The Carnegie Endowment held a media call on the ongoing Iran nuclear negotiations with Mark Hibbs, George Perkovich, and Karim Sadjadpour.

Listen to the call here.

TOM CARVER: Good morning, everyone.  This is Tom Carver at the Carnegie Endowment here with a 30 minute media call on the Iran talks.  I'm pleased to have with me here George Perkovich who runs our nuclear policy program and Mark Hibbs who is a senior associate in the program normally based in Berlin but is here this week.  And we're hoping to be joined any minute by Karim Sadjadpour as well.  

This is on the record and as I say we're going to keep the time of 30 minutes.  Please identify yourself when you ask a question and also I'd be grateful if you could mute your line when you're not speaking so that others can hear what is being said.  Let's start with George.  George what are your thoughts on where we stand as of this morning?

George Perkovich: My sense is I am speculating, and everybody else is speculating.  The smartest thing is probably going to be to wait.  But having said all that let me speculate just briefly that I think it would be normal than when Foreign Minister Zarif returns from Tehran he will basically say that what the U.S. and the others had presented to him – to the Iranians – in the last few days as kind of what we've got to have – He's going to come back and say, "Sorry I've just been in Tehran and we can't do that."

And so then the question will be does Secretary Kerry get on a plane and come home?  Or do we have kind of the fallback position?  So in other words I would not expect the next couple of days to yield the agreement.  And you know I think there's a real question about - If Zarif comes back and does this I suggest you know whether it wouldn't be the worst thing for Kerry to come home and for there to be a pause in the process.  I think on some of these fundamental issues, especially regarding inspections there's a point at which the U.S. and the P5 can't go.

TOM CARVER: Mark?

MARK HIBBS: There's been a lot of speculation as George says.  And one of the things that people are speculating about is whether the deal that we have goes far enough to satisfy the P5+1 including the United States.  I think there is a reason to believe that the conditions that have been agreed to as we understand them regarding essential parts of the program, including uranium enrichment, plutonium, inspector access for ongoing activities, and the procurement program in Iran that these are things that diplomacy has succeeded in coming up with an agreement which will contain Iran's nuclear program for a considerable time – 10 to 15 years.

But the real questions that remain have to do with the longer term.  They have to do with questions about whether Iran after a period of time of upholding the agreement and abiding by it will revert because diplomacy may not succeed in engaging Iran in a longer term that Iran would then rev up its program on the basis of the agreement that they would make.  They would then deploy enrichment technologies, which in the past they were not able to do because of the agreement and its constraints.

And that they may go back on interim commitments or indefinite commitments not to do plutonium.  Questions about the IEA monitoring process: as we understand it Iran insists that some of the verification commitments that it's going to mak will run out and expire after a certain period of time.  And so there are real questions in the longer term about how the Iranian regime is going to be engaged as the process of this.  And we don't know the answer to those things.

So a lot of pressure is put on the diplomatic process at the end of the agreement to go forward with Iran.  Once they have an agreement then people who crashed that agreement and brought it into force are going to have to stay on the ball and move forward with Iran over a period of time where we don't really know, particularly in the United States, what kind of a political engagement we're going to have.  We'll have an agreement perhaps, but we don't know enough about how Iran will move forward.

TOM CARVER: If what you just said does come to pass and Kerry come back how then does the process of negotiation continue?  I mean do you think there is then a kind of back channel that _______?

MARK HIBBS: Yeah they have – I mean I'm making this up obviously that he would come back.  But yes they know how to communicate.  They've done this before.  There are plenty of ways to communicate, and this would just be part of the dance of trying to make the final accommodations or adjustments.

TOM CARVER: I just wanted to ask you about the congressional situation.  Do you think, I mean, [inaudible comment] starting to be quoted widely.  Is he –?  Is the personal situation changing?  Do you see it getting worse?

