President Trump and Iran have set Europe a stiff Challenge

President Trump’s decision to pull the United States out of the July 2015 nuclear agreement with Iran, known as the Joint Comprehensive Plan of Action (JCPOA), had been predictable for nearly four months. On 12 January he had set conditions for remaining a party to the deal that were bound to be unacceptable to Iran. He had also bared his (characteristic) belief that he could get a better deal by scrapping the JCPOA and subjecting Iran to crippling sanctions.

Less predictable was Iran’s response to the decision. Some of the statements coming out of Iran since January had suggested that the JCPOA would be of no value to Iran if the United States pulled out. But, when the time came, Iran’s President and Foreign Minister reacted cautiously. In effect, they have given the other parties to the JCPOA – France, Germany, the UK, the EU, Russia and China – several weeks to convince them that without the United States

Iran will still receive sufficient benefits for it to be worth Iran’s while to continue to honour the deal.

The benefits they have in mind are economic. In 2015 their hope was that the JCPOA would not only allow Iran to resume its position as a leading oil exporter, but also would enable it to purchase modern aircraft from Airbus and Boeing, and would bring in substantial European investments.

In the two years since the JCPOA came into effect that hope has been realised only in part. Iranian oil exports have returned to levels that were common before the imposition of harsh sanctions in 2012; but so far Iran has only taken delivery of a small number of modern aircraft and only a few European investments have materialised.

Now even that scale of benefits is under threat from the secondary sanctions that President Trump intends to impose on Europe and the rest of the world to inhibit trade with and investment in Iran. Essentially this is due to the role of the dollar as the world’s reserve currency and to the importance of the US market to most large firms – and to the fact that Airbus cannot export without US licenses.

This means that convincing Iran that it will still receive sufficient benefits will be a stiff challenge. The EU can promise to re-introduce a blocking regulation with which, in 1996, it countered a US secondary ban on investment in Iran’s oil and gas sectors, but European bankers and company executives are unlikely to see that as adequate protection against the penalties the United States may impose on those who do business with Iran. EU leaders can try to muster the political resolve to threaten President Trump with retaliatory measures against US firms operating in Europe, but that may not have the desired effect.

So, in parallel to doing their best to protect Europe from US sanctions, EU leaders will have to persuade Iranian counterparts that the JCPOA benefits Iran in other ways.

That may not be impossible. The JCPOA was and is about much more than trade, investment and sanctions. It enables Iran to assure the world that its nuclear intentions are peaceful and legitimate. It confers moral prestige on Iran. It contributes to securing for Iran the geopolitical backing of Russia and China, especially useful when the White House is in such belligerent hands. It denies the United States and Israel reasonable grounds for claiming that Iran poses a nuclear threat which must be eliminated by the use of force.

Some may wonder whether Europe would be better advised to take an easy way out: siding with President Trump against Iran. The reasons why this seems not to have appealed to European leaders – so far at least – probably include the following.

Releasing Iran from the nuclear restrictions it accepted in 2015, by terminating the JCPOA, would result in Iran reverting to the production of enriched uranium on a much larger scale than under the JCPOA (with which Iran has been fully compliant). This would be Iran’s way of putting pressure on President Trump to reconsider last week’s decision. The trouble is that it would lead Israel, in particular, to clamour for the destruction of Iran’s nuclear facilities, entailing, potentially, dire consequences for global oil supplies and heavy human costs.

There is no reason to think that President Trump is right when he claims that imposing crippling sanctions would lead Iran to concede a better deal. It was not sanctions that led Iran to concede the JCPOA in 2015 (after two years of negotiation) but the United States’ conceding that Iran has a sovereign right to enrich uranium under international safeguards to produce fuel for nuclear reactors (a concession which President Obama liked to obscure by exaggerating the effectiveness of sanctions).

The surest way of guarding against Iran being tempted to misuse its facilities to produce weapon grade enriched uranium after JCPOA restrictions have “sunsetted” (which President Trump claims to fear) is to draw Iran into normal relations with the West, and thereby maximise the costs that Iran would incur if ever it went back on its nuclear non-proliferation pledges.

From the outset it was understood between Iran and the other parties to the nuclear negotiation that the JCPOA would only address concerns about Iran’s nuclear intentions. Had the negotiators attempted also to address Iran’s possession of medium-range (Iran has no intercontinental) ballistic missiles and its alliances with regional foes of Saudi Arabia and Israel (as President Trump now demands), their task would have been impossible. Global norms do not exist in those two domains.

Pacta sunt servanda. The JCPOA was negotiated in good faith. President Trump’s decision to repudiate it is morally indefensible and a dark stain on the record and reputation of the United States. In time it may prove to have harmed the rules-based global order created in 1945.

Europe is strongly committed to that order. A good reputation is a vital component of Europe’s soft power.

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