Introduction: Is the Iran nuclear deal dead?
Marina Forti 7 June 2018

Is the Iran nuclear deal dead? Perhaps not, after all, in spite of president Donald Trump’s decision to withdraw the United States from the Joint Comprehensive Plan of Action (JCPOA), as it is formally known. The US withdrawal, however, is a dangerous blow to the most important diplomatic achievement in the Middle East in many years.

Let’s summarize the facts. On May 8 president Trump announced the US will reinstate all nuclear-related sanctions against Iran and withdraw from the agreement, which was signed in July 2015. Trump described the nuclear agreement as a “terrible deal … that should never, ever have been made”. The US sanctions suspended under the agreement are again in force; those companies and banks that currently trade and invest in Iran are supposed to close their businesses within three to six months. Crucially, President Trump announced the reinstatement of “secondary sanctions” against any third country individual, company or bank entering business relations with Iran.

Although expected, Trump’s decision is still highly destabilizing. The US is pulling out from a multilateral agreement to which Iran has so far fully complied, as repeatedly certified by the International Atomic Energy Agency (IAEA), the UN organization responsible for monitoring nuclear safety under the Nuclear Non-Proliferation Treaty. It is important to note that the latest communiqué by IAEA inspectors is dated 24 May. In other words, Iran continues to comply with the terms of the nuclear deal, even after the US withdrawal.

In a further escalation, on May 21st the US Secretary of State, Mike Pompeo announced a list of 12 demands on Iran. Bellicose in tone, Pompeo threatened to “crush” the country if it did not concede to the US’s (unrealistic) mandates. “Nothing short of an ultimatum demanding Iran’s total surrender to US wishes”, writes Seyed Hosein Mousavian, a former Iranian ambassador and spokesperson for the Iranian nuclear negotiators (see his article in this dossier), about the US list. The 12 demands betray the true intentions of the Trump administration, namely to provoke the collapse of the Iranian state and bring about “regime change”. Such an outcome, however, would be disastrous for Iran and a nightmare for the entire region, as well as for Europe.

How will Iran respond to the US withdrawal from the deal? Soon after Trump’s announcement, the Iranian president, Hassan Rouhani, stated that Iran will remain in the JCPOA as long as the other parties  (Russia, China, France, Germany, Great Britain and the European Union) do, and as long as they commit to safeguard the economic benefits Iran is entitled to under the deal. Failing this, Rouhani said, Iran will resume enriching uranium “more than before”. This position was confirmed by Iran’s Supreme Leader, Ayatollah Ali Khamenei, although in much stronger terms. Expressing doubts that the European parties will be able to counter the US, Khamenei noted: “Without receiving strong guarantees from these three countries we won’t stick to the nuclear deal”. The “last word” in strategic matters is that of the Supreme Leader. And in a solemn “policy speech” delivered on May 23rd, just after Pompeo’s remarks, Khamenei addressed directly to the European Union, accusing the US of being an “erratic” and unreliable party. The Supreme Leader presented a list of political and economic conditions: that Europe condemn the United States for breaking the agreement, that it stop questioning the Iranian missile program and regional activities, and guarantee Iran’s oil sales and banking transactions. Khamenei spoke at the presence of all Iranian political factions, to show the regime is united in confronting any external threat.

To add to the pressure on Europe, on June 5th the head of Iran’s Atomic Energy Agency Ali Akbar Salehi announced it is developing infrastructure to increasei ts uranium enrichment capacity, and it has informed the Iaea. The plan is not in violation of the Jcpoa, as it is just the start of the production process and “does not mean that we will actually start assembling the centrifuges”, said Salehi. The message is clear, Iran would restart its activities should the nuclear deal collapse – and it will collapse, should Iran will be denied oil exports and banking transactions.

Will Europe be able to offer the guarantees Iran is demanding? Trump’s decision was a humiliation to the Europeans, and the first European reaction was indeed unusually strong. The US decision was unanimously deemed “unacceptable”.

