required to be transparent about its facilities.[9] In November 2003, the Director-General of the IAEA, Mohamed ElBaradei, stated that "Iran has concealed many aspects of its nuclear activities, with resultant breaches" of its reporting obligations under its Safeguards Agreement.[10]

10. As the British American Security Information Council (BASIC) states, international concern was heightened by the fact that the facilities at Natanz and Arak were 'dual use'—i.e. that they "could be used in civil or military programmes".[11] Another NGO, the Verification Research, Training and Information Centre (VERTIC), argues in its written submission that "what's the point of hiding the country's activities if there is no mala fides?", noting Iran's counter-argument that the reluctance of the West to engage with it forced it to rely on the secret underground network of the rogue Pakistani scientist Abdul Qadeer Khan.[12] Iran also defended itself by arguing it is bound by a religious decree that prevents Islamic countries developing, producing or using nuclear weapons.[13] It should be noted, however, that Pakistan, a Muslim country, possesses such weapons.

URANIUM ENRICHMENT

11. Uranium enrichment lies at the heart of much of the analysis of Iran's nuclear programme, and (as discussed later in this chapter), the UN Security Council has, without success, asked Iran to suspend its activities on this front. The fuel enrichment plant at Natanz is regarded as 'dual use' because enriched uranium can be used in both civil and military nuclear programmes. As Dr Barnaby explained to us, natural uranium contains 0.7% of the isotope uranium 235. The enrichment of uranium in a gas centrifuge plant such as the one at Natanz increases this percentage. Dr Barnaby told us that, for the purposes of a civil nuclear programme, a level of around 3.5% uranium 235 is required. Uranium used in a nuclear weapons programme needs to be enriched to 93% (sometimes referred to as highly enriched uranium or HEU). Whilst the gap between 0.7% and 3.5% is, in percentage terms, much smaller than the gap between 3.5% and 93%, Dr Barnaby warned:

The energy required to enrich from the natural 0.7% to 3.5% is some 80% of the energy required to make weapons-grade material. So, if you can make nuclear fuel, that is a big step towards making weapons-grade material.[

12. In its November 2007 Report on Iran's nuclear programme, the IAEA stated that the level of uranium enrichment at Natanz was at roughly the level required to produce reactor fuel for a civil nuclear programme. It also stated that Iran had completed the installation of eighteen 164-machine cascades at its fuel enrichment plant, and that uranium had been fed in to each one.[15] This provides for 2,952 operational centrifuges. BASIC notes "3,000 centrifuges running for long periods without breakdown could be enough to produce enough fissile material for one nuclear bomb within a year", should Iran choose to do so.[16] Dr Kim Howells, the Minister of State responsible for Iran at the FCO, told us that Tehran had not yet mastered this technology:

[T]he Iranians, like many others who have tried, have had a lot of difficulty with this centrifugal system. The centrifugal cascades are not easy to operate. The engineering has to be incredibly precise, and I doubt whether there has ever been a nation on Earth that has tried it that has not experienced great problems with it.

He further argued that "3,000 centrifuges sounds a lot, but it is not in fact an awful lot, if you want to produce sufficient quantity to be able to engineer an atomic bomb. You need more than that."[17] VERTIC notes that Iran has announced its intention to install over 50,000 centrifuges at Natanz.[18] However, Mark Fitzpatrick, the Senior Fellow for Non-Proliferation at the International Institute for Strategic Studies, says it is "unknown" whether Iran could produce this many centrifuges "indigenously", given the IAEA's uncertainty over its access to materials and technology.[19] We will consider how the uncertainty over Iran's ability to expand its programme at Natanz affects the international community's diplomatic options later in this Report.

