The Morning Dispatch: Is the Iran Deal Back From the Dead?

Happy Wednesday! Everyone is going to have bad days at work, but only a select few have bad days that involve accidentally firing a missile into the territory of a neighboring nuclear power. India’s air force fired three military officers on Tuesday for doing just that in March.

(That’s the story India is going with, at least.)

Quick Hits: Today’s Top Stories

• Florida and New York held primary elections on Tuesday. Some highlights:

  • Rep. Charlie Crist—a Republican-turned-independent-turned Democrat—will challenge Florida Gov. Ron DeSantis in November after easily defeating Florida’s agriculture commissioner Nikki Fried in the state’s Democratic gubernatorial primary.

  • GOP Rep. Markwayne Mullin of Oklahoma will face off against former Democratic Rep. Kendra Horn in the race to replace retiring Sen. Jim Inhofe after Mullin defeated former State House Speaker T.W. Shannon in a runoff.

  • Rep. Jerry Nadler defeated Rep. Carolyn Maloney, his longtime colleague, in the Democratic primary for New York’s 12th congressional district. The two incumbents were forced to face off against one another after redistricting in New York eliminated a congressional seat.

  • Democrat Pat Ryan defeated Republican Marc Molinaro in a special election to replace Antonio Delgado in New York’s 19th congressional district after Delgado was tapped to become the state’s lieutenant governor. The race had taken on outsized importance as a bellwether for November’s elections after Ryan ran heavily on abortion in the wake of the Supreme Court’s Dobbs decision this summer.

  • Republican Joe Sempolinski—once an aide to former GOP Rep. Tom Reed—won the special election to fill the seat in upstate New York that Reed vacated earlier this year. He has vowed to serve only the remainder of the term; Republican Nick Langworthy will face off against Democrat Max Della Pia in November for a full term. 

• Following a similar move by Pfizer and BioNTech one day earlier, Moderna announced Tuesday it had formally requested Emergency Use Authorization from the Food and Drug Administration for its updated COVID-19 booster shot modified to target the original coronavirus strain and the latest iterations of the Omicron variant. Moderna started clinical trials of the shot earlier this month, and said it would be ready to ship doses within weeks if authorized by the FDA.

• Global oil prices surged on Tuesday after Prince Abdulaziz bin Salman—Saudi Arabia’s energy minister—suggested the Kingdom and some of its OPEC+ allies might cut crude production to stabilize the market as global recession risks rise. The news comes weeks after OPEC+ agreed to a smaller-than-expected increase in production for August, and about a month after President Joe Biden traveled to Jeddah in an effort to increase global supply.

• A whistleblower complaint filed with the Securities and Exchange Commission, Justice Department, and Federal Trade Commission last month by Twitter’s former security chief, Peiter “Mudge” Zatko, alleges executives at the social media platform misled federal regulators about “extreme, egregious deficiencies” in Twitter’s security protocols and efforts to combat spam. Zatko was fired by Twitter earlier this year, and new CEO Parag Agrawal told employees the claims were part of a “false narrative that is riddled with inconsistencies and inaccuracies, and presented without important context.” 

Iran Deal Back From the Dead Again

After 16 months of bargaining through international intermediaries, might the Biden administration’s efforts to limit Iran’s fast-expanding nuclear enrichment program in exchange for sanctions relief be nearing a conclusion?

It depends on who you ask. 

Last week, Iranian negotiators responded to Europe’s recent draft text of the agreement with a “yes but,” European Union foreign policy chief Josep Borrell told reporters Tuesday. To finalize the deal would require “some adjustments,” Borrell said, describing them as “reasonable” and adding that the Europeans expected an American response by the end of the week. 

(The EU’s urgency is likely driven, at least in part, by its need to replace Russia’s oil supply with alternate sources when an embargo takes effect in December. Iran offers one viable alternative—a fact of which its negotiators are acutely aware.)

The U.S. side, meanwhile, is “seriously reviewing” the proposed changes put forth by the Iranians, State Department spokesman Ned Price said in a briefing Monday, hinting at outstanding challenges: “Had there been a clean Iranian response, a clear yes answer, I’m not sure that we would be in a back-and-forth the way we are now.”

Complicating Washington’s determination to reach an agreement is opposition from Israeli leadership and congressional allies and opponents alike. 

“This agreement will send approximately a quarter of a trillion dollars to the Iranian terror administration’s pocket and to its regional proxies, and will enable Iran to develop, install and operate centrifuges, with almost no restrictions, in a mere two years,” Former Israeli Prime Minister Naftali Bennett tweeted Tuesday, adding that “one way or another, the State of Israel is not a party to the agreement.” Israel’s national security adviser, Eyal Hulata, is reportedly in D.C. this week to persuade the White House to back out of negotiations.

