The Cable

New Khamenei Demands Make Tough Iranian Nuke Talks Even Tougher

Iran's supreme leader, Ayatollah Ali Khamenei, has laid out an unusually detailed set of demands for what he would accept in a nuclear deal, further complicating the high-stakes efforts to reach an agreement before a July 20 deadline.

Khamenei's declaration that any nuclear deal preserve Tehran's right to enrich uranium on an industrial scale to fuel its long-term energy needs echoes what Iranian negotiators have said throughout the talks, which began in earnest last year and are currently continuing in Vienna. Still, by drawing a red line in public, a rarity for Iran's top cleric, Khamenei signaled that Tehran wasn't prepared to accede to Western demands that it sharply curtail its enrichment activities. The United States and its allies have long accused Tehran of trying to produce weapons-grade uranium to build a weapon, a charge Khamenei has repeatedly denied.

The remarks come amid signs of disunity among big-power diplomats as talks near a self-imposed July 20 deadline for a deal between Iran and the permanent five members of the Security Council -- Britain, China, France, Russia, and the United States -- plus Germany, which are negotiating collectively as the P5+1.

Speaking to senior-level technocrats on Monday, Khamenei said Iran signaled that Tehran would eventually need up to 190,000 centrifuges, depending on their sophistication -- far more than the 10,000 he says world powers are willing to allow Tehran to acquire. Western governments want to curb Iran's nuclear enrichment capacity in order to inhibit its ability to develop a nuclear bomb. Tehran insists it wants such a large quantity for peaceful purposes, such as medical isotopes and nuclear energy.

"On the issue of enrichment capacity, [the West's] aim is make Iran accept 10,000 SWU," Khamenei said, using an acronym for a highly technical term, "separative work units," that measures how much uranium individual centrifuges can enrich in a year. "Our officials say we need 190,000 SWU.... [T]his is our absolute need and we need to meet this need."

Iran hawks said Khamenei's insistence that Iran have greater enrichment capacity was an attempt to force the United States and its allies into a bad deal.

"Khamenei is trying to trap the United States by demanding industrial-size enrichment capacity," said Mark Dubowitz of the Foundation for Defense of Democracies.

Khamenei's comments came as French Foreign Minister Laurent Fabius told a parliamentary committee in Paris on Monday that countries within the P5+1 were beginning to disagree about the makeup of a final deal with Iran. Fabius said the Western powers had previously been "very homogeneous" in their negotiations with Iran, but that "in the past days representatives in the negotiations have put forward a certain number of different approaches between part of the P5+1 and our Russian partners."

Fabius didn't spell out the West's differences with Moscow, which has traditionally been more sympathetic to Iran than those in the Western camp. Some Western officials have long feared that Washington's confrontation with Moscow over its annexation of Crimea would make Russian President Vladimir Putin even more willing to break with the West over Iran.

Still, the French foreign minister hinted that there was some daylight between the countries over whether to call in senior government officials to put the talks back on track or leave things in the hands of mid-level diplomats. Speaking before France's parliamentary foreign affairs committee, Fabius said the Obama administration has a "desire" to carry out a meeting of foreign ministers before the July 20 deadline. "I don't have a strong view on it, but at one point between now and July 20 we shall know where we stand," he said.

The talks currently underway in Vienna are centered on a deal that would require Iran to provide verifiable assurances that its nuclear program is limited to fueling the country's energy needs in exchange for easing international sanctions.

Fabius said that "none of the primary points [of contention] have been resolved," including the fate of a heavy water reactor at Arak that Western powers fear could be used to produce plutonium, as well as procedures for monitoring Iran's compliance with any nuclear deal and easing sanctions.

In Washington, State Department spokeswoman Jen Psaki told reporters that "significant gaps remain with Iran" but stressed that the P5+1 countries remained united on how to proceed in the talks.

Despite Khamenei's demands, Laicie Heeley of the Center for Arms Control and Non-Proliferation said that it's natural for both sides to stake out hard-line positions before a final deal is struck.

"At this point we should realize that we're still very much involved in a negotiation, and each side is likely to hold out for compromise as long as it can," she said. "In the end, they'll both have to move."

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The Cable

Hey, Germany, Stop Your Kvetching. Everybody Spies.

Revelations that a 31-year-old German intelligence service employee has allegedly been passing hundreds of classified government files to the United States for the past several years has prompted cries of shock and outrage from some of the Obama administration's closest allies in Berlin. But the Germans shouldn’t have been surprised. Washington has been spying on Germany for decades, and that work will almost certainly continue well into the future.

When top-secret documents leaked by Edward Snowden revealed that the National Security Agency had been monitoring German Chancellor Angela Merkel's cellphone, President Obama insisted that he hadn't known about the surveillance -- a claim many intelligence community veterans found laughable -- and promised to bring it to a stop. But the White House said nothing about ending other spying operations inside Germany or even against top officials in the Merkel government. There was a good reason for that: Those extensive intelligence-gathering efforts are continuing for both counterterrorism purposes and diplomatic reasons, and include monitoring German relationships with other governments, former officials said.