13. In December 2007, the United States National Intelligence Council released an unclassified report into Iran's nuclear weapon intentions and capabilities. It calls its National Intelligence Estimates the "most authoritative written judgments" by the entire US intelligence community. In this document, it argues that centrifuge enrichment "is how Iran probably could produce enough fissile material for a weapon, if it decides to do so." It also highlights the continued "significant technical problems" at Natanz. Its two conclusions on Iran's enrichment capabilities are:

We judge with moderate confidence that the earliest possible date Iran would be technically capable of producing enough HEU for a weapon is late 2009, but that this is very unlikely.

This corresponds with Dr Howells' assessment that "the Iranians have a long way to go before they get the enrichment process right."[21] However, Mr Fitzpatrick warns that once Iran is able to master the technical difficulties, it could

14. On our visit to Iran, we heard from a number of interlocutors that Iran's intention is to enrich uranium to a low level for use in its nuclear power plants. BASIC's written evidence is sceptical about this claim, noting that there is as yet no finished reactor to load nuclear fuel.[23] This argument was reinforced by Dr Howells when he appeared before us:

Mr Fitzpatrick argues that Iran's eagerness to "put the centrifuge cascades in place as quickly as possible" likely reflected its desire "to establish a better bargaining position and to be able to portray technological progress to its population."[25]

15. It is clear that Iran's declared nuclear activities at Natanz could provide Iran with a path towards weapons-grade uranium in the coming years. Another possible route towards HEU would be the use of covert enrichment facilities. As we discuss below, Iran agreed an Additional Protocol with the IAEA in 2003, giving inspectors greater access to its nuclear activities.[26] Since 2006, it has refused to implement the Additional Protocol, which has left the Agency unable, in its own words, "to provide credible assurances about the absence of undeclared nuclear material and activities in Iran."[27] Mr Fitzpatrick comments that an unreported facility "cannot be totally ruled out", but notes that "no evidence has surfaced pointing to a parallel, covert facility."[28] The 2007 US National Intelligence Estimate concluded "with moderate confidence" that Iran would likely use covert facilities rather than its declared facilities to enrich uranium, and notes that Iran was probably engaged in such activity before 2003, but that they were halted in that year and "probably had not been restarted through at least mid-2007."[29]

OTHER ACTIVITIES OF CONCERN

16. Uranium enrichment is not the only route towards producing the fissile material for a nuclear weapon. In its memorandum to the Committee, the FCO comments that the heavy water research reactor being constructed at Arak would be "eminently suitable for producing weapons-grade plutonium." Iran claims that the facility only has peaceful purposes such as the production of radioisotopes for medical care.[30] BASIC notes that Iran has restricted the access of IAEA inspectors to verify design work at the plant, and argues that the work at Arak "has been overlooked" by the West's focus on uranium enrichment.[31] The US National Intelligence Estimate judged with "high confidence" that Tehran would not be able to produce and reprocess enough plutonium for a nuclear weapon until about 2015.[32] Elahe Mohtasham notes that once fully operational, the plant would be able to produce enough plutonium for one or two weapons a year.[33]

17. As Mr Fitzpatrick notes, "producing fissile material is not all that is necessary to produce a nuclear weapon" as such a weapon must also be "deliverable". He states that there are "few hard facts" that Iran has worked on "weaponization". The most "damning" evidence includes missile design plans that could accommodate objects with the characteristics of a nuclear implosion weapon, which were handed over by a defector.[34] Iran also possesses a 15-page document describing how to cast uranium metal into hemispherical forms (the IAEA has said its relates to "the fabrication of nuclear weapons components"). Iran claims this document was provided unsolicited from the AQ Khan network.[35] Again, the US National Intelligence Estimate judged with "high confidence" that Iran halted the work it was carrying out on "nuclear weapon design and weaponization work" in 2003 and that it had not restarted this programme as of mid-2007.[36] Some have suggested this high-profile conclusion was only made public because America's intelligence community was "anxious" about how its findings were used following the controversies surrounding the Iraq war.[37]

18. The FCO's submission noted Iran was testing the Shahab 3 missile based on North Korean technology.[38] It is capable of striking Israel and Riyadh, as the map below illustrates.