GEORGE PERKOVICH: I mean just briefly I think it got a lot better – It's a lot better now than it was a year ago in the sense that a year ago components of the diplomatic process were waiting to seize on this deadline to move immediately for sanctions.  And now there's a recognition that continuing this process and having the implementation of what was agreed in November of 2013 is in our interest.  So I don't think the deadline issue is important in terms of the sanctions.

TOM CARVER: You just walked in.  I hate to put you on the spot but – George was just talking about how Zarif has gone back to Tehran yesterday.  Do you have an answer of where the Iranian ________?

SADJADPOUR: I think the asymmetry here is that Iran clearly needs this deal.  They're hemorrhaging hundreds of billions because of sanctions, and tens of billions because of the drop in oil process, and billions trying to sustain the ________.  But it seems that the U.S. wants the deal or ______ poorly.  I think Secretary Kerry naturally wants to leave a major foreign policy legacy of reconciliation whereas Iran's Supreme Leader's legacy – He's always prided himself on the legacy of resistance.  

This should be the ___________].  The last thing I’d add here is that I know the reaction to Khamenei's tweet, his red line tweet Secretary Kerry said that this was merely for internal consumption.  I think as others have pointed out he tweeted that in English, not in Persian.  And he tweeted it on a platform, Twitter, which isn't permitted in Iran.  And it may be that he's merely doing this to strengthen his bargaining position.  That's plausible.

But at least in the 26 years that he's been ruling, his words have been a pretty good indicator of his deeds.  So I think that we'll see in the next days whether those were firm red lines or simply – or he was simply trying to strengthen Iran's bargaining position.

TOM CARVER: Okay.  Great, thanks.  Let's open it up to questions.  Who's got a question?  Anyone?

REPORTER: Hello, can you hear me?

TOM CARVER: Yes.

REPORTER: Hi.  Yeah I was having a bit of difficulty understanding too.  I believe Karim came in.  And I believe there at the end he was talking about how the U.S. or Obama wants a deal in part for legacy of reconciliation.  But he said Iran needs a deal.  And so yeah that's something I have been wondering about.  I mean obviously just the other day, or I guess it was maybe just yesterday – Now I can't remember who it was.  I don't have all my notes in front of me.

But you know they made the point that Iran does not need – it was an Iranian.  I'm sorry; again I forgot who it was.  It was not Zarif.  But anyway Iran doesn't need this deal but that certainly could've been for domestic consumption.  So I'm wondering why – You know explain why in your view Iran needs this deal?  Is it just sanctions relief?

KARIM SADJADPOUR: Well there's an economic imperative.  We all know the sanctions issue.  And we did a study a few years ago at Carnegie which measured the cost of Iran's nuclear program when you look at lost foreign investment, lost oil production at around $100 billion.  This was several years ago.  The latest figures I've seen from former Iranian ministers is closer to $500 billion.  So whether it's $100 billion or $500 billion Iran is hemorrhaging hundreds of billions because of the sanctions.

And then add on top of that oil is no longer $100.00 per barrel.  They've been losing tens of billions because of the decline in oil prices.  And then remember their closest ally in the region, Bashar al-Assad, is almost wholly financially and militarily reliant on them to sustain his rule.  So each month they're hemorrhaging hundreds of millions more.  And we saw the reaction when the framework deal was announced.  

We saw the popular reaction in Tehran.  There was no popular reaction in the United States.  If this deal is signed or isn't signed I think it's not going to really affect the finances of most Americans.  They won't know the difference, whereas in Iran really the entire nation is waiting on the edge of its seat for this deal to happen.  So I think the deal is an economic necessity for the Iranian people.  The question is whether it's a political necessity for Iran's leadership.  

 And here I think the Supreme Leader is in a dilemma because for two and one-half decades the organizing principle of the system has been resistance against the United States.  The United States can't be trusted.  And it's difficult for him to abandon those principles and potentially alienate his political base.  And I think that's why they're in a way trying to reconcile the economic imperatives of the system, the economic imperatives of the nation, and the political imperatives of the hard line elite.

