London, United Kingdom – When President Donald Trump decided to unilaterally withdraw the United States from the nuclear deal between Iran and world powers, and use sanctions to economically squeeze Tehran back to the negotiating table, Europe found itself in a bind.
Trump wanted the deal’s European signatories to abandon the agreement. Tehran wanted them to maintain it.
Cognizant of Trump’s penchant to economically punish nations that refuse to play along with the White House but all too aware of the security consequences of the deal falling apart, European leaders defaulted to rhetoric rather than action – pledging repeatedly to uphold the pact even as they failed to deliver on its promised economic benefits to Tehran.
Rhetoric proved untenable after Trump ordered the assassination of Iranian General Qassem Soleimani and Iran retaliated with air attacks on military bases hosting US troops in Iraq. As both sides appeared poised on the brink of war, Iran announced on January 5 that it would no longer adhere to restrictions the deal – formally known as the Joint Comprehensive Plan of Action (JCPOA) – had placed on its nuclear programme.
That catalysed what is arguably Europe’s boldest move since Trump withdrew from the JCPOA, which had been signed in 2015.
Last week, Germany, France and the United Kingdom – known as the E3 – triggered JCPOA’s Dispute Resolution Mechanism (DRM).
The move sets in motion a process that could ultimately see the United Nations reimpose sanctions on Iran – an outcome that would render the JCPOA well and truly dead.
But the ramifications could reach even further.
Iran said on Monday that if the E3 refers it to the UN, it may withdraw from the global nuclear Non-Proliferation Treaty (NPT) – the foundation of the JCPOA and the bedrock of global nuclear arms control for more than 50 years.
Both sides appear keen to avoid such drastic outcomes. Tehran says it wants to keep negotiating with Europe, while the E3 says it aims to “preserve the deal” and find a way forward “diplomatically”.
While the E3 may have every intention of salvaging the JCPOA, analysts say that by invoking the dispute mechanism, Europe revealed just how powerless it has become as Washington ratchets up pressure on Tehran.
By triggering the dispute resolution mechanism, the E3 is attempting to take back control of the escalating situation
Taking back control
The JCPOA essentially lifted sanctions on Iran in exchange for the country curbing its nuclear programme, which Tehran has always insisted is intended for civilian, not military, purposes.
But the Trump administration’s withdrawal from the deal and its subsequent “maximum pressure” campaign of sanctions targeting Iran’s oil and banking sectors has ravaged Iran’s economy.
To impart some relief, Europe launched a special-purpose vehicle – The Instrument in Support of Trade Exchanges (INSTEX)– in January 2019 to enable European firms to trade with Iran without falling foul of US sanctions. But INSTEX has utterly failed to alleviate the financial destruction wrought by Washington, leading to charges by Tehran that Europe is not doing enough to keep up its end of the bargain.
Iran’s oil sales have slowed to a trickle, government coffers have been depleted and the population is getting angry. A surprise fuel price hike in November ignited anti-government protests that swept the nation.
As its economy has deteriorated, Tehran has gradually scaled back its commitments under the JCPOA – with the first announcement coming one year after the US withdrawal. The most recent was this month’s announcement that it would no longer abide by the uranium enrichment limits placed on it by the deal, setting the stage for Europe to activate the DRM.
“The E3 were faced with a difficult choice of needing to take action in response to Iran reducing its compliance with the deal in order to preserve some credibility, while also finding ways to preserve the deal,” said Nevine Schepers, research associate with the Non-Proliferation and Nuclear Policy Program at the International Institute for Strategic Studies (IISS).
“By triggering the dispute resolution mechanism, the E3 is attempting to take back control of the escalating situation,” she told Al Jazeera, adding that the E3 now needs to find a way to channel support from the deal’s other signatories – Russia and China – while continuing to try and engage with the US.
But some analysts believe the Trump administration’s ability to dole out punishment through punitive tariffs was a driving factor behind Europe’s decision.
The White House has threatened to slap tariffs on $2.4bn of French goods over a digital tax and could expand tariffs on $7.5bn of annual imports from the EU that were first imposed in October.
The biggest levy threat arguably hangs over Europe’s all-important auto sector. On Wednesday, Trump told business news network CNBC that he would slap “very high tariffs” on European autos if the US and EU don’t agree to a trade deal.
Last week, German Minister of Defence Annegret Kramp-Karrenbauer confirmed to reporters in London that the Trump administration had threatened to impose a 25-percent tariff on European auto imports if the E3 did not activate the dispute mechanism.
“This shows that when Trump tells the Europeans to jump, they ask “how high”?” Iranian Professor, Mohammad Marandi told Al Jazeera from Tehran.
Jacob Funk Kirkegaard, senior fellow at the Peterson Institute for International Economics (PIIE), disagrees that the tariff threat was the main motivation behind the E3 move.
While “Europeans are very cognizant that on any given day Trump can link his trade policy with his foreign policy agenda,” he told Al Jazeera, “car tariffs are essentially the declaration of an all-out economic war against Europe. Why would he [Trump] then suddenly want to launch into a 100-billion-dollar war with Europe focused on the manufacturing sector?”
Rather, Kirkegaard believes the E3 engaged the DRM because it is one of the only tools at its disposal.
“Europe basically knows that they are checkmate,” he said. “The European move was premised on their weakness, not in the face of potential car tariffs from Trump; but in the face of how few cards they have left to play given the effectiveness of Trump’s maximum pressure campaign.”
Europe basically knows that they are checkmate
The next move
Iranian President Hassan Rouhani has linked his country’s economic wellbeing to Europe’s security, warning that the burden of sanctions would impact Tehran’s ability to fight “drugs and terrorism”, resulting in a “deluge” of drugs, refugees and attacks on the West.
“The nuclear deal’s demise can bring about another conflict in the region that would send waves of refugees and radicalism to European shores,” Ali Vaez, director of the Iran Project at the International Crisis Group, told Al Jazeera.
“In the absence of some form of economic reprieve for Iran, both Iran and the US seem locked in a cycle of escalation that Europe appears unable to break,” he said.
PIIE’s Kirkegaard believes that given the weakness of Europe’s position, the most it can hope for is to keep the nuclear deal on life support in hopes of a future point when Washington becomes more accommodating.
“The best that the Europeans can hope for now is that the JCPOA becomes a latent agreement that is still on the books, and that a potential Democratic administration can quickly reactivate in the case of a Trump loss,” said Kirkegaard. “And that’s also the only carrot that Iran still has – essentially betting on Trump losing the election.”