Domestic Iranian politics will be driven by two parallel agendas. Moderates will push for a speedy return to a compliance-for compliance arrangement within the Joint Comprehensive Plan of Action (JCPOA), while hardliners will attempt to disrupt the process, hoping to win the June election and control future negotiations with the Joe Biden administration.

Tehran will continue ramping up its nuclear activities in order to create a sense of urgency for the United States and other signatories to the JCPOA. If no progress is achieved by 21 February, Iran will stop implementing the Additional Protocol, a move that would limit International Atomic Energy Agency (IAEA) inspections of its nuclear activities.

Supreme Leader Khamenei And President Elect Joe Biden

The new US Administration will refocus on multilateral diplomacy, engaging European allies to develop a way to approach Iran and considering steps that could be taken to revive the JCPOA.

Tehran will wait for a positive signal from the Biden Administration before decelerating its nuclear activities. The most effective step would be an executive order outlining the path of a US return to compliance with JCPOA provisions, but Biden could choose other initiatives, such as stating that Washington would not object if the International Monetary Fund extends a US$5 billion loan to Iran.

If Biden issues an Executive Order, other JCPOA signatories will undertake initiatives to facilitate the sequencing of a staged return to compliance, especially France, Germany, and the United Kingdom.

Positive signals from both sides will benefit the Iranian economy and consolidate the value of the Iranian currency. A stable foreign exchange rate will remove some inflationary pressures.

Opponents of diplomacy will become more active in attempts to prevent Biden from improving relations with Tehran.

Israel may intensify its efforts to undermine Iranian interests, especially through attacks on Iranian positions in Syria.

With Donald Trump out of the picture, Tehran and Riyadh will gradually thaw their currently cool relations, which will also ease Iranian relations with other Arab nations.

On 27 January we hosted a webinar on US-Iran relations from Iran Strategic Focus’ editor Bijan Khajehpur. You can download the hour long talk and slides here.

This excerpt is taken from Iran Strategic Focus, our monthly intelligence report on Iran. Click here to receive a free sample copy.