Abu Dhabi, UAEWednesday 20 November 2019

Iran’s attrition strategy pays off in Europe

Tehran extracts concessions from EU but could soon hit limit

Iranian deputy foreign minister Abbas Araqchi attends the meeting on the 2015 nuclear deal in Vienna on June 28, 2019. AFP
Iranian deputy foreign minister Abbas Araqchi attends the meeting on the 2015 nuclear deal in Vienna on June 28, 2019. AFP

Iran’s strategy of waiting for the other side to blink claimed a familiar target when the EU delivered last week on technical help for Tehran to overcome US sanctions, despite public misgivings about Iran’s declared readiness to breach limits of the 2015 nuclear deal.

Capitalising on divisions between Washington and its allies, Iran renewed its push for further concessions from Europe at a major meeting in Vienna on Friday, demanding EU loopholes to make large oil sales. The meeting was to discus the status of the nuclear deal, officially called the Joint Comprehensive Plan of Action, from which the United States pulled out last year.

Washington said Iran lost tens of billions in oil revenue as a result of the sanctions, affecting Tehran's backing for sectarian Shiite militias across the region. But the EU's help to Iran so far centres on a barter mechanism called Instex, mainly to make possible Iranian imports of medicine and basic commodities from Europe.

Today’s focus is on how dangerous and volatile the region has become, with many world leaders now pushing for compromise.

The Washington Institute for Near East Policy

A research note published last week by the Washington Institute for Near East Policy said Iran gained leverage through two recently applied “instruments”: reactivation of aspects of the nuclear programme and the capability to disrupt oil supplies passing through the Strait of Hormuz.

“Whereas two months ago the narrative centred on Washington’s unexpected success at imposing real pain on Iran’s economy, today’s focus is on how dangerous and volatile the region has become, with many world leaders now pushing for compromise,” wrote Patrick Clawson and Mehdi Khalaji.

In a sign of market gratification that could bolster the architects of Tehran's strategy, the Iranian rial improved slightly after the activation of Instex, reversing a fraction of the huge losses it had suffered since last year. The rial was trading on the black market at 129,500 to the dollar on Sunday compared to 132,000 on Friday, according to currency monitors Bonbast.

But Iranian Deputy Foreign Minister Abbas Araqchi said progress made on helping Iran in Vienna was not enough and he did not rule out continuation of Iranian uranium enrichment beyond the limits set in the nuclear deal.

Mr Araqchi’s slightly ambiguous language has been the hallmark of Tehran's policy throughout the latest tensions: assuming a hardline posture while preserving a diplomatic opening for those in Europe who would argue for accommodating Iran.

The deal to curb Iran’s nuclear programme was signed with the five permanent UN Security Council members and the EU. Iran had said it was prepared to break the deal's limits on uranium stockpiles and on enrichment as part of its response to the reimposition of US sanctions.

Tehran appears to have taken advanced steps in this regard but so far does not seem to have actually breached the limits. A European official said progress had been made in Vienna on the uranium issue but did not give details.

Washington has intensified sanctions on Tehran since pulling out of the deal, citing sunset clauses they say could allow a major relaunch of its nuclear programme, the deal’s failure to halt its development of ballistic missiles and what US officials term as the spread of Iran’s Shiite proxy militias as a core element behind regional instability. In a move seen by Tehran as a major escalation, the US last week targeted individuals and entities that deal with Iranian supreme leader Ayatollah Ali Khamenei or officials serving under him.

Iran’s political position had strengthened since attacks on oil tankers in Gulf in the last two months raised the possibility of an open conflict. France and Germany did not directly back US accusations that Iran was behind the attacks and led Europe in resisting US efforts to support Washington’s “maximum pressure” policy toward Tehran.

Core support within Europe for accommodating Iran – as long as it does not breach the nuclear deal in a major way – lies in Berlin and Paris, as well as within EU institutions. On Saturday Iranian state television said Tehran’s compliance with its nuclear commitments depended on Europe’s ability to shield Iran from sanctions, raising pressure on the EU to preserve the relationship.

As it continues to milk the EU's accommodation, Tehran could soon hit a limit. European countries said in a statement after the Vienna meeting that there was continental consensus on facilitating “legitimate trade and financial operations with Iran”. However, they stayed clear of promoting oil sales, which would take differences between Europe and the US to a new level.

Updated: June 30, 2019 08:55 PM

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