On Tuesday the 8th of May, a day before Europe traditionally and increasingly apathetically celebrates Europe’s Day, US President Donald Trump decided to pull out the Iran Nuclear Deal.
This was a deal that was discussed by the representatives of Iran and the permanent members of the United Nations Security Council (the United States, the United Kingdom, Russia, France, and China, plus Germany) and the European Union for months. It was finally agreed and signed in April 2015, while by July the 14th of the same year, a comprehensive agreement based on the April 2015 framework, was announced.
The deal was welcomed by most world leaders, either participating in the discussions or not, apart from Israel. The country’s Prime Minister Benjamin Netanyahu, strongly opposed the deal and claimed that it actually threatens the survival of Israel. He also wrote that “such deal would not block Iran’s path to the bomb, it would pave it”. And although many analysts have pointed out some of the agreement’s weaknesses or shortcomings, this deal offered a full access of the international community to inspect the nuclear program in Iran. Something that no other country with nuclear plants ever agreed on or was obliged to give permission to.
A deal is better than no deal
Now that Trump decided to trash the agreement, how can anyone trust American foreign policy if it changes with every US president? The deal might not have been perfect but it was a good start to try to smooth out some thorny issues in the region, potentially leading to a breakthrough and a solution for a lasting peace in the Middle East. Is no access or control in Iran’s program better than a deal that allows it? It is doubtful after all that that’s what the US administration aims for. Rather it clearly is interested in its regional allies’ interests promotion and safeguarding, even if it means that Iran and any other nation which stands in the way, is bullied and humiliated. That’s not how you work for peace though.
Personally, I’ve never felt threatened by Iran or its nuclear ambitions and it is evident that the whole problem is embroiled in Middle Eastern regional politics and power struggles. Yet somehow, Europe is dragged into them with the continent’s alliance to the USA plus the participation of three of its powers in the negotiations. I have also never understood how some countries are allowed to invest in nuclear power and develop it while others are forcibly forbidden by doing so by another country and its allies. Is Pakistan more stable and reliable than Iran for example?
Until now, it was mainly Iran and other Middle Eastern countries that either the US administration or its allied states in the region-such as Israel and Saudi Arabia-felt that pose a threat to their interests, baring the consequences and hostility of American foreign policy.
However, Trump’s recent move hurts Europe directly this time. In 2016, the European Union exported more than €8.2 billion ($9.7 billion) worth of goods to Iran, while importing almost €5.5 billion ($6.5 billion) from there, according to the European Commission. “U.S. sanctions will target critical sectors of Iran’s economy. German companies doing business in Iran should wind down operations immediately,” Richard Grenell, the U.S. ambassador to Germany tweeted on the same night the scrapping of the deal was announced.
Carl Bildt, the former leader of Sweden who is now co-chair of the European Council on Foreign Relations, highlighted that the sanctions would have the biggest impact beyond America’s borders. “U.S. Iran sanctions are hardly hitting any U.S. companies, but aim primarily at European ones,” he said in a tweet.
Trump has now directed maximum economic sanctions to be applied. This is nothing less than a massive assault on the sovereignty of European states and the European Union. They are deprived of their right to decide on their policies and actions by brutal dictates from a foreign and allegedly friendly country. It relegates Europe to just abiding by and implementing policies with which it profoundly disagrees.
It is becoming increasingly obvious that the USA cannot be regarded as a reliable ally of Europe forever unless of course, our leaders abide with American foreign policy to the letter, regardless if it hurts our economies. The Trump administration not only previously opened a trade war with Europe but now it additionally forbids us to conduct business with third countries, unless they agree to it or the terms.
It is time for Europe to get the message that the new US government is trying to give – we either get ourselves together and look after our own affairs, or we follow their command to the letter if we want to continue to receive their protection and investments. Perhaps Europe should consider its weaning from American influence and guidance while seriously looking into becoming self-sufficient and reaching out to new blocks and partners to trade and forge alliances with. Maybe that’s what the new US government also wants as it appears.
Change of money
There was always some healthy competition between the two sides of the Atlantic but recently it has become obviously more intense, with under-the-belt hits. Just before the US scrapped the Nuclear Deal, Iran decided to start reporting foreign currency amounts in euros rather than U.S. dollars, as part of the country’s effort to reduce its reliance on the U.S. currency due to political tension with Washington.
Bank transactions involving the dollar have been already difficult for Iran because legal risks make US banks unwilling to do business with Tehran. Foreign firms can be exposed to sanctions if they do Iranian deals in dollars, even if the operations involve non-US branches. As a result, France started offering euro-denominated credits to Iranian buyers of its goods later this year to keep its trade out of reach of U.S. sanctions, the head of state-owned French investment bank Bpifrance said in February.
Europe’s response to Trump’s announcement is to potentially shield individual European companies from US pressure by deploying its so-called “blocking statute,” banning EU companies from complying with Washington’s sanctions and protecting them from penalties imposed by overseas courts.
There is a precedent. Washington issued a similar threat against European companies in 1996 over Cuba. The EU evoked the “blocking statute” and the Clinton government backed down. Thus Brussels is now considering it and a final decision was expected at the European Summit in Sofia yesterday, May 17th. Following the summit, European Energy Commissioner Miguel Arias Canete is expected in Tehran for consultations on May 18th.
The EU could open a credit line to Iran in Euros and continue to absorb Iranian oil – Italy already has a five billion credit line for investment in the Islamic Republic. These combined moves would keep the agreement afloat. The question is whether all the EU 28 have the consensus to play hardball with Washington. It is shameful that the USA is behaving like a bully, even towards its oldest allies. Hopefully, Europe will stick together in this case, showing Trump and its administration that our continent needs the freedom to conduct business with countries that are of economic or political interest to us.
Unless of course, the USA desires us to always rely on its own businesses to achieve economic growth, something that doesn’t comply with Trump’s “America First” policies. They cannot have both – if America looks after its own first, then Europe has no other option but to do the same. Maybe this is for the best interest of both sides, as the USA was carrying the weight- but also ripping the benefits, of monopolising European defence, protection and economic stability or growth.
Under that arrangement, Europe can never claim its own role in the globe and expand its influence, while America will always solely bear the burden-and indeed the privilege, of promoting Western values to the rest of the world. No one has agreed to give to the USA this privilege though, we were all bought into this by circumstances and in the case of Europe, our own grave mistakes. The times are changing and we are receiving an ultimatum from our American allies.
The rift across the Atlantic maybe not permanent or necessarily bad. It will certainly help establish new rules in this old alliance, ones that will push Europe out of its comfort zone at last. Re-evaluation of a relationship is always good and our continent was too hesitant to challenge the status. This time it is our American friends that are initiating the change. Will Europe step up to the challenge and form a united front towards Trump’s ultimatum?