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Iran’s nuclear inspections or talks

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The Director General of the International Atomic Energy Agency (IAEA), Rafael Grossi landed in Iran for two days visit as part of efforts to restore the nuclear deal between Iran and the Western countries.

Grossi is holding talks with Iranian officials to safeguard the nuclear deal signed in 2015 but collapsed in 2018 when the then US president withdrew from the agreement.

Grossi met with Mohammad Eslami, the head of the Atomic Energy Organization of Iran (AEOI) and expressed certitude that progress will be achieved in efforts to end nuclear activities. He highlighted the ongoing challenge but hoped the two sides agreed to move the talks forward.

While stressed on the need to put an end to “doubts and concerns” over Iran’s nuclear program, Grossi said that he is in Iran to achieve this objective.

IAEA has been engaged in talks with AEOI for months, and blamed Iran for nuclear activities at undeclared sites, an allegation which Iran dismissed time and again.

AEOI spokesman Behrouz Kamalvandi received Grossi at the airport and will stay in the country for two days. He will also meet the Iranian president Ebrahim Raisi.

The western median media reported that uranium particles enriched up to 83.7 percent as Iran just need 90 percent to produce an atomic bomb.

Nuclear agreement failure

Head of AEOI Mohammad Eslami said that they decided to take steps away from the 2015 nuclear agreement after observing lack of commitment from other parties.

“Given the fact that the other parties failed to fulfill their commitments under the Joint Comprehensive Plan of Action (JCPOA), hindered other countries’ cooperation with Iran, and increased the sanctions,” Eslami said in an interview with state TV, referring to the US withdrawal from the nuclear deal in 2018.

After the deal the sanctions must be removed which did not happen. We were also forced to decrease our own commitments as well, he said.

The decision was taken under the law adopted by the Iranian Parliament aimed at protecting the country’s interests against sanctions.

Eslami came up with the remark after meeting Grossi in Tehran and is expected to go for longer discussions between Grossi and Iranian officials.

Enrichment development

France, one of the countries that signed the 2015 deal with Iran and remained engaged in negotiations to restore and rescue the deal, has called the enrichment development “unprecedented and extremely serious.” Meanwhile Grossi will try to secure more substantial access to the site, according to media reports.  He will push to increase the number of inspections, but the negotiation process is complicated and fruitless so far that Iran likely allows him to see the sites.

Grossi will return back to Vienna late today

Grossi will return back to Vienna late Saturday evening, and is likely to brief the media. In March 2022, Grossi visited Iran and focused on the sites to facilitate resumption of negotiations between the major powers and Iran to safeguard the country’s nuclear deal.

The negotiation is not a simple process especially when it goes slowly and also the Ukraine war affected the talks. Meanwhile, the US, Israel and countries in most of Europe are really concerned over Iran’s progress toward producing a number bomb.

Israel, the neighboring but arch-enemy of Iran, has already threatened to take military action if needed to stop Iran from becoming a nuclear state.

Nevertheless, Grossi is in Tehran to re-launch the dialogue and reach a conclusion to the deal to make sure to limit Iran’s nuclear activities in return of lifting international sanctions.

Another concern

On his part, CIA Director William Burns has expressed concern about growing relations between Iran and Russia and said the cooperation between the countries can go further behind merely military cooperation.

There has been reported that Iran sent military equipment, including drones to Russia to use them in the war in Ukraine. However, both Tehran and Moscow denied such cooperation, and Iran said it is ready to welcome foreign delegation to investigate the news of sending military support to Russia.

Regarding the nuclear activities, Burns said that the sudden progress of the Iranian nuclear program and it is growing at a “worrisome pace”.

“They’ve advanced very far to the point where it would only be a matter of weeks before they can enrich to 90% if they chose to cross that line,” Reuters reported Burns as saying.

But he said that the US does not believe that Iranian Supreme Leader Ali Khamenei has decided to resume the weaponization program that “we judge that they suspended or stopped at the end of 2003.”

Meanwhile, an Israeli delegation including Strategic Affairs Minister Ron Dermer and National Security Council chief Tzachi Hanegbi will visit the US to meet with officials from the White House, the Pentagon and the State Department to kick start deep talks on Iran’s enrichment of uranium.