Iran's Strategic Weapons Programme

Source: Iran's Strategic Weapons Programmes © IISS

Dr Howells noted Iranian claims that it can deliver "a payload, which presumably they are claiming is heavy enough for a very substantial bomb of some sort or other." However, he said they "need a lot more technology and it is not easy to engineer" a missile capable of delivering a nuclear weapon.[39] The FCO notes that "Iran has made no secret of its aspiration to develop a satellite launch vehicle capability" and notes that it could use this technology to test systems for "longer-range and intercontinental ballistic missiles" by "the end of the decade".[40] In February 2008, Iran fired a rocket from its newly inaugurated space centre, laying the groundwork for what it says will be the future launch of its first domestically produced satellite. Russian Deputy Foreign Minister, Aleksandr Losyukov, was quoted by news agencies as saying the test "adds to general suspicions of Iran regarding its potential desire to build nuclear weapons". He noted that long-range missiles "are one of the components of such weapons. That causes concern."[41]

NUCLEAR WEAPON POTENTIAL

19. In the section above, we have outlined a number of key concerns about Iran's nuclear programme. Iran may be able to produce fissile material at its overt facility in Natanz, or it may choose to restart a covert uranium enrichment programme. Its facilities at Arak, once completed, could also be used to develop weapons-grade plutonium. As Mr Fitzpatrick argues, "producing fissile material […] is the hardest part of developing a nuclear bomb", and that "at a minimum, Iran is keeping open the option to develop nuclear weapons." He emphasises that Iran's weapons programme, which the National Intelligence Estimate judged Iran has suspended, "can be saved for a rainy day, to be picked up again at some future point."[42] Indeed, the NIE concluded that it "does not know" whether Iran intends to resume its programme. It stated:

20. Mr Fitzpatrick refers to the November 2007 Report by Dr ElBaradei which notes Iran's cooperation with the IAEA as "reactive", not "proactive".[44] Its slowness to cooperate and its current unwillingness to implement the Additional Protocol makes it more difficult for the international community to be certain that Iran's activities are not directed towards developing a nuclear weapons programme. Indeed, when Dr Howells gave evidence to the Committee at the end of November, he commented that much of his assessment relied on "instinct" rather than "intelligence".[45] Unanswered questions about Iran's previous nuclear activities remain a cause for concern.

21. Though Iran's President Mahmoud Ahmadinejad presented the National Intelligence Estimate's conclusions as a "declaration of victory for the Iranian nation", the document itself does not provide a satisfactory level of confidence that Iran will not move towards producing a nuclear weapon in the future.[46] Dr Howells wrote to us to make "very clear" that the report would not alter the Government's policies. He stressed that,

22. BASIC assesses that Iran is likely positioning itself to establish a 'breakout' nuclear weapons capability, which it defines as "the ability to manufacture a nuclear device within a short period of time by virtue of its non-military nuclear technical capabilities and assets." It suggests that if Iran reaches this breakout position, it would be on a par with states such as Brazil and Japan, although it notes that both these countries remain in good standing with the international community.[48]

23. We conclude that, whilst Iran's suspension of an active nuclear weapons programme since 2003 is welcome, its continued enrichment activities and questions over its previous conduct mean its potential to develop such a programme remains. We further conclude that although technological constraints are likely to prevent Iran from developing a nuclear weapon, if that is its intention, in the near future, there is nevertheless a strong possibility that it could establish a 'breakout' nuclear weapons capability by 2015.

International Engagement

24. We now turn to consider the history of international engagement over Iran's nuclear programme, in order to assess what policies are likely to achieve the end of persuading Iran not to develop a nuclear weapons capability. We cover the evolution of the E3 negotiating group (France, Germany and the UK) to the E3+3 (including the US, Russia and China), and establish the current areas of dispute between Iran and the international community. After considering the influence of Iran's domestic politics and its role in the region in the next two chapters, we then turn towards the policy options facing the international community in the final chapter.

