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Since early October 2009, the talks between Iran and P5+1 (the five permanent members of the Security Council and Germany) have focused on the proposal for a circular deal: Iran would transfer some 80 percent of the low enriched uranium it has produced thus far to Russia (according to the most recent report from the International Atomic Energy Agency of November 16, Iran has to date produced close to 1,800 kg of low enriched uranium); in turn, Russia would enrich the uranium up to a 20 percent level and move it on to a third country – France, for example – which would process it into nuclear fuel rods for the research reactor in Tehran, which has been in operation since the time of the Shah.

On the face of it, the proposed deal is of limited significance. It only involves the supply of nuclear fuel to a small, dated research reactor serving primarily civilian needs, and affects only part of the enriched uranium in Iran’s possession. It does not involve Iran’s nuclear program in general, and does not at all ban Iran from continuing to enrich uranium any way it wants. It does not affect the development of plutonium at the installations in Arak. Furthermore, it says nothing about the sanctions against Iran, either on the part of the Security Council or bilaterally.

Nonetheless, all sides viewed the deal as having broad significance. The United States and Western states saw the deal as having a double advantage, considering the lack of a better option available at present in stopping Iran’s nuclear program. Should Iran accept the deal, the stores of enriched uranium in its possession would be reduced and the time table for achieving fissile material would be postponed by close to a year. In that sort of time frame it would be possible to conduct negotiations with Iran about its nuclear program under less pressure. The deal could also help to help build trust between the sides. Alternatively, Iran's rejection of the deal could be instructive regarding its intention of using the enriched uranium in its possession for military purposes, and thus help enlist broad support for instituting severe sanctions. Yet even were a deal achieved, the American administration did not intend to reduce the sanctions on Iran already in place, and it was planning on continuing to work on freezing Iran’s nuclear program.

Iran too saw the deal as being of broad significance. From the outset, Iran presented a positive outlook on the deal and made it understood that in principle it supported it. However, later on in the talks, the Iranians expressed reservations about the contents of the arrangements; contradictory reports on its stance were published that obscured Iran’s position. The reservations expressed by Iran included:

• The place: Iran is not prepared to send its enriched uranium to Russia and then to France. It is demanding that it remain in Iran under the supervision of international observers until it is turned into nuclear fuel. The proposal that the uranium be moved to nations friendly to Iran, such as Turkey, was also rejected by Iran. The proposal that the uranium remain in Iran was rejected by the United States, as well as by the head of the International Atomic Energy Agency, Mohammed el-Baradei.
• The timing: Iran insists on first receiving the nuclear fuel and afterwards moving its enriched uranium to another country, or that that the exchange occur simultaneously. However, el-Baradei made it clear that according to the deal, a year must pass between moving the uranium out of Iran and its receiving the nuclear fuel in order to build trust between the sides.
• The quantity: An Iranian source claimed that Iran would need less nuclear fuel than the amount that was discussed, and would therefore hand over only 22 percent of its enriched uranium, rather than 80 percent.

Iran’s position is apparently affected by a double consideration. On the one hand, the fact that it is not being asked to suspend its uranium enrichment represents an important achievement for it, because it will thus be able to replace the amount of enriched uranium it would have to hand over in less than a year. This deal would also represent recognition of Iran’s right to enrich uranium within its borders, despite the fact that this contravenes Security Council resolutions on the matter. Signing such a deal would bestow a positive image on Iran as cooperating with the international community and would make instituting more sanctions very difficult; in fact, it might even allow for the reduction of sanctions currently in place. Such international legitimacy is very important to the Iranian regime, especially after the internal crisis it has just experienced.

On the other hand, Iran does not trust the United States and the West, and suspects that they would not hand over the nuclear fuel once Iran had agreed to let the enriched uranium out of the country. It apparently also worries that after it hands over its enriched uranium it would be more vulnerable to American pressures, and that the administration means to take advantage of this vulnerability in order to continue in its efforts to shut down the Iranian nuclear program. Moreover, after Ahmadinejad’s initial leaning towards accepting the deal, a wave of criticism by radical Iranians swelled because of his agreeing to let uranium, which had by right been enriched in Iran, out of the country. Even spiritual leader Ayatollah Ali Khamenei came out against a dialogue with the United States. Reformist circles also joined in the criticism and took advantage of the opportunity to present Ahmadinejad as someone harming Iran’s vital interests.

In light of these considerations, Iran, finding itself in an uncomfortable situation, procrastinated over many weeks in formulating its stance. The administration made it clear that Iran would not be offered another deal and that it would not wait long for Iran to answer. Internal sources claimed the administration would wait until the end of the year for Iran’s response and then determine its next move. Equally importantly, Russia exerted pressure on Iran to accept the deal, and the Russian president added that his country, though opposed to sanctions, could not rule out the possibility of imposing them should there be no progress in the talks. This apparently reflects an agreement between the United States and Russia over the issue of placing further sanctions on Iran should Iran fail to contribute to progress in the talks, although it is unclear whether the two powers have agreed on the severity and nature of such sanctions. Furthermore, the report published on November 16 by the IAEA does not cut Iran any slack and casts doubt on its trustworthiness, both by stating that Iranian reporting to the agency about the new enrichment facility in Qom was inconsistent with the truth and by raising the question of Iran possibly hiding additional covert nuclear facilities.

What emerged from these deliberations was the announcement made on November 18 by Iranian foreign minister Manouchehr Mottaki to the effect that Iran rejects the terms of the deal and is willing to consider it only if the transfer of the enriched uranium and the receipt of the nuclear fuel take place simultaneously – on Iranian soil. Despite the statement made by the French foreign minister – that he views Iran’s announcement negatively though he is interested in continuing to negotiate with Iran – it is hard to imagine that any deal would be made under these conditions. In light of Iran’s unyielding stance, the probability that the American administration would agree to Iran’s terms is low as they obviate the principal advantages the United States saw in the deal to begin with. Based on this assumption, it would seem that the ball is now back in America’s hands and probably try to enlist international support for toughening the sanctions against Iran.