GENEVA—The U.S. and five other world powers struck a historic agreement with Iran on Sunday, agreeing to ease part of an economic stranglehold in exchange for steps aimed at capping Tehran's nuclear program and ensuring the country's Islamist government doesn't rush to develop atomic weapons.
The agreement calls for Iran to stop its production of near-weapons grade nuclear fuel—which is uranium enriched to 20% purity—and for the removal of Tehran's stockpile of the fissile material, which is estimated to be nearly enough to produce one nuclear bomb.
Enlarge Image
French Foreign Minister Laurent Fabius, center, leaves the Intercontinental Hotel prior to talks over Iran's nuclear program in Geneva, Switzerland, Nov.23. Jean-Christophe Bott/Associated Press/Keystone
Iran, in return, will gain relief from Western economic sanctions that U.S. officials believe will provide between $6 billion and $7 billion in badly needed foreign exchange for Tehran over the next half-year.
The agreement reached in Geneva is an interim deal for about six months that will allow international powers to try to strike a permanent pact, an effort experts said would be the true test of Iran's new government, headed by revitalization-minded President Hasan Rouhani.
Iranian Foreign Minister Mohammad Javad Zarif met with E.U. representatives in Geneva on Friday in an attempt to hash out details of a possible deal to curb Iran's nuclear program. Via The Foreign Bureau, WSJ's global news update.
While U.S. officials argued the deal will roll back Iran's nuclear program, critics of the diplomacy are likely to seize on key Western concessions, including a signal that Washington ultimately will agree to accept Iran's enrichment of uranium and would leave open for now the future of Tehran's plutonium-producing reactor in Arak.
Enlarge Image
EU foreign-policy chief Catherine Ashton, center, flanked by members of her delegation. Fabrice Coffrini/Press Pool
The first-stage deal also takes no steps to force Iran to ship out or destroy the roughly 19,000 centrifuge machines it is amassed to produce nuclear fuel.
U.S. lawmakers and key American allies have said Iran will only abandon its nuclear program if international pressure is increased.
Enlarge Image
Iranian Foreign Minister Javad Zarif, center. Fabrice Coffrini/Press Pool
The deal was completed during three exhaustive negotiating sessions over the past month in Geneva involving Iran and the five permanent members of the United Nations Security Council and Germany, a diplomatic bloc called the P5+1.
U.S. Secretary of State John Kerry and the foreign ministers of the other members of the P5+1 states traveled to the Swiss lakeside city over the weekend to push through the final agreement—their second such visit in two weeks.
American and Iranian officials called the deal a potential turning point in Tehran's relations with the international community and an important "first step" in ending the decadelong standoff over Iran's nuclear program.
"The agreement creates the time and space for a comprehensive solution," said Catherine Ashton, the European Union's foreign policy chief, who leads the P5+1.
Enlarge Image
Switzerland's Foreign Minister Didier Burkhalter, left, shakes hands with Iranian Foreign Minister Mohammad-Javad Zarif before talks about Iran's nuclear program on Saturday. Associated Press
U.S. and European officials said the six months that the interim agreement covers will be used to forge a broader accord that permanently ends the threat posed by Tehran's nuclear work. Iranian officials stressed this week that the nuclear program only had civilian uses.
American, European and Iranian officials described on Saturday a testy three days of talks that were needed to forge the final deal.
The question of what to do with Iran's heavy water reactor nearing completion in the city of Arak nearly killed an agreement in the later stages of the diplomacy, said theses officials.
France was pushing for a complete dismantling of the reactor on the grounds that there was no nonmilitary rational for building the facility. The U.S. government shared this position
Under the deal, Iran agreed to significantly increase inspections of Arak by the U.N.'s nuclear watchdog, the International Atomic Energy Agency.
Iran also agreed to cap its enrichment of uranium to levels only usable as fuel for a reactor, which is a purity of 3.5% to 5%. Iran committed to maintaining its total stockpile of the low-enriched nuclear fuel at its current level, which is around six tons, during the six-month period.
Iran and the P5+1 also forged a compromise over the issue that over the past few days looked as though it could squelch a deal—Tehran's demand that the international community accept its "right" to continue producing nuclear fuel domestically.
Tehran cites the U.N.'s nuclear Nonproliferation Treaty as affording every signatory that legal right to enrich uranium, provided it is used for civilian purposes. Successive U.S. administrations have denied this right exists and have supported multiple U.N. Security Council resolutions requiring Tehran to suspends its enrichment activities.
In a compromise, the P5+1 agreed to a text that says Iran will enjoy all the rights of treaty signatories, provided Iran satisfies all of the IAEA's questions about the alleged military dimensions of Iran's program. But the U.S. and its partners won't be forced to formally accept that Iran will be allowed to enrich.
Still, the compromise is seen as a victory for Iran, which has campaigned for a decade on this issue. U.S. officials on Saturday acknowledged that Iran will likely be allowed to maintain some enrichment capacity on its soil as part of a final deal.