THE E3 (UP TO 2005)

25. Our predecessor Committee's 2004 Report on Iran covered the beginning of the negotiations Iran held with the UK, France and Germany on the nuclear issue in some depth. It praised the firm resolve of the three European countries and noted the confidence-building measures agreed with Iran in October 2003. These included the agreement of the IAEA Additional Protocol that would allow greater scrutiny of Iran's nuclear activities, and Tehran's decision to suspend voluntarily all uranium enrichment and reprocessing activities. However, it also noted Iran's continued failure to declare some aspects of its nuclear programme, and it argued that there was "no certainty" that the initiative would achieve success.[49]

26. As the FCO's written submission to this inquiry highlights, the October 2003 bargain with Iran required the IAEA Board not to refer its file to the United Nations Security Council for further action (which was the approach favoured by the United States). It also required "a prospect" of "opening a dialogue on a basis for longer term cooperation that would include acceptance of Iran developing nuclear power plants."[50] The memorandum outlines the complex negotiations that followed, including over the precise definition of which of Iran's activities were to be suspended. In November 2004, the E3 (by now supported by the EU Council Secretariat) secured what is referred to as the 'Paris Agreement' with Iran. Defining the suspension of specific nuclear activities, it noted:

27. The FCO writes that during the course of these negotiations, Iran was keen to resume its uranium conversion and requested the IAEA to remove the seals at its facility in Esfahan in preparation for this. The E3/EU delivered its proposal to Iran "for a long-term agreement" on 5 August 2005, before conversion activity commenced. Just three days later, Iran rejected the proposal as "an insult on the Iranian nation, for which the E3 must apologise" and began to resume conversion work. Tehran was told that the resumption of this activity undermined the Paris Agreement and negotiations came to an end.[52]

28. The FCO's written submission does not discuss the E3/EU's offer to Iran in much detail (although it sets out the text of the offer in an annex). This is surprising giving the significance of Iran's rejection of the agreement and its violation of the Paris Agreement thereafter. At the time the offer was made, BASIC characterised it as "strong on demands and weak on concrete offers." BASIC argues it,

29. When we visited Tehran, interlocutors expressed Iran's frustration that the E3/EU appeared complacent about securing a deal during the period of its suspension because they had already temporarily stopped Iran's programme. Our interlocutors claimed that this has influenced Iran's approach towards current calls for renewed suspension. We raised this issue with Antony Phillipson, the Iran Co-ordinator at the FCO. He told us that "I would agree that there is an open question about whether they [Iran] could argue that we did not offer enough" whilst Tehran maintained the suspension of its nuclear activities, and alluded to the weakness of the 2005 offer by comparing it to a "considerably improved" proposal made the following year by the E3+3 (a new grouping including China, Russia and the United States).[54] However, Dr Howells defended the 2005 offer, calling it "a perfectly reasonable package".[55]

30. BASIC notes that the 2005 offer eventually came following the election of President Ahmadinejad. His hard-line approach replaced that of his moderate predecessor Mohammed Khatami, who had appeared ready to propose relatively conciliatory measures. It notes that Ahmadinejad's election was a "turning point in relations" under which "the opportunities for compromise" diminished considerably.[56] We consider how Iran's nuclear programme relates to its domestic politics later in this Report.

31. We conclude that the E3/EU was too slow to build on Iran's suspension of enrichment activities. By failing to present a compelling offer to Tehran before the ascendancy of President Ahmadinejad, the E3/EU made reaching an agreement a much more challenging task.

