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Europe Getting Economic Divorce from Trump over the JCPOA

Wednesday, February 7, 2018

 

Sara Ma’soumi
journalist ( world & diplomacy affairs)

“No” to dollar and “no” to US sanctions. It seems that Europeans have already started a reciprocal economic game with the United States over the nuclear deal with Iran, which is known as the Joint Comprehensive Plan of Action (JCPOA). The European Union, including three major European countries, which were part of the nuclear marathon with Iran, gave the new US President Donald Trump one year and one month to adapt himself to the JCPOA, which is the diplomatic achievement of his predecessor Barack Obama in the field of nuclear nonproliferation. However, Trump’s continued opposition and resistance to the JCPOA as an international agreement finally left Europeans with no choice but to think about parting ways with the United States during the remaining years of the JCPOA. The first and foremost grievance that Iran has had about the implementation of the JCPOA during the past two years, especially during last year, has been about the country’s inability to take full economic advantage of this agreement. Tehran's dissatisfaction has been both about unwillingness of major European banks and companies to get back to Iran, and about the negative atmosphere that Trump has created about Iran during last year, which has practically prevented investment conditions from returning to normal in the country. The United States continues its threats and sanctions against Iran and the May deadline is also a cause of concern for Europeans because Trump has noted that when the May deadline comes, he will not recertify Iran’s compliance with its commitments under the nuclear deal.

Trump’s obstructionism has been aimed at barring the implementation of the JCPOA not only with goodwill but also in a correct manner, and has practically increased Iran’s expectations from the European Union. In the first stages of the conception of the JCPOA, which took place through secret talks between Iran and the United States in the Oman’s capital, Muscat, European countries were left out in the cold. However, during nuclear negotiations, especially in the last months leading to July 2015, they played a more serious role and even turned into the main pivot of the implementation of the JCPOA on the opposite side of Iran during last year. At the present time, the European Union is under pressure from Iran because of being the United States’ trans-Atlantic ally, while being simultaneously under pressure from the United States because of its role as a partner to the JCPOA.

Tehran expects Brussels to mount pressure on Washington in order to make the US comply with its commitments, while the White House, on the other hand, expects its allies on the Green Continent to get along with Washington with regard to non-JCPOA issues such as Iran’s regional activities and its missile tests. Federica Mogherini, the High Representative of the European Union for Foreign Affairs and Security Policy, made a well-managed effort during last year to create a divide between US Congress and the White House over the JCPOA. In the last instance of differences between the White House and Congress over the JCPOA, US lawmakers kicked the ball, which Trump had thrown into their court by expecting them to take steps for amending the JCPOA, back to him and into the White House’s court. At the same time, Mogherini said that the American lawmakers and senators have reached the conclusion that staying in the JCPOA is to Washington’s benefit and, of course, are trying to appease their president at the same time by passing sanctions bills against Iran in a way that will not affect the JCPOA.

During past week, the European troika – Britain, France and Germany – gave two concurrent concessions to Washington and Tehran. Following visits by US Secretary of State Rex Tillerson to London and Paris, the three European countries established a special working group on Iran in cooperation with the United States. As put by Tillerson, the working group is tasked with finding those points about the JCPOA, which have made Trump concerned, and then take steps to amend them. Only a few days after the establishment of the working group, France, which has been the most vociferous critic of Iran’s regional activities and missile tests among European countries, took a long economic stride toward Iran. As reported by Reuters, the general manager of Bpifrance state-run investment bank has announced that while respecting US sanctions, the bank is ready to offer credit lines in euro to Iranian customers of French goods. “The plan is to offer dedicated, euro-denominated export guarantees to Iranian buyers of French goods and services. By structuring the financing through vehicles without any US link, whether to the currency or otherwise, the aim is to avoid the extraterritorial reach of US legislation,” Reuters says[1]. Bpifrance’s chief executive, Nicolas Dufourcq, was also quoted by Reuters as saying, “We put a lot of preparation into this in 2017 and we keep on working, every single day, on the conditions of our entrance into Iran.”

According to reports, this initiative by the French side will lead to establishment of a monetary pipeline, which will have nothing to do with dollar. Another important point about this initiative is that there is not even a single dollar in this initiative and those people who are involved in it do not hold American visas to be prosecuted in case of Washington’s secondary sanctions are reinstalled. According to the bank’s chief executive, “there is a pipeline of about 1.5 billion euros in potential contracts from interested French exporters,” and “French export credits could be offered as soon as May or June.[2]” While major French companies like Total have returned to Iran following the implementation of the JCPOA and removal of nuclear-related sanctions, Paris is not the sole party who has been seeking ways to keep the JCPOA safe since a year ago after Trump was elected president of the United States. In the same report, Reuters has quoted a French banking source as saying that Italy, Germany, Austria and Belgium are also working on mechanisms that would shield their companies from the risk of US sanctions.[3] As the number of European countries that work on such mechanisms is increasing, one can claim that various countries, which are interested in boosting trade with Iran, are launching a coordinated effort to bypass possible US sanctions.

Of course, Italy has moved ahead of France in this regard, because it was in early January when Italy and Iran agreed on a framework credit agreement to fund investments in Iran worth up to 5 billion euros. Of course, sources close to Trump claim that just a few months after entering the White House, he had contacted German Chancellor Angela Merkel and French President Emmanuel Macron separately to tell them Washington would put no obstacle on the way of their trade with Iran and they could earn as much revenue as they could through Iran trade. However, French banks and companies have not yet forgotten heavy fines they suffered in past years because of economic relations with Iran. For example, according to Reuters, “BNP Paribas received a $9-billion fine in 2014 for violating US financial sanctions.” Therefore, France’s decision could anger Trump, who has threatened to pull out of the Iran nuclear agreement in May this year.

At a time that US President is trying to minimize Iran’s economic benefits from the nuclear deal to make Tehran renegotiate the JCPOA or change its regional behavior, Europeans have already started devising mechanisms to bolster the nuclear deal and encourage Iran not to quit it regardless of what decision Washington may make. Fox News television news channel, which is close to Trump, noted in a short report on Paris’ initiative that European countries believe Iran has complied with all its commitments as per the JCPOA and, therefore, must be able to avail itself of its economic benefits as well. Now that European countries are one after the other parting ways with the United States and finding mechanisms to go around Iran sanctions, the possibility that Trump may unilaterally quite the nuclear agreement keeps rising.

 

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