TOM CARVER: George, do you think that the U.S. administration is prepared to – would be prepared to walk away from a deal completely?  Or is it now so invested in it that it can't go back?

GEORGE PERKOVICH: Again I'm just speculating.  It looks to me like Secretary Kerry is not prepared to walk away.  My sense about the president is that he probably has greater awareness that if this is a legacy issue the legacy is going to be determined whether it's a bad deal or a good deal.  Therefore he needs to walk away if it's not something that can really be affirmed strongly where they get the verification terms they need.  Because then his legacy is bad and he's got other things on which to build his legacy.  

Whereas with Secretary Kerry I think this really could be his legacy.  So I would see a difference in the two perspectives.

TOM CARVER: Mark?

MARK HIBBS: I would only add to that.  In my view from Berlin as where I am and I look at the United States from there.  It appears to me that what's happened in this negotiation over the last several months particularly with the last several weeks and more hardline positions coming out of Iran that in a sense the president is inoculated by this development that if the negotiations fail there aren't going to be that many people in the American political system who are going to blame the president for this.

Certainly on the right side of the aisle the president will not get into trouble.  There may be some complaining on the other side but by and large as others have said this is not a do and die for the American public.  They don't really care about it as much as the Iranians do.

KARIM SADJADPOUR: I would just add to that a couple of things.  I think Mark is absolutely right and I would add not only I think in the U.S. is Obama in a good position domestically on this position.  But I think the U.S. is in a good position vis-à-vis the P5+1 partners.  I think that France, the UK, Germany, and even Russia and China I think – have seen that the Obama administration – Secretary Kerry – have really been committed to trying to resolve this issue diplomatically.

And if the talks – If we reach an impasse I don't think that the P5+1 is going to break apart and these countries are going to start doing business with Iran again.  I think that there's been again an appreciation that Washington has tried to – Well Washington has made unprecedented overtures to Iran.  The second thing is that I don't see this as a question of negotiation success or negotiation failure.  I think it's a question of negotiation success or a stalemate.

If we're not able to reach an accommodation by July 9 I don't think we're going to tear up everything we've worked on and go back to status quo ______.  I think as we've seen over the last two years there is always an ability to extend things.  And I think frankly it's the Iranian people who really are the big losers in this equation if there is an extension because they're the ones who are really living under economic duress.  

As long as the nuclear program is kind of frozen in its track I don't think it's a huge – You know in a nonproliferation context --- it's not a huge risk there.

TOM CARVER: So you think the sanction regime would stay in place – would hold?

KARIM SADJADPOUR: Absolutely.  Again if by July 9 we haven't reached an accommodation I don't think that Iran is going to be open for business because countries and companies around the world will have to make a simple decision which is the decision they face now which is do they want to do business with America or do they want to do business with Iran?  And for the vast majority of companies and countries in the world that's a pretty simple choice.

TOM CARVER: Okay other questions?

REPORTER: I have a question.  It's Trudy Rubin from the Philadelphia Inquirer.

GEORGE PERKOVICH: Hi Trudy.  

REPORTER: Hi.  Karim do you think that if it is stalemated – What do you think the Iranians will do in terms of revving up centrifuge production and so forth?  And just one more thing, if it is stalemated do you sense there was a change of heart?  Do you think there was ever a chance that Iran was going to agree to the kind of verification measures that are the bottom line for U.S., France, and most of the P5+1?  Do you think there's a chance they ever would agree if the thing is frozen and it's clear there won't be a deal unless those verification measures are met?

KARIM SADJADPOUR: Let me take those in reverse order.  And I know that Mark and George are much more knowledgeable about especially the latter question than myself.  But the one point I'd make on the latter about verification is that the Supreme Leader has consistently said that the IAEA won't have any access to military sites.  And Iran is a sovereign nation.  And access won't be grated to military sites.  I think what's problematic about that is that it's the Revolutionary Guards which really oversee Iran's nuclear program.