THE E3+3 (FROM 2006)

32. In our 2006 Report on Foreign Policy Aspects of the War Against Terrorism, we wrote that there had been a "serious deterioration in the situation" after the relative optimism of Iran's 'suspension' period.[57] Iran's angry rejection of the E3/EU offer set the tone for more combative and confrontational diplomacy, and its decision to resume uranium conversion inevitably led to a breakdown of the Paris Agreement process whilst doing nothing to help restore confidence in Iran's peaceful purposes. The dismantling of the Paris Agreement was completed by Iran in January 2006, when it wrote to the IAEA to announce that it intended to restart enrichment activities at Natanz.[58] This was despite a unanimous IAEA Board conclusion in August 2005 that had urged Iran to "re-establish full suspension" of its enrichment-related activities.[59]

33. The FCO's written submission makes clear that up until the resumption of work at Natanz, the E3 had been careful in not forcing the issue of Iran's non-compliance with its Safeguards Agreement to the UN Security Council (the body that can impose binding resolutions and sanctions against States). However, with this latest deterioration, the E3+3 (now including all five Permanent Members of the Security Council) agreed that the IAEA Board should report Iran to the Security Council. The IAEA Board eventually agreed such a resolution in February 2006, passed with 27 positive votes to 3 negative and 5 abstentions (both Russia and China voted for the resolution and Iran's support came only from Cuba, Syria and Venezuela).[60]

34. The E3+3 agreed a 'twin-track' strategy. The FCO characterises it as follows:

On one track the US agreed to support a further offer by the E3+3 to negotiate with Iran about a mutually acceptable long term arrangement if Iran agreed to suspend enrichment activities while the negotiations took place. On the other track Russia and China agreed that, if Iran failed to take up this offer, they would support a UNSCR [Security Council Resolution] depriving Iran of the right to enrich and reprocess, and also contemplate sanctions if Iran then failed to respect that UNSCR.

Significantly, the US also agreed it would join multilateral talks with Iran if it suspended enrichment (the two countries have not had bilateral relations since the Islamic Revolution which overthrew the Shah in 1979).[61] The twin-track strategy outlined above is crucially important as, to this day, it remains the overall framework within which Iran's nuclear programme has been addressed diplomatically. The strategy also highlighted a new role for the E3 in the grouping, which was to help find agreement between the US (which favoured a tougher line against Tehran) and Russia and China (more inclined to favour a softer line).

35. The E3+3 put together a new offer to Iran in June 2006 as a basis for further negotiations. BASIC notes that it was "less demanding and included clearer incentives to Iran", but it also made clear that negotiations would only be held on the precondition that Iran resumed the suspension of its enrichment related activities.[62] The FCO states that Iran has been offered,

36. Iran failed to meet the strict deadline to respond to the offer, which led to the E3+3 successfully achieving a Security Council Resolution demanding (under Chapter VII of the UN Charter) Tehran suspends enrichment activities, giving it a deadline of one month. As the FCO notes, "this finally put a legal obligation on Iran to suspend these activities" (its previous suspension agreements had all been voluntary and went beyond Iran's obligations under the NPT).[64]

37. When it eventually arrived, Iran's response to the E3+3's offer rejected suspension as a precondition to talks. However, Dr Ali Larijani, Iran's nuclear negotiator at the time, had commented that the offer contained some "positive elements".[65] BASIC notes that whilst Iran's counter-proposal has never been made public, official Iranian declarations since then "strongly suggest" that Iran was willing to consider suspension within negotiations instead.[66] This policy appeared to still be in place in February 2007, when a Foreign Ministry spokesperson, Mohammad-Ali Hosseini, was reported by the official Iranian news agency as saying all issues, including the suspension of enrichment, could be brought up within negotiations.[67]

38. The E3+3 'twin-track' strategy remains in place. On one hand, Dr Javier Solana, the EU High Representative for Common Foreign and Security Policy (representing the E3+3), has been engaged in 'talks about talks' with his Iranian counterparts in a bid to urge them to meet the suspension precondition. On the other hand, the Security Council has passed two Resolutions (1737 in December 2006 and 1747 in March 2007) imposing limited sanctions on Iran, including the ban on the export to Iran of certain nuclear and missile related items, applying travel restrictions to a list of persons, and introducing a call on all States and international financial institutions not to enter into new commitments for grants, financial assistance and concessional loans to Iran (except for humanitarian and developmental purposes). At the same time, the Security Council has also made it clear that if Iran suspends enrichment related activities, it would suspend implementation of its sanctions measures.[68] So far, as the first section of this chapter made clear, none of these measures have succeeded in halting Iran's enrichment activities.

