Iran’s Bargaining Card That North Korea Never Had
The recently signed MOU between the United States and Iran could prompt North Korea to acquire new bargaining chips for future nuclear negotiations.
By Ellen Kim
Last week, the United States and Iran concluded a memorandum of understanding (MOU), ending nearly four months of conflict and bringing the two countries back to the negotiating table. The fourteen-point MOU includes provisions such as U.S. sanctions relief for Iran, permission for Iranian oil exports, the release of frozen Iranian assets, and the creation of a USD 300 billion reconstruction fund for Iran. These conditions show that economic assistance and sanctions relief in exchange for limits on or the abandonment of a nuclear program—a familiar formula used repeatedly in past negotiations with North Korea—form the basis of the broader framework of the agreement. This approach is not fundamentally different from the negotiating formula used in the Joint Comprehensive Plan of Action (JCPOA), a 2015 U.S.-Iran nuclear deal concluded under the Barack Obama administration.
What distinguishes this U.S.-Iran MOU from past North Korean nuclear negotiations and the JCPOA, however, is the decisive role that reopening the Strait of Hormuz played in reaching the agreement. As the blockade of the Strait of Hormuz dragged on, the U.S. oil industry warned in late May that oil inventories were heading toward “really, really low levels” and that, in the worst-case scenario, spot prices for Brent crude could surge to USD 150–160 per barrel. With the Donald Trump administration and congressional Republicans facing midterm elections in November, it appears that a short-term fix was unavoidable to prevent a sharp, inopportune rise in global oil prices and inflation at home. Ultimately, the United States made the swift reopening of the Strait of Hormuz its top priority. Rather than immediately resolving the details of other outstanding issues, Washington deferred them to follow-up working-level talks while offering a range of economic incentives to bring Tehran back to the negotiating table.
For its part, Iran allowed the return of International Atomic Energy Agency (IAEA) inspectors and used its status as an oil-producing country and the strategic value of the Strait of Hormuz as bargaining leverage. In doing so, Tehran secureda temporary sixty-day waiver on sanctions related to oil exports. The fact that Iran obtained temporary, front-loaded sanctions relief even before substantive negotiations on its nuclear program had begun demonstrates the bargaining power of its strategic assets.
Of course, it is still too early to be optimistic that this MOU will lead to a final agreement. Substantive negotiations over Iran’s nuclear program have yet to start, and the United States and Iran are already expressing nuanced differences over the issue of accepting IAEA inspectors—an issue they had reportedly agreed on. In addition, the risks that could derail the negotiations are far from minor, including the ongoing armed conflict between Israel and Lebanon, the permitted use of frozen assets, and the domestic political situations in both countries.
How, then, might North Korea perceive the ongoing U.S.-Iran negotiations? Currently, North Korea has firmly rejected denuclearization talks and is consolidating its status as a nuclear-armed state by advancing and diversifying its nuclear capabilities. The country also appears to feel little need for sanctions relief as it continues to deepen its ties with China and Russia. However, North Korea will likely closely watch Iran’s ability to secure front-loaded sanctions relief not by possessing nuclear weapons, but instead by leveraging its oil and the Strait of Hormuz as strategic assets. Even though North Korea lacks such strategic assets, this case could prompt the country to consider acquiring new forms of bargaining leverage for future negotiations with the United States. Consequently, the United States and South Korea must closely analyze and prepare for the possibility that North Korea may present new bargaining chips in the future.
This article was originally published in Korean in Hankook Ilbo on June 27.
Ellen Kim is Senior Fellow and Director of Academic Affairs at the Korea Economic Institute of America (KEI). The views expressed here are the author’s alone.
This material is distributed by KEI on behalf of the Korea Institute for International Economic Policy. Additional information is available at the Department of Justice, Washington, DC.