You know they manage the most sensitive nuclear facilities in Iran.  So technically if it's managed by the Revolutionary Guards it's a military site.  And so you really can't do the type of verification regime you need if you don't have access to any facilities which are controlled by the Revolutionary Guards which is really all of the nuclear facilities.  On the first question about what will Iran do in the event of a stalemate, I don't see them putting their foot on the gas.

Because if they do, that is going to trigger additional sanctions from the United States.  And I think it's going to – Then they will lose the blame game, right?  At the moment I think there has been – At least up until now they have made an effort.  The Iranians have made an effort which they really didn't make in the Ahmadinejad  era of trying to make the outside world appreciate the fact that Iran has been cooperative.  Iran has been compromising.  

So in the event of a stalemate I see them kind of staying where they are.  I don't see them ramping up.  But I would be curious what George and Mark say about whether there was an inspections regime which Iran agreed to and now they've reneged on or did they really not go as far as we thought they did in Lausanne.

GEORGE PERKOVICH: You know there is a way out in the short term for this.  Iran has proposed on verification that they discussed modalities of what is called managed excess which would essentially be a compromised where the IAEA would be able to do environmental sampling at locations at military installations.  But they would not be able to carry out inspections.  This would be a Band-Aid if you will to paste over the problem because essentially it would mean that Iran would give access to the agency to do an activity where the Iranians are comfortable that they won't find anything.

But what the agency needs to do is to talk to people who are in the program.  Talk to their scientists.  Go to the locations.  The Iranians won't do that if they feel that those inspections and that access will be overly compromising as Karim was suggesting.  So if they go that route in the short term that will bandage over the problem.  But in the longer term it puts the burden back on the IAEA and the powers in the sanctions lifting process.

In the early days of the negotiations it was understood that sanctions would be lifted when the IAEA had determined that Iran's program was dedicated to peaceful use.  And in going the managed excess route that will delay that discovery process for a much longer period of time.  The IAEA will not give the access that it would need through environmental sampling in all cases to be able to make that determination, essentially meaning that when the powers ask the IAEA to make a decision whether it's satisfied that it knows everything it needs to know about the Iranian nuclear program.

It will decide that it's totally transparent and peaceful the IAEA would probably say, "No we don't have enough information."  They could cut corners on that verification protocol to solve this little problem.  But that would again put a great deal of burden on the IAEA and the powers to come up with an agreement with Iran that would satisfy all parties, that would lift sanctions.  So there's no simple silver bullet for this.

TOM CARVER: George do you want to –?

MARK HIBBS: Well just briefly.  I mean this is a genuinely really hard problem because the issue is – from the Iranian point of view what's to stop the U.S., Israel, and others continually demanding or pushing the IAEA to go visit any facility we may be interested in for any purpose.  So what's the due process here that protects Iran's legitimate interest in not having an unending inspections process, fishing intelligence expedition by the U.S. and Israel that's not strictly bounded to suspicions about nuclear activities?

What's the burden of evidence that others would have to present in order to trigger an inspection?  Who decides?  These are really, really hard issues and given Iran's suspicions – some of which are legitimate – it makes it that much harder.  So the Iranians say, "Sure you want to come talk to scientists so somebody can assassinate them," as has been done in the past.  "You want to come visit military facilities so that you can target them with covert operations and sabotage – not even nuclear facilities," as has been done in the past.

"What are you going to do to reassure us?"  Then we say, "Well the IEAE will decide."  And they say, "Right and we have WikiLeaks for the U.S. ambassador or U.S. diplomats cabled back to Washington.  We control the director general of the IEAE," which I don't think is true.  But from the Iranian point of view it is .  So I think Mark's right in terms of the way that this is going to have to be done.  But when people in Congress and others stand up and say, "We've got to have anytime, anywhere inspections and go anyplace we want in Iran," they're really overlooking how genuinely difficult this is.