39. We conclude that Iran has a legal obligation established by a number of Security Council resolutions to halt its enrichment activities. We also welcome the offers of enriched uranium to Iran by Russia, deliveries of which have already commenced, and the international community. These offers are significant. We further conclude that Iran must not be allowed to develop a nuclear weapon.

THE CURRENT SITUATION

40. We now set out the current state of affairs at the UN Security Council, the European Union and within the United States, Russia and China. We also consider the current IAEA 'work plan' with Iran, and note the continued efforts of Javier Solana, as the E3+3 representative, to find a path towards restarting substantive negotiations with Iran.

Dr Solana

41. As noted above, Dr Javier Solana has represented the E3 and E3+3 in its talks with Iran's nuclear negotiators since 2003 (most recently Dr Ali Larijani and Dr Saeed Jalili). Dr Solana's task is to convince Iran to suspend its enrichment before what the FCO calls "formal negotiations" can begin.[69] In late November 2007, Dr Solana met Dr Jalili in London. Following the meeting, he said, "I have to admit that after five hours of meetings I expected more, and therefore I am disappointed". He had labelled talks in Rome five weeks prior to this meeting as "constructive".[70] Without progress on the 'carrot' side of the international community's strategy, attention has been paid elsewhere to what 'sticks' can be deployed to convince Iran to change its course.

The Security Council

42. At the time of drafting this Report, the E3+3 has agreed the contents of a draft Security Council resolution that would impose a third round of sanctions against Iran, but the contents of this draft have not yet been made public.[71] Antony Phillipson told the Committee that the UN sanctions against Iran under Resolutions 1737 and 1747 were "deliberately" limited:

The sanctions were limited, and deliberately so. As the Minister has said, they were targeted on the nuclear and missile programme because that was the issue that the UN Security Council was addressing. With regard to their effectiveness, they have had some economic effect. It has not been great or dramatic because they were not very harsh, partly so as not to allow the regime to say that we were hitting the Iranian people.

He argued, however, that they had also had a "political effect":

Paul Arkwright, the head of the FCO's counter-proliferation department, added that the current UN sanctions on Iran's nuclear technology may have slowed down its nuclear programme, whilst also making it clear that it was now illegal for states to transfer particular types of dual-use goods to Iran.[73]

43. We asked Mr Phillipson whether Russian and Chinese reluctance to endanger their business interests with Iran would limit the economic impact of UN sanctions. He replied:

At the same evidence session, Dr Howells called the current UN sanctions "pretty weak", adding, "I do not think that the UN has gone out of its way to cripple Iran by any means."[75] Despite this, Mr Phillipson stressed that it was the UK's preference for the UN to be the "principal vehicle" for sanctions as it "applies the broadest possible waterfront".[76]

The European Union

44. In implementing Security Council Resolution 1737, the EU has chosen to go beyond the sanctions imposed by the United Nations (as it is entitled to do). This includes a travel ban on a longer list of persons and adding more entities to the list of those subject to an asset freeze.[77] These were achieved through common positions agreed in February and April 2007. Mr Phillipson explained the logic behind this:

We did that in order to have the EU do its bit and also because what the Iranians try to do when they look at the international community taking action against them is to look for comfort and for people who have not taken action. The EU, acting on the back of the UN, reinforced the political message of the UN sanctions regime.