On Capitol Hill, resistance to reviving portions of the Obama-era deal—formally known as the Joint Comprehensive Plan of Action (JCPOA)—is as fierce as ever. 

In a letter to Biden yesterday, Michael McCaul—the House Foreign Affairs Committee’s top Republican—reasserted Congress’ right to oversight, criticizing the administration’s failure to regularly brief lawmakers or address the Iranian regime’s crimes outside the scope of its nuclear program. “It is completely unreasonable for this administration to think that a review could be favorable without a robust history of engagement with Congress, to include an increased tempo of briefings as negotiations reach their purported end game,” McCaul wrote. 

Some Democrats are among the talks’ detractors. The Democratic chair of the Senate Foreign Relations Committee, Sen. Bob Menendez, recently jabbed the prospect of a renewed 2015 deal as “not only unrealistic and unproductive,” but also a “fantasy.” 

Aware of American political opposition to the deal, Iranian negotiators have pressed the Biden team for guarantees that future administrations won’t withdraw and reinstate sanctions, as former President Donald Trump did in 2018. “We demand strong economic guarantees,” Iranian Foreign Minister Hossein Amir-Abdollahian told Italian newspaper la Repubblica last month. “If a western company signs a contract with its Iranian counterpart, they must be guaranteed the project will go ahead and they will receive compensation.” 

The precise form such assurances might take remains unresolved but several ideas have been piloted by Tehran, Wall Street Journal reported last week.

“Iran appeared this spring to accept U.S. assurances that the Biden administration would stick by the agreement as long as it was in office and Iran was in compliance with the deal. The negotiators also crafted significant wind-down periods for Western firms to wrap up their business in Iran if Washington did leave the pact and reimpose U.S. sanctions on Iran.” 

Talks have also stalled amid Iranian demands that an ongoing investigation into Iran’s undeclared nuclear sites by the International Atomic Energy Agency (IAEA) cease as a pre-condition of an agreement. But Iran reportedly omitted its previous stance on IAEA safeguards in its response to the EU draft, leading some American media commentators to declare the issue resolved Tuesday. Others cautioned against drawing any conclusions, particularly given Iran’s continued vocal opposition to the IAEA probe.

On Tuesday, Iranian Supreme Leader-linked Nour News described IAEA head Rafael Grossi as “the main obstacle to the finalization of the sanctions lifting negotiations, along with the Zionist regime.” 

“No deal will be implemented before the IAEA Board of Directors PERMANENTLY closes the false accusations file,” Mohammad Marandi, an adviser to Iran’s negotiating team, tweeted in apparent reference to the three-year investigation. 

“I suspect the IAEA open investigations will be treated separately and the deal’s implementation will occur regardless of Grossi’s findings,” Mark Dubowitz, CEO of the Foundation for Defense of Democracies, told The Dispatch. “He will be under enormous pressure to close the files or issue a report essentially saying he can reach definitive conclusions.” 

But at least one hurdle has reportedly been cleared. On Friday, CNN confirmed that Iran had abandoned a remaining “red line” for the White House—its demand that the Islamic Revolutionary Guard Corps (IRGC) be removed from the State Department’s roster of Foreign Terrorist Organization (FTO) along with associated companies. 

But some critics of the JCPOA say the militia still stands to gain from a partially restored agreement. Iran is expected to receive financial relief upfront during the prospective deal’s 120-day implementation period, including $7 billion in frozen funds in South Korea and billions more in oil sales. Up to a trillion dollars may follow. This cash flow could go to funding the IRGC’s malign activities abroad, including its sponsorship of regional terrorism and targeting of think tankers and former government officials on U.S. soil. 

“This is a fairly easy conclusion: There’s no way the nuclear deal gets revived while this kind of activity is going on,” former National Security Adviser John Bolton told The Dispatch, asked about a recently unearthed Iranian plot on his life.

“There’s a 100 percent chance of a deal unless the supreme leader thinks that the deal is so favorable to Iran that he sees it as an American trap and rejects it,” Dubowitz said. “But with $1 trillion in sanctions relief, the nullification of over 1,500 designations, executive orders and legislative sanctions, patient pathways to nuclear weapons and ICBMs as restrictions sunset, and the closure of investigations into Tehran’s military-nuclear activities, the deal simply will be too good to pass up.”

“At a minimum we are about to flood the world’s largest state sponsor of terrorism with up to a quarter trillion dollars which will be used to consolidate its power at home and export its terrorism abroad. This is policy malpractice on a historic scale,” said Michael Rubin, a senior fellow at the American Enterprise Institute. “The only upside is for the family of Neville Chamberlain, who will no longer be known as the poster boy for appeasement as Biden and Blinken surpass him.”