New sanctions

On the day when Grossi visited Iran, the US came up with new sanctions on Iran-linked shipping and petrochemical companies, including two shipping firms based in China.

The Treasury Department’s website also showed that the sanctions also targeted 20 shipping vessels linked to firms in China, Vietnam, and the United Arab Emirates.

The order was implemented under a 2018 US executive order that restored sanctions targeting Iran’s oil, banking, and transportation sectors.

Weeks ago, the US also imposed sanctions on several jurisdiction that have played a critical role in the production, sale, and shipment of hundreds of millions of dollars worth of Iranian petrochemicals and petroleum to buyers in Asia.

 

 

EUROPE

Merz, Greens reach debt deal in Germany

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According to a report in Handelsblatt newspaper, Germany’s prospective chancellor, Friedrich Merz of the CDU, has reached an agreement with the Greens on a financial reform package that envisions major investments in infrastructure and defense.

The report indicates that party caucus meetings are scheduled for 1:00 PM local time in Berlin to brief officials on the latest status of the negotiations. The news is attributed to unidentified individuals close to the groups.

Yesterday, as German lawmakers debated Friedrich Merz’s spending plans, the Greens stated that his revised proposal, which agreed to billions of dollars in defense and infrastructure spending, was insufficient to pass the parliament.

The CDU/CSU and Social Democrats (SPD) had called for an extraordinary parliamentary session to make progress in passing the proposal, which would overturn Germany’s cautious fiscal policy.

However, the required two-thirds majority was still not achieved, as the parties needed the support of the Greens.

During the first reading of the bill in the Federal Parliament, Merz asked the Greens, “What more do you want in such a short period than what we have offered you in the negotiations?”

The coalition had initially proposed exempting defense spending exceeding 1% of GDP from the country’s strict constitutional debt rules. They also wanted to create a special exempt fund worth 500 billion euros for infrastructure spending.

But Merz said they had amended the draft to address the Greens’ concerns and because he “takes climate protection seriously.” The new draft includes a broader definition of defense spending and paves the way for allocating up to 50 billion euros for the net-zero transformation of the German economy.

The Greens accused Merz of prioritizing only his own interests, as the CDU had rejected a Green proposal to relax German borrowing rules when they were in opposition.

They also insisted that the text should guarantee that the additional fiscal space would not be used for tax exemptions.

The party’s parliamentary leader, Katharina Dröge, said, “If you wonder why the negotiations between us are progressing this way, it is because we do not trust your word.”

The Greens’ alternative draft proposes a defense spending exemption of 1.5% of GDP. They also want the fund to be abolished in favor of a fundamental reform of the borrowing rules with the newly elected parliament.

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EU plans major defense industry overhaul to counter Russia, support Ukraine

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According to a draft “White Paper” on defense obtained by POLITICO, the EU aims to launch a significant project to bolster its defense industry. This initiative is intended to “deter Russia” and “support Ukraine” as the US reduces its presence on the continent.

“The reconstruction of European defense requires a major investment over a long period,” the draft states.

The document, prepared by EU Defense Commissioner Andrius Kubilius and EU Chief Diplomat Kaja Kallas, is expected to be presented to EU leaders next week. It remains subject to change before publication.

Key elements of the new EU policy include supporting arms production within the bloc and in “like-minded third-country companies,” promoting joint arms purchases, facilitating the financing of defense projects, and focusing on critical areas where the bloc has capacity gaps—such as air defense and military mobility. Additionally, it aims to reduce bureaucracy related to defense investments.

Russia’s actions are cited as the driving force behind this new policy. The draft states, “Russia is an existential threat to the Union. Given its track record of invading its neighbors and its current expansionist policies, the need to deter Russian armed aggression will continue even after a just and lasting peace agreement with Ukraine.”

Therefore, the immediate priority is “ensuring that Ukraine can continue to fend off Russian attacks.”

“Especially now that the US is suspending its support, without a significant amount of additional military resources, it will not be possible for Ukraine to negotiate a just and lasting peace in a strong position,” the draft says.

The shift in US policy towards Ukraine, Europe, and NATO is evident throughout the 20-page document. “Europe cannot rely on the US security guarantee and must significantly increase its contribution to protect NATO,” it asserts.