Referring to possible future sanctions, he added that,

45. The Prime Minister, Rt Hon Gordon Brown MP, has argued that the EU should go beyond merely reinforcing the UN's actions by proposing a course of action that Mr Phillipson acknowledged had "no prospect" of success in the Security Council. In his first foreign policy speech at Mansion House, the Prime Minister stated that the UK would "lead in seeking tougher sanctions both at the UN and in the European Union, including on oil and gas investment and the financial sector" (the latter taken to include export credits).[79] Despite strong support for harder sanctions by the French Government, Dr Howells admitted to the Committee that "there are obvious differences within Europe; there is no question about that."[80]

46. The main opponents to tougher EU sanctions are believed to be the Germans and Italians, who both enjoy a relatively strong economic relationship with Iran. A senior German diplomat told the International Herald Tribune, "unilateral sanctions don't make any economic sense".[81] The concern is that if sanctions are not globally enforced, the 'slack' created by European sanctions will be taken up by Chinese and Russian companies. Under this thesis, the impact of sanctions would be felt by European businesses, not by Iran, which would merely shift trading partners. We consider what role sanctions should play in resolving the crisis (including how effective they can be in changing Iran's decision-making) in the final chapter of this Report.

The United States

47. The United States Government's relationship with Iran has been consistently poor since the Islamic Revolution and the hostage crisis involving US diplomats in Tehran. In his January 2002 State of the Union Address, President George Bush labelled Iran as part of the "axis of evil" (with Iraq and North Korea), a comment that was still resented in Tehran when we visited nearly six years on. The US stance on Iran's nuclear programme has been tough. However, the US continues to contribute to the E3+3 process, and has committed to talking to Iran if it meets the precondition of suspending its uranium enrichment. Dr Howells acknowledged that the motives of the US with regards to Iran were "as complex as all of us". Whilst President Bush has refused to take the military option off the table, Dr Howells argued that "they realise that they have enough problems as it is in Iraq and Afghanistan without a new war in Iran".[82]

48. The US has long had unilateral sanctions in place against Iran. In October 2007, Secretary of State Dr Condoleezza Rice announced further sanctions, specifically targeting the elite Islamic Revolutionary Guards Corps (IRGC), which she accused of "support for proliferation". Two Iranian state-owned banks were also sanctioned due to their alleged support for proliferation. Alongside its nuclear concerns, the US also designated the Quds Force (an arm of the IRGC) as a supporter of terrorism.[83] However, at the same time as increasing the pressure on Iran, the US has also held formal bilateral talks with Iran for the first time in nearly three decades.[84] These have been held at Ambassador level in Baghdad and they have been narrowly confined to the issue of Iraq.

49. The publication of the National Intelligence Estimate in December 2007 has significantly altered the debate about Iran in the US. The Democratic response to its assessment that Iran stopped work on a nuclear weapons programme in 2003 was to call for a 'diplomatic surge' to engage with Tehran. Leading Republicans also used the document to urge against the possibility of a military strike against Iran. However, President Bush told a press conference: "Iran was dangerous. Iran is dangerous. And Iran will be dangerous if they have the knowledge necessary to make a nuclear weapon".[85]

50. US Congressmen such as the late Tom Lantos, Chairman of the House of Representatives Committee on Foreign Affairs, with whom we had discussions during our visit to Washington in October 2007, have previously sought to visit Iran but have been denied visas by Tehran.[86] Iran's reluctance to engage with these Congressmen may partly be a result of the fact that there are no diplomatic relations between the two Governments. It may also reflect anger over controversial Congressional support for regime change and democracy promotion within Iran.[87]

Russia and China

51. China and Russia make up the remaining two members of the E3+3. They both have significant economic relations with Iran. Indeed, Dr Howells told us that China was "positively slavering" at the potential market in Iran.[88] Russia and Iran enjoy the world's largest and second largest reserves of gas, and there has been talk of establishing a potential cartel. For its part, China has agreed a $100bn, 25-year gas deal with Iran.[89]