Ukraine War Hits Six-Month Mark

Ukraine is marking two very different milestones today: its 31st independence day, and six months at war. The country has celebrated its resilience with a parade of wrecked Russian tanks on Kyiv boulevards and mourned its losses with wooden crosses on a bridge where civilians died fleeing Russian artillery strikes.

Little territory has changed hands since our last update two weeks ago. Russia controls about a fifth of Ukraine and is still pushing—largely unsuccessfully—for more territory. Though Russian troops show no sign of pulling out of Ukraine, U.S. intelligence estimates some 15,000 Russian troops have died, and Russia has lost hundreds of tanks, fighter jets, and helicopters. Ukrainian forces have repelled Russia’s attempt to take Kyiv, sunk the Moskva, and taken the initiative with strikes on Russian military positions well behind the front lines in the occupied Crimean peninsula.

While Russia struggles to replace its specialized equipment, the flow of Western military assistance to Ukraine continues. Germany reportedly plans to provide another $499 million of ammunition and military equipment, and the U.S. will reportedly announce today a $3 billion military aid package—its largest yet—featuring some equipment such as drones that will take a year or more to reach the front lines, reflecting a long-term commitment to Ukraine’s defense.

But Russia has also inflicted devastating losses on Ukraine, leveling cities, filling mass graves in Bucha, threatening the integrity of a nuclear power plant, and shelling apartment buildings and hospitals alongside military installations. Ukrainian military commander Valery Zaluzhnyi said Monday an estimated 9,000 Ukrainian troops have died, though all casualty numbers are imprecise. Meanwhile, the United Nations has recorded more than 13,000 civilian casualties and reports the actual number is likely much higher.

The violence has sent a flood of refugees across Ukraine’s borders. The United Nations estimates the war has displaced a third of Ukraine’s people, scattering more than 6.6 million across Europe. After a slow start, the United States has kept its pledge to admit more than 100,000 Ukrainians, and European countries have organized work permits and host homes for many. But if the war continues unabated, Europe may struggle to continue accommodating refugees: A July survey of United Kingdom households hosting Ukrainians found about 20 percent intended to host Ukrainians for longer than a year, but another 20 percent or so also said inflation was affecting their ability to aid the guests “quite a lot.” UK refugee minister Richard Harrington said this week he’d asked the Treasury to consider doubling the £350 monthly “thank-you payment” households receive for hosting.

Meanwhile, the war has battered Ukraine’s economy, with the International Monetary Fund predicting a 35 percent drop in the country’s gross domestic product in 2022. Until a recent deal, Russia had blocked shipping through the Black Sea, trapping about 20 million tons of Ukrainian grain and seeds inside the country. The Ukrainian Grain Association dropped its harvest forecast from 69 million metric tons to about 64 million as Ukrainian farmers join the fighting and Russians occupy and mine the farmland they leave behind.

But the West aims to strangle Russia’s economy with a still-tightening ring of sanctions—cutting energy imports, blocking Russia’s access to financial platforms, and halting critical imports like semiconductors. In the early weeks of the war, the Russian ruble collapsed to from 75 rubles per dollar to 135 in March, but has since recovered to about 60. European Union countries are still buying Russian energy, and the Finnish Centre for Research on Energy and Clean Air estimates they’ve paid Russia nearly €85 billion for fuel since it attacked in February, funding its war effort.

But there are signs of stress in Russia’s economy, which the IMF predicts will contract by about 6 percent this year. More than 1,000 foreign companies—representing some 40 percent of Russia’s gross domestic product—have withdrawn from the country. Russia may still be exporting its raw materials, but the foreign currency it’s raking in hasn’t enabled it to evade import sanctions, hobbling its manufacturing industries. Its car production fell about 62 percent in the first half of the year, according to the state statistics source, and new Russian-made cars lack such luxurious details as airbags and anti-lock brakes. Airlines have resorted to cannibalizing planes to make repairs.  

“The technological gap between Russia and the advanced economies will widen over time,” Russian political scientist Ilya Matveev wrote in a June paper. “In the absence of global cooperation and with hundreds of thousands of skilled professionals having left the country, innovative and technological advancement in Russia is simply impossible.”

None of that means that Russians will rise up against President Vladimir Putin to end the war, but it doesn’t mean the sanctions are failing. “What does it mean, sanctions are working?” said Oleg Korenok, economics professor at Virginia Commonwealth University. “For me, the definition of that is that if the sanctions will slow down [the] Russian military machine, then it means they’re working.” And while Russian forces still seem to have plenty of military equipment to throw at Ukrainian troops, there’s evidence their supply of sophisticated weaponry is depleted, with Russia evidently using microchips from refrigerators and dishwashers in military equipment.