TOM CARVER: Okay.  We've got a few more minutes.  Are there any other questions?

REPORTER: Yeah I have one.

TOM CARVER: Sure.

REPORTER: I have one. I just had a question for Karin if he could just kind of revisit ground we've already covered.  But I just needed to hear everything.  How do you square the Supreme Leader's speech on June 23 with the compromises that Iran is likely to have to make for example on access to military sites?  And then a quick one for George which is how do you think the PMD issue can be finessed?

KARIM SADJADPOUR: I think there are two ways to try to understand Iran.  You can try to interpret the Supreme Leader's words or you can try to interpret what's in his heart.  And you know my – I've always thought that the most accurate reflection of the Islamic Republic's policies are the speeches of the Supreme Leader.  He's quite earnest and his speeches over the last two and one-half decades have been a pretty good indicator of Iran's policies, whether nuclear policies, regional policies, relations with the United States.

That said in the last six months there were some assertions that Khamenei laid out which he seemingly acquiesced on in the Lausanne framework.  Well one of them if you recall was when he said that Iran's practical needs are 190,000 P1 centrifuges.  That wasn't part of the Lausanne framework.  So we'll basically know in the next days whether that speech – the most recent speech from the Supreme Leader – were firm red lines which basically really limit the Iranian negotiating team's ability to compromise and to get a deal.

Or were they merely meant to strengthen the regime's bargaining position?  And you know what I said in the earlier remark was that I think what the regime has to reconcile here is there's an economic imperative to sign the deal.  But the hard line there is to have kind of a political imperative to continue to resist the United States.  And you know at some point those are kind of irreconcilable goals.  Either you deal a deal or you continue to resist the United States.  And I think the Supreme Leader's speeches are trying to kind of check both boxes.

MARK HIBBS: Okay just real quickly on the PMD issue.  There are a couple of things.  I think Rohani since 2003, _______ the negotiations they've had a theory of the case which is to focus on the future.  The future is the most important thing.  And eventually, if they get an agreement about future activities and constraints on the program and all of that, the rest of the world isn't going to block the implementation of all of that over the past.  I don't know that that's correct, but I think that's been the theory under which they've been operating.

Two, their position would be – and I think ours should be – that Iran isn't required to confess in any kind of moral sense to having had a nuclear weapon program or having sought nuclear weapons.  The issues seems to me, if there's going to be a resolution, is a clinical one.  Describe what kind of activities happened in what places.  You don't have to say why.  But just say who did what.  That would be a reasonable approach.  

But three, it seems to me – and Mark knows more about this than I do – at the end of the day I don't think that even if Iran were more transparent and does provide access to people that you're going to get answers to all these questions.  So it seems to me at the end of the day the IAEA isn't going to be able to draw firm conclusions about every element that they want to explore.  You're going to get at the end of the day a sense of, "Well we got more transparency.  We have suspicions but we haven't been able to confirm them."

So it's all going to be murky at the end of the day would be my prediction.

TOM CARVER: Okay.  I'm sorry for the noise at the beginning.  And I know that there are a couple of other questions.  So we'll keep going for a few more minutes.  There was another question.

REPORTER: Yeah can I –?  I'm over in Vienna.  I had a couple of questions for you but one is there are some people around the talks who are saying however much money flows to Iran from the unfrozen revenues, whatever the economic impact, it won't be enough to allow Iran to hugely increase the money it's spending in Syria, in  Iraq, et cetera.  And including that they're also making the case that the Revolutionary Guards themselves and if this is _____ ______ that they wouldn't hugely benefit in the short term from a deal.

I wonder what your analysis of that is and whether you can there’s so much truth in that.  And then second I just wonder if one of you or all of you could pick out two or three immediate impacts that you think the region would see in the coming months from a nuclear deal.

TOM CARVER: Karim do you want to do the first one?