More

"We're interested in exploring how Iran might end up with a limited and tightly controlled facility to enrich," said a senior U.S. official.
U.S. officials said the agreement will provide sanctions relief of between $6 billion to $7 billion over the next six months, a number far below estimates made by critics of the agreement, including the government of Israel. The Obama administration also stressed that any easing of the sanctions could be quickly reverses if Iran is found not complying with the agreement.
U.S. officials said the P5+1 immediately will begin helping Iran repatriate about $4.2 billion in oil revenues that it has not been able to access overseas as a result of the sanctions. Iran is estimated to have $50 billion in these revenues overseas, which its government has been unable to access. The funds will be returned to Iran in monthly installments of $600 million.
The agreement also calls for the U.S. and European Union to ease the ban on Iran's trade in petrochemicals, precious metals, automobiles and airplane spare parts. U.S. and European officials said they didn't believe that such commerce could derive more than a few billion dollars in revenues for Tehran over the next six months. But they said some of the trade—such as access to airline parts—is critical to Iran, which has increasingly found its jetliners grounded due to safety concerns.
U.S. officials stressed that the sanctions relief will still be dwarfed by the revenues Iran is still losing out due to the pervasive sanctions that remain in place.
These diplomats estimated that Iran still is likely to lose around $25 billion over the six months to the U.S. and European embargo against oil purchases. They also believed Tehran will continue to find itself unable to repatriate the earnings from the oil its does sell in Asia and the Middle East, due to sanctions. One official said Iran was likely to find itself unable to access another $14 to $16 billion in oil earnings over the next six months.
"The pressure of the sanctions will continue to grow," said a second American official involved in the Geneva talks.
Write to Laurence Norman at Laurence.Norman@wsj.com and Jay Solomon at Jay.Solomon@wsj.com

What's in the Iran Deal

The historic deal struck between Iran and world powers is an interim agreement that gives each side a small portion of their demands.
Western officials said the deal will halt the growth of Iran's nuclear program; roll back key parts of the nuclear complex; step up monitoring; and expand the time it will take Iran to "break out" and produce weapons-grade fuel.
Iran says it is receiving a break from economic sanctions and international recognition that it is entitled to pursue a civilian nuclear program.
Here are major provisions:
Enrichment
-Iran must cease all uranium enrichment above 5% purity.
-International powers will recognize the right of the Iranian people to access peaceful nuclear energy.
Stockpile
-Iran will begin converting existing stocks of uranium enriched to 20% purity to an oxide that can't be used in weapons, or dilute it to a fraction of its current purity level. (Uranium enriched to 20% is considered near weapons-grade. Atomic bombs require nuclear material at 90% purity to be more than a "dirty bomb.")
-Iran must not increase its stockpile of low-enriched uranium.
Centrifuges
-Centrifuges capable of enriching uranium beyond 5% purity will be disconnected.
-Iran will not install any new centrifuges. Old units will not be replaced with new ones. Iran can't increase the number of enrichment facilities in the country.
-Iran will not amass new centrifuges that can be quickly put into place if long-term talks collapse.
Verification
-Daily inspections will be held for the first time at the Natanz and Fordow facilities, replacing weekly inspections. New access to centrifuge production sites, uranium mines and mills, design information on the Arak nuclear power reactor.
-Iran agrees to some of the provisions contained in a document known as the "additional protocol," an agreement with the United Nations' nuclear watchdog, the International Atomic Energy Agency. Iran under the provision would provide expanded information on plans for reactors and production sites.
Arak nuclear reactor
-No advancement in work on the plant will take place during the interim agreement.
-Iran will not dismantle Arak or begin dismantling it during the agreement.
'Breakout'
-If it chose to rapidly produce weapons-grade material, Iran will need weeks to months longer than it would need without the interim agreement. With less higher-enriched uranium, fewer centrifuges and more inspectors, international powers would have more time and wherewithal to spot a "breakout" attempt, Western officials say.
Sanctions
-Iran will receive overall relief believed to equal $6 billion to $7 billion during the interim agreement.
-Iran will have better access to its own funds for humanitarian initiatives.
-Sanctions are being suspended on petrochemical exports.
-Sanctions are being suspended on dealing in gold and precious metals.
-Most sanctions affecting Iran's auto industry are being suspended, so leaders can work on making it a major part of its economy.
-Sanctions are being eased on airplane parts, including by ensuring parts are used for flight safety and not, for example, for military radar.
-Any restricted Iranian funds may now be used for purchasing medical equipment. West will watch to make sure purchases are from recognized firms and not unknown companies with suspect motives.
-All relief is considered limited, temporary and reversible. International powers will maintain core sanctions on banking and oil. Any measures can be reversed if Iran doesn't meet its commitments.
New sanctions
-West will retain right to impose new sanctions if agreement is violated.
--Jay Solomon and Laurence Norman
Write to Laurence Norman at laurence.norman@wsj.com and Jay Solomon at jay.solomon@wsj.com