Europe has a lot at stake in salvaging the JCPOA, both to avoid a dangerous path toward more destabilization and conflict in the Middle East and to defend a world order based on multilateral diplomacy and international law, argues Nathalie Tocci, director of Italy’s Istituto Affari Internazionali (IAI) and special adviser to European High Commissioner for Foreign Affairs Federica Mogherini (see the interview with Ms Tocci). This is why EU leaders went on to discuss practical measures to counter the new sanctions, from reviving a “blocking regulation” to protect European companies, to creating public financial channels denominated in euro for business in Iran.

It is difficult to overstate the impact of the US pulling out of the Iran nuclear deal. For sure, president Donald Trump’s announcement will affect not only Middle Eastern regional balances but also the international system and the transatlantic relations more generally, writes Eleonora Ardemagni.

“President Trump took an extremely dangerous decision that will have negative effects on a global scale”, argued Seyed Kazem Sadjadpour, head of the Institute for Political and International Studies (IPIS) in Tehran, during a seminary recently hosted by the IAI in Rome. “In the Us a radical approach is prevailing, and not only toward Iran. At the regional level we can expect more instability and insecurity: the signs are already visible in certain provocative actions taken by Israel or in the over-confident approach of the Saudi. We are talking of a volatile region, where the Palestinian issue is probably the major issue and it must be addressed as a question of fundamental human rights and justice. At global level, too, President Trump’s decision will cause great damage to the international institutions and order”. The Iranian diplomatic and scholar noted that “the JCPOA was the result of a long negotiation under the auspices of the UN Security Council and it was signed by the US along with other five nations and the European Union. Who on Earth will confidently negotiate with the US again?”.

But “the damage is done”, as Sadjadpour puts it: “What we need now is some damage management, and time will be essential”. This is why closer cooperation between Europe and Iran is now so important.

However, the question remains: will Europe be sufficiently strong and united to defend its interests and counter US pressure? This is far from granted, given that most major European companies and banks have interests in the US and are therefore vulnerable to the “secondary sanctions” (indeed this is the reason that many European banks were reluctant to resume business with Iran, undermining implementation of the JCPOA, even before Trump’s announcement ). US companies were prevented from trading with Iran even before, with few exceptions. In contrast, many European companies (if not banks) have resumed trade and investment in Iran, with hundreds of German, Italian, French firms opening shop in Tehran. Peugeot and Renault dominate the Iranian automotive industry; France’s Total and the Italian Eni are developing oil fields. Airbus is an interesting case: the European aircraft maker signed a contract to sell more than one hundred aircraft to Iran. But these planes incorporate American parts and anything with 10% or more of the components being American-made falls under American law. Some European nations might be tempted to negotiate individual exemptions for this or that company with the US. But it is likely to be in vain. The Trump administration has made it clear that there will be no exceptions, the US will “hold those doing prohibited business in Iran to account”, as Pompeo said. A looming Us-Eu trade war makes things worst.

Meanwhile, in Iran the US decision to pull out the JCPOA has opened the stage to those extreme factions that had always opposed negotiating with the West: “It is as if the hardliners in Tehran, Washington and Tel Aviv are working together in one another’s interest”, an Iranian observer close to the reformists said recently. Only the Supreme Leader’s intervention silenced the hardliner’s attack on Rouhani and his entourage, for the moment. Trump’s decision revived a general resentment against the West. The sense of an incumbent threat has also revived patriotic feelings: “Nationalism has never been so strong”, says Saeed Leylaz, an economic and political commentator close to the Rouhani government.

The US Treasury Department “has been turned into a war room against Iran”, notes the Iranian news agency Tasneem, commenting on its role in applying sanctions against countries that do business with Iran. This is the multi-faceted challenge Europe faces: averting the trend toward economic, political – and possibly military –confrontation with Iran; keeping the doors open to diplomacy and cooperation to address the many crisis in the Middle East; and salvaging the idea of a world order based on international law, diplomacy and multilateralism.