President Obama at WSJ CEO Council talks Iran

WSJ's Washington Bureau Chief Gerald F. Seib interviews President Obama

SEIB: I’m in the red zone here on the clock here, but let me — I do want to ask about — a question about international affairs. You’ve mentioned the world and the U.S. position in it. There’s the possibility this week of an agreement with Iran, a preliminary linear agreement, in which they would free some of their nuclear activities in return for some relief on sanctions.

Your Israeli friends have been arguing, along with some of your — some of your friends, as well as your foes, in Congress, that if you give the Iranian regime any relief on sanctions, the sanctions regime will fall apart, countries that don’t want to be there in the first place will head for the exits; it will all come apart. And that’s the danger of what you’re negotiating right now. I know you talked to some senators about this very topic today. Is there going to be a deal? And why can you ease sanctions without having them fall apart?

PRESIDENT OBAMA: Well, just by way of background, when I came into office, we had a trade embargo, the U.S. had done some things unilaterally, we did not have a strong, enforceable international mechanism to really put the squeeze on Iran around its nuclear program, despite the fact that it violated a range of U.N. and nonproliferation treaty requirements.

So we built, we constructed with the help of Congress, the strongest sanctions regime ever.

And it has put a bite on the Iranian economy. They have seen a 5 percent contraction last year in their economy; it’s projected to be another contraction this year, and in part, because the sanctions have been so effective, we were able to get Iran to seriously come to the table and look at, how are they going to give assurance to the international community that they are, in fact, not pursuing a nuclear weapons program.

I don’t know if we’ll be able to close a deal this week or next week. We had been very firm with the Iranians even on the interim deal about what we expect. And, you know, some of the reporting out there has been somewhat inaccurate, understandably, because the P-5 plus one — the members of the — permanent members of the Security Council in addition to — and Germany as well — have kept the negotiations fairly tight.

But the essence of the deal would be that they would halt advances on their nuclear program. They would roll back some elements that get them closer to what we call breakout capacity, where they can run for a weapon before the international community has a chance to react, that they would subject themselves to more vigorous inspections even than the ones that are currently there — in some cases, daily inspections.

In return, what we would do would be to open up the spigot a little bit for a very modest amount of relief that is entirely subject to reinstatement if, in fact, they violated any part of this early agreement. And it would purchase a period of time — let’s say six months, during which we could see if they could get to the end state of a position where we, the Israelis, the international community could say with confidence, Iran’s not pursuing a nuclear weapon.

Now, part of the reason I have confidence that the sanctions don’t fall apart is because we’re not doing anything around the most powerful sanctions. The oil sanctions, the banking sanctions, the financial services sanctions, those are the ones that have really taken a big chunk out of the Iranian economy. So oil production and oil sales out of Iran have dropped by more than half since these sanctions were put in place. They’ve got over a hundred billion dollars of oil revenue that is sitting outside of their country. The rial, their currency, has dropped precipitously.

And all those sanctions and the architecture for them don’t go anywhere. Essentially what we do is we allow them to access a small portion of these assets that are frozen. Keep in mind, though, that because the oil and banking sanctions stay in place, they will actually still be losing money even during this six-month period relative to the amount of oil sales they had back in 2011.

So what we are — what we are suggesting, both to the Israelis, to members of Congress here, to the international community, but also to the Iranians, is let’s look, let’s test the proposition that over the next six months we can resolve this in a diplomatic fashion while maintaining the essential sanctions architecture, and as president of the United States, me maintaining all options to prevent them from getting nuclear weapons.

I think that is a — a test that is worth conducting. And my hope and expectation is not that we’re going to solve all of this just this week in this interim phase, but rather that we’re purchasing ourselves some time to see how serious the Iranian regime might be in re- entering membership in — in the world community and taking the — the yoke of these sanctions off — off the backs of their economy.

WSJ: Transcript of Obama Remarks at WSJ CEO Council Meeting

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