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Iran Nuclear Deal: U.S. Pushes Europe’s Back To The Wall

By Nola Valente | The Media Line

July 18, 2018

P5+1 and Iran representatives pose prior to the announcement of an agreement on Iran nuclear talks on April 2, 2015 at the The Swiss Federal Institutes of Technology (EPFL) in Lausanne. (Photo: FABRICE COFFRINI/AFP/Getty Images)
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Trump seeks to isolate Iran, but his plan may backfire

Following U.S. President Donald Trump’s decision to withdraw from the Iran nuclear deal, European leaders flocked to Washington in an effort to arrive at an understanding that would allow them to salvage parts of the accord while limiting their nations’ exposure to renewed American sanctions targeting the Islamic Republic.

But to their great dismay, they were summarily rebuffed, adding to an already-growing transatlantic divide.

The situation, many analysts warn, is unprecedented, with the U.S. acting unilaterally in contravention of the interests of its closest allies. In the past, they contend, most disagreements of this magnitude would have resulted in compromise.

The Joint Comprehensive Plan of Action (JCPOA), as the 2015 accord struck by the Obama administration is formally known, limited Iran’s enrichment of uranium to 3.67 percent, well below the 90 percent threshold required to produce atomic bombs. Tehran also was obligated to reduce its number of operational centrifuges from 20,000 to 5,000. In exchange, global economic sanctions on Iran were lifted and the country received a financial windfall estimated at over $100 billion as its foreign assets were unfrozen.

To ensure Tehran kept its end of the bargain the U.S. vowed to implement the strictest-ever, “anytime, anywhere” inspections regime; however, President Trump argues that this has not materialized and, irrespective, suggests the Iranians cannot be trusted. The American leader likewise has stressed that, in his estimation, the deal is the “worst ever” as it fails to address Iran’s ballistic missile program and “nefarious” regional expansionism.

Despite push-back, Paris, London and Berlin are in a precarious situation and may be forced to dump the nuclear deal altogether when U.S. sanctions snap-back into place beginning in August.

“If and when the U.S. applies extra-territoriality to its own sanctions policy and does not grant exceptions, the Europeans won’t be able to deliver on the economic incentives of the JCPOA,” Josef Janning, an Iran expert at the European Council on Foreign Relations, told The Media Line. “Business with the U.S. is far more important than business with Iran,” he continued, a reality that many analysts believe will force European powers to eventually abandon the accord.

“The fact is that the U.S. withdrawal could kill the agreement, not immediately but over time, because of the centrality of the U.S. in global commerce,” Janning asserted. “This experience could lead to the development of some new instruments, such as a European clearing house for payments, to reduce exposure to the [American] dollar and U.S. financial institutions, though this won’t change the basic dependence over the mid-term.”

Indeed, Janning insists that there is only a slim chance of the EU finding a way to offset the effect of U.S. secondary sanctions. To this end, the body is lobbying other countries—whose economies are not as intertwined with the U.S.’, thus rendering them less susceptible to American penalties—to increase trade with Iran to make up for the anticipated losses.

“From a commercial perspective, European multi-nationals such as the French Energy company Total, have little prospect of continuing business with Iran unless specific exemptions are provided by the U.S. Treasury,” Ellie Geranmayeh, who advised EU governments and corporations during the nuclear negotiations with Iran, explained to The Media Line. “The bloc is therefore focused on facilitating small and medium-size enterprises, and those companies engaged in business that is not subject to U.S. secondary sanctions, such as pharmaceuticals, to stay in or enter the Iranian market because they have less exposure to the U.S. market.

“Another important track involves Iranian energy exports,” she elaborated, “as Washington has recently shown more flexibility after it became evident that succeeding in dropping Iran’s oil exports to zero would undermine global energy markets and possibly induce a spike in fuel prices. Europe, China and Russia are in consultation with Iran on how to minimize the impact of U.S. sanctions on Iran’s energy market share.”

Jarrett Blanc, formerly the U.S. State Department coordinator for Iran nuclear implementation, envisions the EU moving to reduce its dependence, financial and otherwise, on the U.S., especially when considering what he views as President Donald Trump’s open and unnecessary hostility towards the bloc.

As regards what to expect moving forward, Blanc affirmed to The Media Line that “isolating the U.S. is certainly the political play for the Iranians. They are very pleased with a situation where for once, it is not them [in the docket].”

(Nola Valente is a Student Intern in The Media Line’s Press and Policy Student Program)

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