US hardens stance on a defiant Iran, raising risk of war and leaving Europe scrambling to protect 2015 nuclear deal.

Days before the anniversary of the United States‘s exit from a 2015 deal that curbed Iran’s nuclear programme, John Bolton, the US national security adviser, issued a stark warning.

Citing a number of “troubling and escalatory” indications from Iran, Bolton said the US was deploying warships to the Middle East to “send a clear and unmistakable message” that it would meet any Iranian attacks on US interests “with unrelenting force”. He did not offer evidence of the threat from Iran, which promptly dismissed his warning as “psychological warfare”.

For some, the comments echoed the war rhetoric in the US before its invasion of Iraq in 2003. Bolton, a senior official in the administration that launched the Iraq conflict, had also called for attacks on Iran before taking up his current post.

The US’s naval deployment is just the latest twist of the screw in President Donald Trump‘s “maximum pressure” campaign against Iran. On May 8, 2018, he pulled the US out of the landmark deal that his predecessor negotiated with Tehran and five other world powers, calling it “defective to its core”.

The pact, formally known as the Joint Comprehensive Plan of Action (JCPOA), imposed limits on Iran’s capacity to enrich uranium and capped its stockpile in exchange for global sanctions relief. But Trump said the deal did not do enough to curtail Iran’s ballistic missiles programme or address its support for armed groups in Iraq, Yemen, Syria and Lebanon.

In the year since, Washington threatened buyers of Iranian crude with sanctions, tightened restrictions on Tehran’s civilian nuclear programme, and designated its elite Islamic Revolutionary Guard Corps a “terrorist organisation” – the first time Washington applied the label to a part of another government.

To lift the punishing measures and begin new negotiations, the US said last year that Iran should meet a list of 12 steep demands, including ending its missile programme and support for regional armed groups.

Iran, however, has remained defiant.

On Wednesday, the anniversary of the US’s withdrawal from the Iran nuclear deal, President Hassan Rouhani said Tehran would build up its stockpiles of low-enriched uranium and heavy water instead of selling surpluses abroad, as required under the nuclear accord.

“We felt the nuclear deal needs a surgery,” Rouhani said. “This surgery is for saving the deal, not destroying it.”

He also threatened to resume high-level uranium enrichment in 60 days if the pact’s remaining signatories – the United Kingdom, Russia, France, China, Germany and the European Union – failed to protect Iran’s oil and banking industries from US sanctions.

‘Europe betrayed Iran’

Mohammad Marandi – a professor at Tehran University who was part of the nuclear deal negotiations in 2015 – said Iran’s strategy was aimed at pressuring the remaining parties, especially those in Europe, to deliver on the economic benefits promised under the pact.

The US’s sanctions have triggered an economic crisis in Iran; the currency lost more than 60 percent of its value against the dollar last year, while inflation is predicted to reach 40 percent this year. Iran’s economy, which shrank by 3.9 percent last year, could plummet by another six percent, the International Monetary Fund said. That estimate preceded the latest round of US sanctions on Iranian oil.

Yet, Britain, Germany and France have so far failed to ease the financial pressure. In January, the three countries announced a new trade channel, called Instex, to bypass US sanctions. The mechanism’s launch has been delayed repeatedly.

But some fear it may not be effective, especially if big European firms, most of which pulled out of Iran after US sanctions, remain unwilling to risk doing business with Tehran.

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“The Europeans have betrayed the Iranians because they signed up to a nuclear deal and they gave verbal support, but in reality, they have abided by the dictates of the US president,” said Marandi.

“Whether it is under duress or otherwise is not relevant to the Iranians. Their inability to uphold their commitments show their inherent weakness.”

The three countries responded to Rouhani’s announcement by appealing against “escalatory measures”. In a statement on Thursday, they also rejected Iran’s 60-day ultimatum, while promising to “continue efforts to enable the legitimate trade with Iran”.

Trita Parsi, author of Losing an Enemy: Obama, Iran and the Triumph of Diplomacy, said Tehran’s moves put the EU “in a difficult spot”.

“Europe seems to have calculated that Iran had no choice but to remain in the nuclear deal despite not receiving any of its benefits. Had Europe acted earlier, faster and with greater sincerity, this day could have been avoided,” he said.

