US President Donald Trump Friday officially renounced the Iran nuclear agreement, yet urged Congress to remain in the deal as he asked lawmakers to ultimately decide its fate.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
Elizabeth Rosenberg, a sanctions expert, also spoke Friday with S&P Global Platts on the impact Trump's announcement may have on oil flows, global energy sector investment and Congress' most likely path forward.
Rosenberg is a senior fellow and director of the energy, economics and security program at the Center for a New American Security and a former senior advisor at the US Treasury Department.
The interview was edited for brevity and clarity.
PLATTS: What is the near-term impact, if any, that Trump's decision to disavow the Iran deal will have on the global oil market?
ROSENBERG: Though I think this was widely expected, this confirmation really sends a very powerful signal of risk to the market. I think many people have already baked that in to their appreciation of where market forces may go.
PLATTS: On Friday morning, Republican Senators Bob Corker and Tom Cotton unveiled legislation aimed at rewriting the Iran deal. What do you expect Congress will do?
ROSENBERG: I think that the stronger signal to the market comes from the Corker/Cotton bill. This is the president's design: to throw the hot potato to Congress and they have responded. We may have expected this from Cotton. He's been totally transparent with his views and this is absolutely in keeping with what he's been saying up until now. But Corker, I think many people expected him to pursue a slightly different course here. The conversations on Capitol Hill over the last week or so have been about the possibility of amending [the Iran Nuclear Agreement Review Act of 2015] to relieve the president from the obligation of having to make this politically distasteful statement to Congress quarterly. But that is not at all what Corker and Cotton just put out. They just put out a strategy to take out the deal with a shotgun. There's nothing subtle about this.
PLATTS: Does the fast track option apply to this proposed legislation?
ROSENBERG: They've only circulated a one-page outline. We haven't seen the legislation and maybe they are contemplating some crafty way where it could be qualifying legislation. Maybe we should reserve final judgement, but based on how I read that one-pager, that doesn't look like qualifying legislation to me.
PLATTS: Do you expect that the Corker/Cotton bill is the likely path forward for Congress?
ROSENBERG: I don't think so at this point. Also, nothing's going to happen immediately. Congress will have to grapple with this for a while and right now the response by many Democrats is 'The deal's not broke, why are we trying to fix it in that way?' There's obvious strategic flaws [with the bill]. If Congress creates this inflexibility, so there's this automatic reimposition of sanctions if certain new conditions that they've set on Iran are met, then that removes flexibility from the executive [branch] to manage this process. That flexibility is helpful when it comes to things like international, diplomatic negotiations. In taking this approach, you've removed the incentive for foreign counterparts to work with and negotiate with the United States to create an amended nuclear deal or a complementary agreement because the executive [branch] doesn't have any discretion. It removes flexibility not just from this administration, but from any administration.
PLATTS: What happens with investments, particularly from European companies, in Iran?
ROSENBERG: As we expected, nothing mechanical or automatic happens today or tomorrow by consequence of this announcement. What does happen is that for everyone who cares deeply about this deal and believes it is working, whether they are abroad or in the United States, this is the stark confirmation that President Trump is not acting in support of these nuclear weapons commitments and this deal and negotiating with this as his base. Now, the majority party in Congress has expressed what is clearly a strong interest and intent in blowing this thing up. I think it increases the perception of risk in energy markets and I think it increases the signal to those potential opportunistic evaders that they should scope out their discrete trading opportunities in order to maintain the flow of Iranian oil even if US sanctions loom or are reimposed in some fashion. It's an indication of a new economic opportunity for evaders.
PLATTS: What does this mean for future multilateral diplomatic efforts?
ROSENBERG: This is tremendously damaging. I mean, we had the presidents and the foreign ministers and the ambassadors of all the leading European countries on the phone with the US administration and leaders in Congress, multiple times. There's been this massive press by them, some in public and certainly in private, again and again and again. It turns out, that didn't do much to influence the president not to take this action which his foreign counterparts, European counterparts in particular, were warning him against. [Trump] remained unswayed and this is yet another confirmation that he is willing to thumb his nose at international counterparts and ignore the advice of his closest advisers. That's a lesson we should all learn about every other international security matter going forward.
--Brian Scheid, firstname.lastname@example.org
--Edited by Richard Rubin, email@example.com