Amidst the rubble of cynicism in Washington and the international community, there’s been one sign of hope for American foreign policy: the West’s negotiations with Iran regarding its nuclear program. Remarkably, things seem to be shifting: diplomats have emerged from the latest round of negotiations emitting good vibes. The West’s crippling sanctions, led by the U.S., have worked.
But before we discuss what’s in flux, let’s recap what the status quo has been: the West, dubious of Iran’s vow that it is only investing in nuclear research and enrichment for energy and medical reasons, has set up a system of sanctions meant to choke the Iranian economy. The United States and Israel have tried to postpone Iran’s progress behind the scenes: the most significant example was 2010’s Stuxnet computer worm that damaged Iranian nuclear enrichment infrastructure. Meanwhile, Iran has responded with a stubborn march toward nuclear breakout capacity, and little willingness to negotiate. The sanctions, however, have begun to take a significant toll: sanctions have more than halved Iran’s crude exports since they tightened in mid-2012, cutting budget revenues by at least $35 billion a year. In Iran, we’ve seen massive inflation and black market demand for dollars.
To date, the range of possible outcomes have looked like a bell curve. We had a small, “fat tail” risk of the situation deteriorating and military strikes against Iran occurring (led by some combination of the United States and Israel). On the other end of the spectrum, we had an incredibly slim chance of a breakthrough deal that could peacefully keep Iran from going nuclear. The status quo — tightening sanctions and Iran’s slow movement toward nuclear breakout capacity — was the overwhelmingly likely occurrence.
But this year, the curve has shifted. The chance that the status quo simply continues is much reduced; the likelihood of the best or worst outcome — a military strike or a breakthrough deal — has risen significantly (although neither one is probable by any means).
So what changed? Two critical things. First of all, Iran’s domestic politics have shifted, at least in part thanks to the sanctions regime. In August, Hassan Rouhani took office after being elected on a promise for moderation and (relatively) more open dealings with the West, as well as a pledge to fix Iran’s hobbled economy. Without Mahmoud Ahmadinejad as president, the West is more amenable to negotiations.