Can Europe Salvage a Future for the JCPOA?

by Andrea Dessí and Vassilis Ntousas

Of all the issues that have widened the transatlantic rift since the beginning of the Trump administration, the fate of the Iran nuclear accord (the Joint Comprehensive Plan of Action or JCPOA) has been the most divisive.

Now, as the Islamic Republic of Iran (and the world) braces for the re-imposition of blanket U.S. sanctions one thing is absolutely clear. Time for quiet diplomacy has run its course. The EU, together with the other signatory parties to the JCPOA, will need to demonstrate their credibility and steadfastness vis-à-vis the Trump administration and its regional allies by standing firm in their defense of the deal.

The jury is still out as to how hard Washington will push third parties, particularly in Europe, with its enforcement of secondary sanctions. Several recent announcements—particularly hints that the United States may ultimately allow Iran to remain connected to SWIFT financial messaging service and an agreement to grant eight countries, including India, South Korea and Japan, waivers to allow them to continue importing some Iranian oil—seem to indicate a slight softening of the U.S. approach toward Iran.

They also reflect an acceptance of reality. Rather than isolating Iran, the Trump administration’s unilateral withdrawal from the JCPOA has isolated the United States—as well as Israel and Saudi Arabia—on the international scene.

Nonetheless, the way forward, especially beyond November 5, will not be an easy task.

For Europe, preserving channels of dialogue and trade with Tehran should top the list of priorities. Yet, in order for the EU to mount a credible defense of the deal, three factors will be essential: unity among its member states, a series of concrete proposals to keep Iran in the deal, and principled, actionable opposition to U.S. policies.

American Ambitions

Europe views Trump’s plan to ratchet up political and economic pressure on Tehran not only as a clear violation of the JCPOA agreement itself but also a direct threat to European economic and security interests in Iran and the broader Middle East.

As Washington moves to use the panoply of diplomatic, economic, technological, and covert military tools at its disposal to weaken Iran’s economy and destabilize the regime, the traditional U.S. allies in Europe are scrambling to limit the damage to their interests.

Against this backdrop, the JCPOA, a key diplomatic achievement for Europe that is of critical importance to EU interests and credibility, has been reduced to a small, insignificant detail in the broader history of U.S.-Iranian animosity. European interests and concerns cannot apparently compete with the adamant rejection of any form of positive engagement toward Tehran coming from the Trump administration.

Their reasoning is simple.

By sanctioning Iran and seeking to deprive Tehran of the economic benefits associated with the JCPOA, the Trump administration—and in particular the team of avowed anti-Iran hawks that now surround the president—is seeking to weaken the regime from within. Ultimately, the hope is that Iran’s foreign engagements will become untenable in the face of growing popular protests and pressure on Iranian authorities, which in turn would fulfil Washington’s key goal of limiting Iran’s regional footprint and influence.

The Trump administration has justified its hardline policy on the grounds of sanctioning Iran’s support for Syria’s Assad, limiting its ballistic missile capabilities, and weakening its support for Hamas in Gaza, Hezbollah in Lebanon, or the Houthis in Yemen. But the real underlining driver remains that of eliminating the single major regional competitor of the United States and its allies in the Middle East.

Although the brutal murder of Jamal Khashoggi in Istanbul may lead to some strains within this anti-Iran axis, few expect the next months to bring anything but a further escalation of regional and international challenges to Iran. Recent reports of a new cyber attack on Iranian infrastructure and communications, similar to the previous Stuxnet attack attributed to Israel and the United States, may indicate what lies in store for the future.

A direct conflict with Iran is unlikely, however. Preferable from the standpoint of the United States and its regional partners is to bleed Iran economically, increasing the costs of its regional deployments while piling on new sanctions in an effort to drive a wedge between the regime and the populace. U.S. hardliners have portrayed a recent upsurge in local protests and demonstrations across Iran, as well as a number of violent attacks targeting Iranian forces and border guards, as signs of Iran’s supposed internal fragility. “One little kick and they’re done,” is how one unnamed source last July summarized internal discussions within the Trump administration and in particular the views of National Security Advisor John Bolton.

Given the attractiveness of such an eventuality to the leaderships in Israel, Saudi Arabia, and the United States—which are united by the ultimately untenable goal of returning the region to the pre-Arab uprisings status quo that key authoritarian U.S. partners dominated—the use of trade and economic sanctions as a tool to destabilize Iran should not be underestimated.

Although Iran is by no means as isolated as it has been in the past, the indiscriminate nature of U.S. sanctions will for instance impact—and at a minimum, severely delay—the delivery of humanitarian trade, medicine, and medical devices, leading millions of ordinary Iranians, not necessarily regime apologists or defenders, to suffer immensely. This stands in direct contrast to the avowed U.S. aim to “advocate tirelessly for the Iranian people.”

Moreover, such a level of hardship can be expected to weaken the political grasp of moderate and (any remaining) progressive forces within the country and up the ante of what Iran is willing to do regionally as a reaction. At the international level, such forceful policies vis-à-vis Iran can instead be expected to deepen coordination among Iran, Russia, and China, setting in motion a number of reactions that may end up weakening or even undermining the dollar’s international reach and influence.