But even if European countries managed to fulfil their obligations towards Iran, they risk “costly tensions with the US”, he added.

Indeed, soon after Rouhani’s announcement, Tim Morrison, assistant adviser to Trump warned businesses on the continent against using the proposed trade channel. “If you are a bank, an investor, an insurer or other business in Europe you should know that getting involved in the … [Instex] is a very poor business decision,” he said.

Trump, meanwhile, has retaliated with even more sanctions – this time on Iran’s steel, copper and iron industries.

“Because of our action, the Iranian regime is struggling to fund its campaign of violent terror as its economy heads into an unprecedented depression, government revenue dries up, and inflation spirals out of control,” he said.

Sanctions, regime change and foreign policy

But analysts said Washington’s approach appears unlikely to force Iran to capitulate and negotiate or change its foreign policy.

The economic crisis triggered months-long mass protests in Iran last year, but some think-tanks say the demonstrations are “nowhere near the scope or intensity” to cause a change in government. A poll published last July showed that while a majority of Iranians are critical of their government for economic mismanagement and corruption, an equally large majority reject the idea that the country’s political system needs to undergo fundamental change.

A December poll, meanwhile, showed a majority of Iranians support the nuclear deal in its current form and do not favour renegotiating it.

The US’s escalatory actions could, in fact, have a reverse effect, by causing an increase in public support for the military, said Foad Izadi, assistant professor at Tehran University.

“People here worry about a military confrontation, and that means the money the government spends on the military is very much justified because there is a serious threat,” he said. “People understand that the Rouhani government has been trying to reduce tensions with the US.”

Sanctions were unlikely to curb Iran’s regional activities either, said Ellie Geranmayeh, senior policy fellow at the European Council for Foreign Relations.

“If you look back at the last 40 years of the Islamic Republic of Iran, where there has been deep hostilities between the US and Iran, we haven’t seen a direct link between US sanctions and a change in Iran’s regional behaviour without a real diplomatic effort behind them,” she said.

The period between 2011 and 2015, which was marked by low economic growth and high inflation in Iran, coincided with the most significant expansion of Iran’s military intervention in the Middle East, the International Crisis Group said in a report last November.

Tehran’s arms transfers to allies in Syria and Iraq also peaked at the time, it said.

‘Outmanoeuvred by Bolton’

The US’s hardline position, coupled with Europe’s inability to protect trade with Iran, may ultimately cause the Islamic Republic to abandon the nuclear deal altogether, analysts said, a move that increases the risk of conflict in the region.

Highlighting the US naval deployment to the Middle East, Parsi said: “John Bolton wants to start a war with Iran. He’s escalating, and he’s hoping the Iranians will make a bad move. Or if they won’t, he’s hoping he can fabricate something in order to be able to trick Donald Trump into agreeing to his war.”

Trump, who wants a better deal with Iran, may not want conflict, Parsi said, “but he is being outmanoeuvred by Bolton”.

Marandi agreed, saying: “Bolton is playing a dangerous game.”

A war between Iran and the US would disrupt the global oil trade, “causing an unprecedented economic crisis”, and may even extend conflict across the multiple flashpoints in the Middle East, he said.

As tensions rise, a group of European think-tank leaders said the US must rejoin the nuclear deal if it wants to achieve its stated aim of reining in Iran’s regional activities and its missile programme.

In a statement, the group led by Richardo Alcaro of the Italy-based Instituto Affari Internazionali said Trump’s pull-out decision had only harmed global non-proliferation efforts, undermined the value of multi-lateral diplomacy, contributed to regional tensions, and “inflicted undue pain on the Iranian population”.

Rejoining the nuclear deal was “wiser than destroying” it, the group said, arguing such a move would draw US allies and others into a “cohesive international coalition” to step up pressure on Iran.

Bernie Sanders, a top Democratic senator who is seeking his party’s nomination to challenge Trump in the 2020 election, echoed that sentiment in a Twitter post.

“Trump has isolated the US from its closest allies and put us on a dangerous path to conflict. We should rejoin the deal and work with allies to effectively enforce it,” he said.