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Abu Dhabi, UAETuesday 17 July 2018

Europe ponders next move as Trump rejects ‘defective’ Iran deal

Despite months of wooing, the American president has rejected entreaties by Britain, France and Germany

The bottom line in the hours after the announcement for the Europeans is the immediate effect on European business dealings with Iran. AFP/John MACDOUGALL
The bottom line in the hours after the announcement for the Europeans is the immediate effect on European business dealings with Iran. AFP/John MACDOUGALL

Boris Johnson, the British foreign secretary, had proclaimed US President Donald Trump could merit a Nobel Peace Prize while French President Emmanuel Macron had engaged in a day-long bromance with the US leader. Even German Chancellor Angela Merkel showed a warm side to the property developer in the White House.

But European hopes turned to ashes when Mr Trump announced that America would withdraw from “the defective at its core” Iran agreement when he spoke from the Diplomatic Room. He said he would work with allies to find a real, comprehensive and lasting solution” to Iran’s nuclear threat.

A joint statement by the three European leaders, delivered after the Trump announcement, urged “the United States to ensure that the structures of the Joint Comprehensive Plan of Action (JCPOA) can remain intact, and to avoid taking action which obstructs its full implementation by all other parties to the deal.

"After engaging with the US Administration in a thorough manner over the past months, we call on the US to do everything possible to preserve the gains for nuclear non-proliferation brought about by the JCPOA, by allowing for a continued enforcement of its main elements.”

Mr Macron said the announcement would not end efforts to impose a tighter sanctions regime on Iran.

“We will work collectively on a broader framework, covering nuclear activity, the post-2025 period, ballistic activity, and stability in the Middle-East, notably Syria, Yemen, and Iraq,” he tweeted.

The largest buyers of Iran's oil exports are in Asia and governments there were keen to take a business as normal approach. Chinese foreign ministry spokesman Geng Shuang said the agreement was crucial to upholding the international nonproliferation regime and promoting peace and stability in the Middle East.

"We express regret over this decision made by the United States," Mr Geng said.China would "carry on the normal and transparent pragmatic cooperation with Iran on the basis of not violating our international obligation."

The bottom line in the hours after the announcement for the Europeans is the immediate impact on European business dealings with Iran. Even with a phased implementation period, the US sanctions will “snap-back” eventually, targeting not only the US, but also global companies.

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Read more:

Iran nuclear deal: Trump pulls US from landmark agreement

UAE, Saudi Arabia and Bahrain welcome Trump’s exit from Iran nuclear deal

Comment: The only country which stands to lose from a nuclear pull-out is the US

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European leaders have sought to address corporate fears and confusion. “We are working on plans to protect the interests of European companies,” Maja Kocijancic, EU spokeswoman for foreign affairs, said on Tuesday.

A senior French cabinet minister called the decision a "major mistake" and said Europe would seek exemptions for commercial activity from the new sanctions.

“The international reach of US sanctions makes the US the economic policeman of the planet, and that is not acceptable,” French Finance Minister Bruno Le Maire said Wednesday.

Experts believe that no matter what stance the governments take, US sanctions would reduce European business dealings with Iran, which have revived moderately since the deal came into effect.

“Reimposed US unilateral sanctions would constitute one factor, among many others, potentially weighting against investment in Iran,” said Patrick Clawson at the Washington Institute. “Since the JCPOA came into effect the level of European business in Iran has been rising but by no means spectacularly. Reimposed US sanction would most likely slow European trade with Iran but the impact on overall European trade would be trivial.”

Even so the commercial element is crucial to the European response. If the task of preventing a Trump pull out fell to France, the task of managing the fallout could rest disproportionately on Germany’s leadership.

To the foreign policy establishment in Berlin, the 2015 agreement marks the high point of global diplomacy in recent decades.

Heiko Maas, the German foreign minister, said Europe needed to address the US decision and its fallout with a cool head.

"It is not at all clear what, in the United States' view, could take the place of the nuclear agreement to prevent Iran verifiably from producing nuclear weapons," he said. "We will also have to analyse what consequences the United States' withdrawal will have for European companies and how we in Europe can react to them together."

Markus Kaim of the German Institute for International and Security Affairs said that the involvement of the US and Iran gave the accord historic reach.

“The overarching topic was to find some sort of reconciliation between the US and Iran,” Mr Kaim said. “If the United States is pulling out of the agreement, I think the Iranian regime will not comply any longer with the existing regulations.”

Even in Britain where the strongest instinct to provide support to Washington resides, there were few defenders of the president’s announcement.

Sir Adam Thomson, a former UK ambassador to Nato, released a letter signed by leading British parliamentarians that contained a stark warning. “If you now sideline this agreement you will push London, Paris, Berlin and Brussels into the arms of Moscow and Beijing in seeking to continue the deal with Tehran,” it said. “We are concerned that you may misjudge the strength of Europe’s attachment to this deal and the emotional reaction if you were to go further and re-impose secondary sanctions on British and other European business.”

A report from The Henry Jackson Society think tank said Europe will still face a dilemma of how to tackle Iran’s ballistic missile programme, which has grown rapidly as sanctions were lifted and posed a rising challenge to the region.

“In the two years since the nuclear deal was signed, Tehran has flagrantly carried on testing missiles capable of carrying increased payloads; has constructed missile facilities in Lebanon; and has armed its regional proxies: Hezbollah, and the Houthi rebels in Yemen,” said Timothy Stafford, a researcher and the report author.

“These moves threaten international peace and security by disrupting the Middle East’s delicate balance of power.

“It is time to call Iran out. Britain, France and Germany should endorse a much tougher approach, tying the imposition of sanctions to Iran’s efforts to acquire advanced missile capabilities and holding Tehran responsible for the weapons it exports to others.”

The report recommended the Europeans band together to:

• Reject the Iranian contention that economic sanctions imposed against those associated with the Iranian ballistic missile programme are in any way prohibited by the terms of the JCPOA.

• Apply a policy of “extended responsibility” in order to deter use of the ballistic missiles distributed to proxy groups in Lebanon and Yemen. The West should regard any Iranian-produced or manufactured missile launched against a third party as a deliberate and hostile direct attack by Tehran itself.

• Sets out clear red lines for the imposition of ballistic missile sanctions. This would provide much-needed clarity as to when key European states would adopt ballistic missile-related sanctions, creating a deterrent that would hinder Iran from engaging in continued testing.