“By any metric and on any level, the Russian economy is reeling, and now is not the time to step on the brakes,” Yale researchers wrote after a recent analysis of Russia’s economic conditions. “There is no path out of economic oblivion for Russia as long as the allied countries remain unified in maintaining and increasing sanctions pressure.”

This winter may strain Europe’s commitment to those sanctions, as weaning itself off Russian gas and oil could tip European economies—already battling high inflation—into recessions. But Europe has rushed to prepare itself, finding alternative energy sources and planning to reduce demand. The European Union has introduced plans to spend some €200 billion to drop Russian fossil fuels entirely by 2027. For short-term relief, Germany will restart production at coal plants and prioritize coal shipments on train lines.

Russia’s leaders still seem determined to test the West’s resolve and Ukraine’s resilience. Senior Russian Ambassador Mikhail Ulyanov recently called for “no mercy to the Ukrainian population.” But Europe and Ukraine have taken long-term steps toward alignment against Russian aggression—Sweden and Finland are poised to join NATO, and in June the EU granted Ukraine candidate membership status.

“Winter is coming, and it will be hard, and what we see now is a grinding war of attrition,” NATO Secretary-General Jens Stoltenberg said Tuesday at a conference. “This is a battle of wills and a battle of logistics. Therefore we must sustain our support for Ukraine for the long term so that Ukraine prevails as a sovereign, independent nation.”

Worth Your Time

• If you’re scratching your head at the recent flurry of contradictory economic indicators, you’re not alone—economists are right there with you. In his latest Bloomberg column, Eduardo Porter breaks down the economy’s weirdness, explaining why the Federal Reserve is having trouble reading the economic tea leaves and offering some theories of what the next few months of economic activity hold. “What would you tell builders who started 34,000 fewer housing units in July than in April but employed 36,000 more workers to do it?” Porter writes. “Numbers like these can give economists whiplash, making it harder for them to sketch out a coherent picture of the state of the economy and its direction. … While some of these discrepancies might be dismissed as bad data—an inordinate amount of noise from the momentous shocks produced by the coronavirus pandemic and Russia’s invasion of Ukraine—they might also tell us something real, rejiggering economic relationships in a way that will complicate the policy response.” 

Presented Without Comment

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Toeing the Company Line

• Substack, which supports our website, went down about ten minutes before last night’s Dispatch Live was scheduled to start, so we apologize if you weren’t able to access the live stream. But you can go back and watch an archived version of the conversation with David, Declan, Andrew, and Audrey here, and you’ll be able to listen to an audio-only version of it in your Dispatch Podcast feed later this week. Be sure to tune in for a fun discussion of Republicans’ Senate chances, the fallout from the FBI’s search of Mar-a-Lago, and Ron DeSantis’ 2024 triangulation.

• Chris Stirewalt is back on The Remnant today (for a record 20th time) to celebrate the publication of his new book, Broken News: Why the Media Rage Machine Divides America and How to Fight Back. From the evolution of America’s major news networks, to the need for journalism to be vocational rather than professional, to the nature of “fair and balanced” media coverage, you’re not going to want to miss this discussion.

• Audrey and Andrew commandeered The Sweep (🔒) this week, writing about GOP efforts to retake the Senate, an independent candidate in Missouri calling it quits, how fights over abortion policy are playing out in Colorado, and Sen. Pat Toomey’s waffling on Doug Mastriano in Pennsylvania. “I haven’t decided what I’m going to do about that race,” Toomey told Audrey.

• Tuesday’s Uphill features a Q&A with Rep. Don Beyer of Virginia about his recent trip to Taiwan. “There were no specific asks in terms of a NATO-like alliance or more weapons. Their singular plea was to try to maintain the status quo,” he told Haley. “They don’t want an armed invasion. I don’t think they particularly wanted us to have to respond to an armed invasion, either.”

• In yesterday’s French Press (🔒), David reflects on a guilty plea in the Breonna Taylor case. “Louisville police served a warrant based on false information, and broke into an apartment they never should have raided,” he writes. “But how many individuals have to conspire or fail before we consider whether systems are at fault?”

• On the site today, Danielle Pletka offers more analysis of the apparently impending renewed Iran Deal: “Iran’s nuclear program is largely on track; its missile and terrorism programs are untouched. The only hope for those who fear a nuclear-empowered Iran is that the Iranians may say no, calculating that if they continue to run down the clock, the Biden administration will become even more desperate and make even more concessions.” And in his weekly column, Jonah argues that Trump has placed the Republican Party in a bind where it’s unable in the short term to grow either with or without him.

Let Us Know

Do you see a renewed Iran deal changing Biden and the Democrats’ fortunes ahead of the midterms, either one way or the other?