"The idea that we wouldn't conduct espionage of any sort on German soil is unspeakably silly," said a former U.S. intelligence official who asked not to be identified while discussing current operations.

When the diplomatic spat that German reporters have taken to calling the "double-agent scandal" erupted last week, some politicians called on Merkel to declare all CIA officers at the American Embassy in Berlin persona non grata, which would lead to their expulsion from the country. The German interior minister said the country should step up its own spying on Washington, and German politicians and commentators have been calling on the Obama administration to confirm whether the mole in the heart of German intelligence is, in fact, a spy for the Americans.

A high-ranking German official told Foreign Policy that it was too soon to say whether the spying allegations, which are now the subject of a law enforcement investigation, can be fully substantiated. But he pointed to foreboding comments by Merkel during a news conference on Monday in Beijing, where she has been holding meetings with top Chinese leaders. "If the allegations are true," Merkel said, "it would be for me a clear contradiction as to what I consider to be trusting cooperation between agencies and partners."

After a long holiday weekend, the Obama administration was forced to address the growing diplomatic rift, which saw the U.S. ambassador summoned to the German Foreign Ministry on the Fourth of July just hours before he was supposed to be welcoming guests to a party at the American Embassy in Berlin. White House spokesperson Josh Earnest wouldn't confirm the allegations about U.S. spying efforts in Germany during his regular press conference on Monday, citing the ongoing German investigation and a practice of not commenting on alleged U.S. intelligence operations. However, Earnest stressed that "the relationship that the United States has with Germany is incredibly important," and he promised, "We're going to work with the Germans to resolve this situation appropriately."

The exposure of the double agent, who hasn't been publicly identified, comes at a particularly inopportune moment, when the political wounds were still raw over revelations of NSA spying that sparked large public protests in Germany. Merkel and her coalition partners were just getting back to the business of normal political relations with the Obama administration and repairing a decades-long relationship with one of their country's largest trading partners and most stalwart political and military allies. Now, that's all up in the air.

"This threatens to derail the efforts of Merkel and other senior coalition partners to get back on track with the trans-Atlantic relationship," said Thorsten Benner, the co-founder and director of the Global Public Policy Institute, an independent think tank in Berlin. While the calls to kick out CIA officials and the publicized haranguing of the American ambassador are largely symbolic gestures, public outrage over the spying could force the German government to reshape its relationship with Washington. During a visit to Mongolia, German Foreign Minister Frank-Walter Steinmeier said that if the allegations turned out to be true, "that's also a political matter, where one can't just go back to the daily routine."

Political elites and other outspoken supporters of a strong U.S-German alliance are now "publicly being proven wrong," said Olaf Boehnke, who runs the Berlin office of the European Council on Foreign Relations. For those who've been particularly supportive of freer trade and investment between the two countries, "It's getting harder and harder to argue now that we should have the United States as a partner," he added. "It's a reality check that this isn't about friendship any longer; it's a very neutral, cost-benefit related partnership."

And Germans are more likely to ask what they're getting out of it. "There was always some kind of anti-American sentiment in the German public, but this is skyrocketing," Boehnke said. "It's really worrying."

Benner questioned the Obama administration's decision to keep up its spying on the German government at such a sensitive time, particularly given the damage done by the high-profile Snowden revelations. "The political consequences for the U.S. are much, much higher than any potential enlightenment that could have come from these leaked documents," Benner said.

Still, German officials are kidding themselves if they think the United States won't keep spying on them. The exposure of the double agent follows Berlin's failed attempt to forge a so-called "no-spying" agreement with the United States, similar to the one it has with the United Kingdom, Canada, New Zealand, and Australia. Under the pact, all five nations generally agree not to monitor each other's officials and conduct spying operations on each other's soil. (The United States and other close allies, including Israel, routinely gather intelligence on one another.)

"They were pretty humiliatingly rebuffed," Benner said. The United States has for years kept Germany out of the club, which grew out of the ashes of World War II and took root during the Cold War. Berlin was turned away once again, and that stung.

The U.S. relationship with Germany is "built on a lot of shared trust," said Earnest, the White House spokesman. "It's built on friendship. And it's built on shared values." But apparently it's not strong enough to bring Germany into the exclusive no-spying club, or to halt operations against its officials.

Indeed, the case of the double agent may end up revealing more about German impressions of American spying than about the inner workings of the German government.

"Germans are more romantic about relationships than the Americans are. They think that if you're in a relationship, you shouldn't need to spy on each other," Benner said. Added Boehnke, "You could blame Germans for being naive.... We have two very different perceptions of how the intelligence business is operated."

John Hudson contributed reporting.

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