KARIM SADJADPOUR: Yeah.  Let me take those in reverse order.  And I think since 1979 I think there have been three pillars to Iran's policies in the Middle East: resistance against America, the rejection of what they call American Hegemony.  Number two has been the rejection of Israel's existence.  And number three has been the rivalry with Saudi Arabia.  And I think the first two elements will remain in place in the event of a deal.  Iran is not going to cease its act of rejection of Israel's existence, support for groups like Hezbollah, Islamic Jihad.  

I think there could be tactical cooperation with the United States.  But that kind of strategic resistance will remain in place.  And the third issue, which is the rivalry with Saudi Arabia: we've already seen that rivalry and that tension grow more acute even as a result of the framework field.  You know there are three parts to it: sectarian, ethnic, and ideological.  And we've seen not so much Iran alter its policies but Saudi Arabia assert itself, especially in Yemen.

So I would say in terms of what to look for – what trend lines to look for – I would look for an escalation of that conflict.  And one thing which is kind of interesting to look at is the cyber context.  You know if you recall after the Stuxnet incident Iran issued a cyber-attack on Saudi Aramco which did enormous damage.  And now this latest – The Saudi WikiLeaks cables; a lot of people are arguing that Iran was behind that.

That's kind of one area which we haven't focused on too much in the past.  But I think it's one to pay attention to.  And just in terms of if there is some type of economic windfall where will that go?  That money is going to – I think it's inconceivable that that money doesn't – I think the money – Certainly they will have to focus on stopping on improving the domestic economy within Iran.  But you know we've seen in the last four years that Iran has become the sole backer – financial backer – the main financial backer – of the Assad Regime.  The Shia militias in Iraq arguably are self-sustaining.

But I think the reality is that the same way Iran is spending its money now, if they had more money they'll continue to spend it in the same way.

TOM CARVER: Okay other questions?

REPORTER: Yeah hi there.  Good.  I'm happy everyone can hear me.  A question for one and all about this: in recent days there have been some reports that as part of an agreement, as part of an incentive to Iran that some of the Western nations – probably the U.S. and France in particular – would offer light water  reactors at little or no cost to Iran over here.  And I'm just trying to get a sense over here as to whether – You know I can't vouch obviously for what will be offered.  

But whether that makes any sense at all here in terms of being a bargaining chip or an incentive for the U.S., the other powers, and Iran?

TOM CARVER: Mark do you want to answer that?

GEORGE PERKOVICH: Jim this has been an issue that has been on the table during the talks since the beginning of 2013.  

REPORTER: Right.

GEORGE PERKOVICH: And the United States' position has been to support President Putin in Russia and moving forward with graphing a plan for a more comprehensive nuclear power agreement with Iran.  The question that you're asking however is who pays for it?  And in fact a single agreement for a power reactor – two units – might be worth something like $20 billion and somebody would have to pay for that.  And already we have a situation where the efforts by the Russian president to engage Iran in nuclear power has led to difficulties even inside the Russian company and industry where the Russian industry sees its engagement with Iran with a certain amount of skepticism based on their past activities. 

You have to understand that when they build the ____ that created serious losses for Russia and the way the Russian industry wanted to make that up was by selling fuel to Iran.  Now we have a situation where Iran wants itself to make the fuel, depriving the Western or Russian vendor of the fuel revenue for that part of the project meaning essentially if somebody else is going to have to pay for the reactor.  

Up until now I think the Western group have been assuming that the Iranians themselves would be able to pay for the reactors from proceeds from oil revenue but there's no agreement to that.  And certainly for Western countries it's almost unthinkable that a Western company would step in to a project like this until they were satisfied that both their economic risks and their political risks were covered.  And we're not anywhere near that point in that.  So it's going to take quite a long time.

REPORTER: Thank you.

TOM CARVER: Okay are there any more questions?  Good.  Okay I think we'll call a halt.  Any further thoughts you guys want to say?  Obviously we'll be watching this very closely over the next few days and I'm sure we'll have another call within a few days or so depending on the outcome.  

Thank you everyone.

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