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Trump Ends Nuke Deal. Military and Oil Stocks Grow

Eran Wolkowshi, Haaretz

Washington, Tuesday, May 8, 2018

Today Donald J. Trump announced withdrawal from the Iran nuclear deal. That act tells North Korean dictator Kim Jong Un to again collaborate with Iran on nuclear weapons development while speeding up efforts to proliferate those weapons in the Middle-East. In the meantime, Trump’s reported stock holdings increase in value.

The Joint Comprehensive Plan of Action (JCPOA), informally known as the Iran Nuclear deal was signed in July 2015 and went into effect the following January.  It imposed restrictions on Iran’s civilian nuclear enrichment program. Key provisions include:

  1. Restricts uranium enrichment at Fordow and Natanz plants.
  2. Renders a heavy-water reactor at Arak inoperable.
  3. Re-purposes Fordow, Natanz, and Arak for research, industrial, or medical purposes.
  4. Subjects those plants to inspections by monitors from the UN nuclear watchdog, the International Atomic Energy Agency (IAEA).
  5. Limits the numbers and types of centrifuges Iran can operate, as well as the size of its caches of enriched uranium.
  6. Binds Iran to implement and later ratify an “additional protocol” to its safeguards agreement with the IAEA, that gives IAEA inspectors unprecedented access to Iran’s nuclear facilities.
  7. Establishes the Joint Commission, with the negotiating parties all represented, to monitor implementation of the agreement.

In exchange for these limitations:

  1. The European Union, United Nations, and the United States committed to lifting sanctions. While the United States has only suspended extant nuclear sanctions, it pledged in the JCPOA to remove specified entities from sanctions lists and seek legislation to repeal the suspended sanctions within eight years, if the IAEA concludes that Iran’s nuclear activities remain peaceful.
  2. Continues some U.S. sanctions dating back to the hostage crisis in 1979. Those cover ballistic missile production, support for U.S.-designated terrorist groups, and domestic human rights abuses.

The United States stopped enforcing its sanctions on oil exports, freeing Iran to trade on international markets. However, the U.S. continued restrictions on certain financial transactions. Also, many banks and other companies, including foreign subsidiaries of U.S. businesses, are wary of doing business in Iran for fear of incurring fines or being barred from dealing on Wall Street, and the United States retained the right to impose new sanctions for nonnuclear matters. The sanctions exempt’s Boeing’s sell of aircraft to Iranian airlines.

The Iran deal was implemented when the IAEA certified that Iran had met preliminary requirements, including taking thousands of centrifuges offline, rendering the core of the Arak heavy-water reactor inoperable, and selling excess low-enriched uranium to Russia. Since then, the IAEA’s quarterly reports have found Iran in compliance with the JCPOA’s requirements.

Setting back Iran’s nuclear program allowed those concerned about the development of a Nuclear weapon “breakout time,” the time needed to develop deliverable nuclear weapons to at least one year.

Trump’s withdrawal potentially decreases the ‘breakout time” well under a year if Kim transfers lessons learned from his nuclear research to Iranian ballistic missile  designers.

Doomsday clock by Global Zero the international movement for the elimination of nuclear weapons.

North Korea and Iran have a history of joint missile development dating back to the Iran-Iraq war in the 1980s. Both countries have links to Pakistani nuclear physicist and accused proliferator Abdul Qadeer Khan.

Iran possesses more ballistic missiles than any other country in the Middle East but remains dependent on foreign suppliers for missile development which, until now, hindered their ability to develop an ICBM capable of carrying a nuclear missile, according to the Nuclear Threat Initiative, a nonpartisan, Washington-based nonprofit organization.

With a breakdown in the Nuclear deal Iran can advance its existing  collaboration with Pyongyang. Both countries want to mount nuclear weapons on intercontinental ballistic missile and North Korea is  willing to act as a “cartel” in its willingness to share information for a price.

Iran’s support for Shi’ite militias in Iraq and Syria and their long-standing collaboration with Hezbollah in Lebanon and newer alliance with Yemen’s Houthis could cause Saudi Arabia and other regional powers to seek dual-use nuclear technology to deal with those regional conflicts.

There is money to be made in collapsing the Nuclear deal. With Trump’s announcement,  Falls Church, Va.-based Northrop Grumman increased 3.7 percent to $328.84, while Raytheon rose 2.4 percent to $210.03, Lockheed Martin climbed 2 percent to $323.97, and General Dynamics added 1.8 percent to $199.93.  Trump’s 2015 Federal Election Committee (FEC) report listed Raytheon as one of Trump’s smaller holdings

Trump undoubtedly knows that renewed sanctions could stall oil shipments disrupting the current near equal balance of oil supply and demand.  That increases the risk that the market could swing into under-supply and send oil prices higher. According to his 2016 filings, Trump holds stakes in a variety of multinational oil companies like Shell, Chevron, and Exxon Mobil.[amazon_link asins=’1334800928′ template=’ProductCarousel’ store=’nevadatoday-20′ marketplace=’US’ link_id=’7cc201f3-5323-11e8-bf23-e7e92b53f501′]

About Author

Michael McGreer Mesquite, Nevada
Dr. Michael Manford McGreer is managing editor of Nevada-today.com and writes on issues that impact public policy.

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