However, it emphasizes that “NATO remains the cornerstone of collective defense in Europe.”

The document notes Europe’s dependence on American military capabilities, creating a risk that the US “may reconsider its approach and decide to restrict or even stop the use of these supports.”

Rebuilding the EU’s military-industrial complex means the bloc “should consider introducing a European preference for public procurement for strategic defense-related sectors and technologies.”

It also highlights the need for “cooperative procurement” to address the bloc’s fragmented defense market and provide countries with the financial means to secure advantageous deals. The European Commission could act as a central purchasing body for member states.

Seven key areas for priority investments are identified: air and missile defense; artillery systems; ammunition and missiles; drones and anti-drone systems; military mobility; artificial intelligence, quantum, cyber, and electronic warfare; and strategic enablers, combat capabilities, and critical infrastructure protection.

The document assures that member states will remain “in the driver’s seat”—a sensitive point for capitals concerned about Brussels interfering with national sovereignty.

“Member States are responsible for their own armed forces, from doctrine development to deployment. The radically changing strategic context, coupled with acute capability deficiencies of the Member States, requires much greater cooperation among Member States to rebuild their defenses,” it states.

Initial steps include member states approving the proposed relaxation of the bloc’s fiscal rules to facilitate increased defense spending, agreeing to cooperate on 35% of defense spending, approving the €1.5 billion European Defence Industry Programme, and agreeing on critical capability areas with NATO.

The document also outlines key measures such as providing 1.5 million artillery shells and air defense systems to aid Ukraine, continuing to train Ukrainian troops, placing orders with the Ukrainian defense industry, linking Ukraine more closely to EU military financing plans, and extending the bloc’s military mobility corridors to include Ukraine.

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Rheinmetall surpasses Volkswagen in market value as defense focus grows

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The market value of arms manufacturer Rheinmetall surpassed that of automotive giant Volkswagen Group on Thursday, marking a significant shift in Germany’s economy from automotive to defense.

As of 4:00 PM yesterday, Rheinmetall’s market value was 55.7 billion euros, while Volkswagen’s stood at 54.4 billion euros.

Since US President Donald Trump took office in January, Rheinmetall’s value, along with that of many other major European defense companies, has more than tripled. Meanwhile, US-based competitors have seen their stock prices fall due to concerns that Trump’s unpredictable policies might harm American arms exports.

VW and Rheinmetall are moving in different directions. The arms manufacturer is benefiting from the increase in defense spending in Europe, which is rearming on the grounds of deterring Russia, supporting Ukraine, and ensuring its security, due to fears that Trump will withdraw from the Continent. Volkswagen, on the other hand, is struggling with challenges caused by problems in China, Trump’s tariffs, and the turbulent transition to electric vehicles.

Automobiles powered Germany’s post-World War II recovery, making it the economic powerhouse of the EU and allowing defense to take a back seat, especially after the end of the Cold War.

Rheinmetall CEO Armin Papperger stated on Wednesday, while announcing the company’s record earnings, “A period of rearmament has begun in Europe that will demand a lot from all of us. This also brings us, as Rheinmetall, growth prospects for the coming years that we have never experienced before.”

As a sign of the transition process, Volkswagen plans to end production at its Osnabrück plant, and Papperger said on Wednesday that the factory would be “very suitable” as a potential tank factory.

“One thing is clear: before building a new tank factory in Germany, we will definitely look at this,” Papperger said.

In the months preceding the early election in Germany in February, the problems of the automotive sector occupied the public agenda, while security concerns are shifting attention and funding towards defense.

Friedrich Merz, who is expected to be Germany’s new chancellor, wants to exempt defense spending from the restrictions of the country’s debt brake.

Explaining the strategic change, Merz said, “Given the threats to our freedom and peace on our continent, what is necessary must now also apply to our defense.”

VW Group CEO Oliver Blume also acknowledged this change during Tuesday’s balance sheet briefing. “We need to invest more to be safe again,” Blume said.

The VW official added that no private meeting had yet taken place, but the company was ready to advise other manufacturers on defense production, a role it has played before.

VW produced armored vehicles for the Nazis in World War II. Its truck transport subsidiary, MAN Truck & Bus, is affiliated with Rheinmetall through a joint venture to produce logistics vehicles for the army.

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