Unraveling of Iran Nuclear Deal Exposes Europe’s Weakness

Iran’s latest announcement that it has broken uranium enrichment limits doesn’t just spell the slow death of its 2015 nuclear agreement with the major world powers. Some experts say it has also exposed the embarrassing limits of the European Union’s foreign policy when it seeks to take sides against the United States.

Despite fierce European opposition, President Donald Trump’s administration withdrew the United States from the Iran nuclear deal last year and slapped sanction after sanction on Iran, including its oil sector, choking the country’s economy and putting at risk the future of the agreement. To date, European efforts to counter Trump and preserve the deal have come to naught.

For European countries and the EU itself, the slow unraveling of the landmark 2015 accord is a particularly brutal reminder of the bloc’s limited ability to chart a truly independent foreign policy. EU regulations from the 1990s meant to shield European firms from extraterritorial U.S. sanctions have proved hollow; meanwhile, Europe has spent a year trying to launch a very limited financial vehicle called the Instrument in Support of Trade Exchanges (INSTEX) designed to insulate some trade with Iran from U.S. sanctions. But European firms, fearing U.S. sanctions, have fled from the Iranian market, contributing to its sharp economic decline—all while Europe watched, impotent.

The slow-motion crumbling of the 2015 deal “has been one of the defining moments of the limits of European freedom of navigation in terms of foreign policy,” said Ellie Geranmayeh, an Iran expert at the European Council on Foreign Relations. And that has huge possible ramifications for a bloc that aspires to play a leading role in propping up the multilateral system. “If the [nuclear deal] goes down and Europe can’t salvage it, it carries a message for every country—not just Iran—about the relevance that Europeans can play as a global actor,” she said.

While European governments have condemned Iran’s breach of the nuclear deal, they have not yet revealed any new policy proposals to address it. The United States, for its part, has shown no signs of letting up on sanctions but has kept the door open to talks with Iran.

“The world’s leading state sponsor of terrorism continues to use its nuclear program to extort the international community and threaten regional security,” U.S. Secretary of State Mike Pompeo said in a statement last week in response to Iran’s stated plan to increase uranium enrichment. He said “the United States is committed to negotiating a new and comprehensive deal with the Iranian regime,” but “[a]s long as Iran continues to reject diplomacy and expand its nuclear program, the economic pressure and diplomatic isolation will intensify.

With Europe loath to directly confront the United States over the nuclear deal, at a time when it is trying to manage rising tensions over trade and NATO, Iran’s latest move to bump up its uranium enrichment levels above the 3.67 percent purity ceiling set in the agreement is a nudge to force Europe’s hand, as well as that of Russia and China, two other signatories to the agreement.

Experts described the move as a calibrated escalation that was long expected. In May, Tehran gave a 60-day deadline to the remaining signatories of the nuclear deal to provide enough economic relief, or it would begin violating the agreement. That deadline expired over the weekend.

“Iran is forcing its way back up the priority list, with the hope that Europeans will look at some creative solutions” to deliver some of the deal’s promised economic benefits, Geranmayeh said.

Experts and policymakers have floated other ideas for the EU to help breathe life into Iran’s ailing economy in exchange for staying in the nuclear deal—from expanding INSTEX to granting Iran access to frozen assets to greater trade with countries like India and Iraq.

“For Europe to try harder to get INSTEX really effective … Europe’s going to have consider much more substantial funding,” said Richard Dalton, a former British ambassador to Iran.

It’s unclear whether the 28-member bloc has the political will to give Iran enough economic relief in the face of U.S. pressure.

“The Iranians have learned so far, and they’re learning more and more, that it’s pretty limited,” said Robert Malley, the president and CEO of the International Crisis Group and a former White House advisor on Iran under President Barack Obama. “What Europe can do through INSTEX and through other mechanisms only goes so far in the face of crushing U.S. sanctions.”

Iranian officials, desperate for an economic lifeline from Europe, also appear unimpressed by INSTEX. “This mechanism without money is like a lovely car which has run out of fuel,” Majid Takht Ravanchi, Iran’s ambassador to the United Nations, told reporters last month. “Personally, I think INSTEX is not sufficient in [its] current condition.”

One result of the showdown since the U.S. reimposition of sanctions on Iran late last year has been an uptick in European desire for more “economic sovereignty” from the United States, which still dominates the global financial system. France and Germany, in particular, have bristled at the U.S. use of its dominant financial system to impose sanctions that affect even friends and allies. Europe’s inability to craft any sort of lifeline to induce Iran to keep complying with the 2015 accord will only redouble the interest in crafting alternatives to the U.S. financial dominance that constrains Brussels’s ability to chart its own course, Geranmayeh said.

“It’s been a real wake-up call for Europe—if they want to support multilateralism, and if they want to support diplomacy, they need to have the ability to take a different position from the United States when their stances clearly diverge,” she said.

In the year since Trump withdrew the United States from the 2015 nuclear pact, European powers have been trying to hold the deal together despite waves of severe U.S. sanctions leveled at Tehran and deep political fissures with the Trump administration’s approach to foreign policy.

The latest move by Iran comes after a tense standoff between Iran and the United States following attacks on oil tankers near the Persian Gulf that Tehran is blamed for and the downing of a U.S. drone near Iranian airspace. The incidents nearly led to a U.S. missile strike against Iran, which Trump said on Twitter he held off on at the last minute after learning it could have caused 150 casualties.

Tensions between Iran and the West are still rising—and not just because of Tehran’s decision to enrich more uranium. Last Thursday, British marines seized an Iranian oil tanker in Gibraltar on suspicions it was carrying crude oil to Syria, in violation of EU sanctions. Iranian Foreign Minister Mohammad Javad Zarif called it an act of “piracy,” and some Iranian officials suggested seizing a British tanker in reprisal.

Wendy Sherman, a former top diplomat under Obama who helped negotiate the Iran nuclear deal, said she feared the tensions between Washington and Tehran could take a dangerous and unexpected turn, even though Trump has made it clear he has no interest in going to war with Iran.

“This could spiral out of control quite quickly depending upon U.S. action,” she said, calling it a “dangerous and difficult moment.”