European Response

Whatever the reaction will be, Europe stands to be affected more directly than Washington.

The Trump administration’s penchant for tinkering with the regional order, and expecting that a sledgehammer instead of a scalpel approach will succeed in curbing Iranian influence, makes the need for an effective European response even more acute.

This requires concrete steps in three distinct yet equally important domains.

First, opposition to an approach of strategic appeasement toward the United States should be sustained. If the intense diplomatic “massaging” that took place between Brussels and Washington in April and May this year served any purpose, it was to underscore that President Trump considers such quiet diplomacy a sign of weakness not strength. Europe was ultimately unable to convince Trump to keep the United States in the deal, so efforts are now focused on damage control and protecting European businesses involved in Iran.

Second, standing up to the White House’s Iran policy should include meaningful measures to strengthen Tehran’s cost-benefit analysis for remaining in the deal. Although Iran will likely see many of the financial benefits of the deal reduced by the U.S. withdrawal, Tehran should consider maintaining dialogue with Europe and retaining the moral high ground by continuing to abide by the JCPOA important assets, not least in light of the lack of alternatives.

Ultimately, the measures announced or implemented so far by Europe will not likely suffice, particularly in terms of providing Iran compensation for U.S. sanctions. A secondary sanctions shield, small-and-medium enterprise (SME) support, and efforts to soften Washington’s goal of imposing a complete oil embargo on Iran are among the proposed approaches. Although not enough economically, these efforts do have important symbolic value and could succeed in convincing Iran to remain in the deal, at least initially.

For instance, it is doubtful whether the EU’s blocking regulation, revived earlier this year, could provide the kind of tangible cover and compensation to large European companies active with Iran. The exodus of many big European firms such as Renault and Total among others, although they are too exposed to the U.S. market to be the intended target of the regulation, has blurred the symbolic value this instrument could have.

The same logic applies to the creation of a Special Purpose Vehicle (SPV) designed to help smaller companies and SMEs interested in dealing with Iran. The SPV is currently being set up and could formally be announced on November 4 in order “to facilitate legitimate financial transactions with Iran […] allow[ing] European companies to continue trade with Iran, in accordance with European Union law,” as indicated by Federica Mogherini, the EU’s high representative for foreign affairs and security policy and vice president of the European Commission, on the sidelines of the United Nations General Assembly.

Such a move would indeed form part of an effort to challenge—in a small but unprecedented way—the Trump administration’s weaponization of sanctions. Yet, many questions remain, concerning the reach and operationalization of this initiative, including the breadth of European member-state participation. Also, it is still unclear if the SPV will only pertain to hitherto non-sanctionable areas of trade with Iran or extend further to other sections of the economy.

Third, whatever the level of application—technical, economic, or political—an effective European response rests on the need for European unity. The United States, Israel, and Saudi Arabia have already begun to lobby individual member states to break the common EU front on the JCPOA. They may be making headway not only with the Visegrad group but also with such countries as Italy.

It is not difficult to see why falling prey to Trump’s transactionalism or his divide et impera tactics is ill-advised. It will be profoundly problematic, both substantively and symbolically, if this agreement fails due to a European inability to maintain a united stance vis-à-vis the United States, damaging EU credibility when it is most needed.

The image of a divided Europe (again) caving into U.S. pressure will not only undermine any European action to keep Iran’s nuclear activity at bay but it would also represent a clear indication of Europe’s inability or lack of readiness to make its voice heard on the international scene.

Such unity of course does not mean giving Tehran carte blanche on all foreign and security fronts. In this respect, recent reports of an alleged Iranian plot to assassinate top members of a dissident group in Denmark, coupled with previous allegations of another Iranian plot to attack a gathering of Iranian opposition supporters in Paris, should be credibly and transparently investigated. But Copenhagen, Brussels, and other European capitals should labor to separate any punitive response from the larger policy of support for the JCPOA.

Ultimately, devising an effective policy pushback against the belligerent impulses of the U.S. president and his team is as much about defending European values as it is about safeguarding European interests. With the possible exception of the migration issue, it is very difficult to find another issue apart from the JCPOA where so much is at stake for European security, legitimacy, and diplomatic gravitas.

In this context, the fate of the accord presents not only the most critical test for Europe’s avowed policy of principled pragmatism, as outlined in the 2016 EU Global Strategy for Foreign and Security Policy. It is also an ideal opportunity to start crafting a policy based on greater autonomy, coherence with European values, and unity of intent. Ultimately, it is in Europe’s security, normative, and strategic interest to defend the JCPOA. In doing so, such action will become an important test of European resolve in seeking to gain greater strategic autonomy from the United States. With so much at stake, it would be terribly shortsighted for Europe not to try. If this doesn’t do the trick, it’s hard to imagine what will.

Andrea Dessí is a research fellow with the Mediterranean and Middle East Programme of the Istituto Affari Internazionali. Vassilis Ntousas is an international relations policy advisor at the Foundation for European Progressive Studies.