52. Russia has also assisted Iran with the construction of its nuclear reactor at Bushehr, which is due to go online by late 2008. Russia is under contract to provide the fuel for the reactor, and Iran received its first shipment of uranium fuel in December 2007. The Russian Foreign Ministry said: "All fuel that will be delivered will be under the control and guarantees of the International Atomic Energy Agency for the whole time it stays on Iranian territory." The Associated Press has noted that Russia has been protective of its relationship with Iran over Bushehr, and asked for the removal of any reference to the project in Security Council sanctions. The US, despite initially questioning the deal, appears now to support it. President Bush argued: "If the Russians are willing to do that […] the Iranians do not need to learn how to enrich." However, Iran replies that it plans to build more nuclear reactors, for which it will require further enriched uranium.[90] With regard to China, the FCO notes that it was involved at an early stage with Iran's plans for a uranium conversion facility, but that these were shelved "largely as a result of US concerns, shared to a greater or lesser extent by others."[91]

53. Russia and China have been more reluctant than others in the E3+3 to impose sanctions against Iran, but they nonetheless agreed to the two current rounds of UN sanctions. Following the publication of the National Intelligence Estimate, China's Ambassador to the UN appeared to question the need for a new round of sanctions.[92] Dr Ali Ansari told the Committee that it would be hard to predict the behaviour of Russia and China with respect to firmer sanctions but that "the Russians are unlikely to give support. It is clear that the current Iranian Government, in particular, are counting on that."[93] This presents a serious dilemma to those countries, like the UK, that are seeking much stronger action at the Security Council.

The IAEA

54. The IAEA has played a pivotal role in the international community's efforts in responding to Iran's nuclear programme. As the body monitoring compliance with the NPT and associated safeguards agreements, it has played a natural role. Its Director-General and inspectors have produced authoritative technical assessments on which the international community's diplomatic policies have been constructed.

55. The most significant recent development in the IAEA's relations with Tehran is its agreement in August 2007 of a 'work plan' to resolve outstanding questions about Iran's previous nuclear behaviour. In his November 2007 Report, Dr ElBaradei noted progress in a number of areas of the 'work plan', including on aspects of Iran's centrifuge programmes. However, he noted that Iran's cooperation was "reactive rather than proactive".[94] In its written submission, the FCO wrote that "the key test will be the implementation" of the measures that were agreed to in the 'work plan'.[95] Further and more active cooperation by Iran with the IAEA could be a way to generate a better atmosphere than as of present. In January 2008, Iran agreed with the IAEA that it would clarify all outstanding questions on its programme within a month.[96]

The Overall Dynamic

56. We present our assessment of the international community's policies towards Iran, and how these policies should be modified, in the final chapter of this Report. This chapter has set out the parameters of some of the debates revolving around Iran's nuclear programme, looking at the different concerns of some of the key states involved in the E3+3. If one considers the 'twin-track' strategy of the E3+3, it is evident that there is currently greater discussion about what coercive measures should be in place against Iran rather than on whether the incentives provided to Tehran are sufficiently enticing for it for it to be able to suspend enrichment and resume formal negotiations. Whilst there are no new proposals to modify the June 2006 offer to Iran, it is clear that the UK Government and its allies wish to make sanctions more punitive than they currently are. In our final chapter, we consider whether this approach is the correct one.

57. We conclude that the E3+3's diplomacy over Iran's nuclear programme is currently a long way from successfully achieving all its goals. We acknowledge, however, that its establishment has been useful in maintaining some degree of international unity towards Iran, thus adding to the diplomatic pressure on the Iranian authorities.

4 Ev 99 Back

5 Foreign Affairs Committee, Third Report of Session 2003-04, Iran, HC 80, para 58 Back

6 Oxford Research Group, Would Air Strikes Work? Understanding Iran's Nuclear Programme and the Possible Consequences of a Military Strike, March 2007, p 4 Back

7 Ev 99 Back

8 Ev 106 Back

9 Ev 107 Back

10 Ibid Back

11 Ibid Back

12 Ev 146 Back

13 Ev 120 Back

14 Q 54 Back

15 International Atomic Energy Agency, Implementation of the NPT Safeguards Agreement and relevant provisions of Security Council resolutions 1737 (2006) and 1747 (2007) in the Islamic Republic of Iran, 23 November 2007, p 6 Back