Iran Nuclear Deal: After Mr. Trump’s Ultimatums, Is There a European Plan B?

Everything suggests that the 12 January White House announcements regarding the Iran nuclear deal were a new step towards Washington’s dismantling of the “EU3+3 agreement”, reached in Vienna on 14 July 2015. 

The first step for the American President was to refuse, back in 13 October, to “certify” that the JCPOA (Joint Comprehensive Plan of Action) remained in the United States’ best interest. Mr Trump then left it to Congress, in cooperation with European allies, to find a way to correct the deal’s main flaws (according to him), in the two-month time frame imposed by the American law. Were Congress to fail, he maintained the possibility to restore sanctions linked to Iran nuclear activities, which would technically pulled the U.S. out of the Vienna agreement. 

Time was up before Congress proposed a legislation on this matter, and the next deadline for the new sanctions waiver, also set by the law,  passed on 12 January. The White House announced with a very precise choice of words that “despite [his] strong inclination”, the President had agreed on renewing waivers, but that it was “the last chance”. This decision opens a new sequence, which will end beginning of May. 

Mr. Trump’s ultimatum to Congress

President Trump’s decision comes along with a double ultimatum. First to Congress. Contrary to what happened in October, when the President did not specify what exactly he expected from the Legislative (and from the Europeans), this time Mr. Trump presented very specific requirements, urging Congress to “fix” the Iran nuclear deal (inevitably depicted as “disastrously flawed”). In essence, this new INARA (Iran Nuclear Agreement Review Act) should include provisions that: 

• “demand that Iran allow immediate inspections at all sites requested by international inspectors”.
• “ensure that Iran never even comes close to possessing a nuclear weapon”, therefore forbidding Iran to increase its reverses of fissile material in order to reduce the “time break” to produce the bomb below one year (current timelapse).
• extend endlessly the restrictions set by the agreement to the Iranian nuclear program
• explicitly state “that long-range missile and nuclear weapons programs are inseparable, and that Iran’s development and testing of missiles should be subject to severe sanctions.”

Some of these requirements seem strange, technically speaking (for instance, a system of immediate inspections already exists under the JCPOA). But foremost, the wording of Mr. Trump’s ultimatum to Congress leaves us skeptical about the Capitol’s ability to respond accordingly. 
First, will Congress be able to reach an agreement on this issue? The required Senate majority, which has the final say on this type of legislation, is of 60 votes (out of 100). For such a majority to be reached, Democrats, or at least a significant fraction of them, would thus have to come together with the Republicans. Such a scenario is far from obvious given that the deal is one of Obama’s most emblematic international achievements. 

Moreover, if Congress agrees on a legislative draft, how can one be sure it will fit the President’s wishes, and at the same time remain consistent with JCPOA’s provisions? Were we to take Mr. Trump’s demands at face value, it would be perfectly impossible. For instance, a faithful application of JCPOA authorizes Iran, eight years after its implementation, to increase its reserves of fissile material, hence enabling the country to reduce the “time break”. In contrast, extending unilaterally the duration of its provisions legally amounts to infringing the deal’s rules. 

However, an optimistic interpretation of the 12 January statement is still possible. President Trump’s staff has been negotiating for weeks with leading Senators on the subject (in particular Republican Bob Corker and Democrat Ben Cardin). It might be inferred that Mr. Trump’s requirements reflect what the Americans call an “emerging consensus” between the Executive and the Legislative. The President would have thus formulated the most challenging demands, in order to later scale them down were he to be presented with a text that could pass through Senate.

One hypothesis would be that both Congress and the White House find common ground on a formula  that does not lead to an immediate withdrawal of the U.S. from the deal, but rather sets a deadline or organizes a progressive withdrawal (e.g. the “eight years” plan mentioned above) were Iran not to abide by terms unilaterally rewritten by the United States. It this case, it would be difficult to pretend that JCPOA still holds. Besides, we know that several among Democratic Senators made it very clear they won’t participate in a legislation violating the current deal (“or one that is inacceptable for the Europeans”). 

Finally, middle ground scenarios seem consistent neither with the polarization of American politics nor with Donald Trump’s strong beliefs about Iran. The ultimate decision, due in May or even before, will belong to the President, who is likely to make a choice depending only on his electoral base, just like he did for the Paris agreement or for Jerusalem. Add to that the upcoming midterms (November), which he clearly has in mind, and none of this bodes well. 

The ultimatum to Europeans

Another lesson can be drawn from the 12 January decisions. President Trump engaged in the Iran issue as one would in a poker game. Unfortunately for him, he is becoming more and more of a lonely player, as the others have left the table: the Iranians haven’t made the mistake of overreacting and withdrawing from the agreement; the Russians and the Chinese obviously haven’t budged; the Europeans have tried to influence the internal American debate (president Macron himself called his American counterpart on 11 January), whilst sticking to their position, i.e. the preservation of the JCPOA.

This probably explains why the tone of the White House statement was particularly vindictive towards Europeans. It urged the “key European countries” (presumably France, Germany and the United Kingdom) to secure with Washington “a new supplemental agreement that would impose new multilateral sanctions if Iran develops or tests long-range missiles, thwarts inspections, or makes progress toward a nuclear weapon”. It would be hard not to interpret this injunction as a way to tie the Europeans to the unilateral revision of JCPOA expected from Congress, even though the two ultimatums differ slightly. 

Independently from the nuclear agreement, Europeans are required to join the U.S. in the implementation of their policy aiming to intensify the pressure towards Iran: cutting off funding to any entity linked with the Islamic Revolution Guards Corps (IRGC), adding Hezbollah to the list of terrorist organizations, countering Iran’s missiles proliferation - as in Yemen -, fighting Iran’s cyber threats and its aggression against international shipping, etc. Not to mention the call for European countries to “pressure the Iranian regime to stop violating its citizens’ rights”.

On the latter, one cannot help but wonder how the recent Iranian protests impacted American decisions. People close to Trump and his line of thought have seen in the December events evidence of the Mullahs’ regime weakness. These are the same people who asserted that President Obama had signed the JCPOA precisely when, without this critical lifeline thrown at the enemy, the Iranian regime would have fallen apart. Thus, they saw in the recent protests an additional reason to cripple the deal. Besides, they gladly interpret this episode as people from the “Iranian street” challenging the Islamic Revolutionary Guards Corps’ foreign action. No doubt the reality is far more complex… Indeed, the newest sanctions supporting the 12 January announcement and the call for further pressure from the Europeans can be understood as an effort to weaken IRGC as one of the regime’s pillars: the fusion between the State and the IRGC is the main target. 

Finally, the protests have widened the gap between Washington and the EU’s approach. Mr. Trump and his administration cared to distinguish themselves from Obama’s 2009 policy, and loudly voiced their support to protesters. Europeans stayed cautious. 

Plan B for Europe? 

As we have seen, not everything is over yet, and the intricacies of the U.S. decision-making can still unveil many surprises. Nonetheless, the hypothesis Europeans should work with must be that of a scheduled American withdrawal from the 14 July 2015 agreement. We are not anymore in a phase in which the Europeans, led by President Macron, had a chance to maintain the U.S. on board, by inventing ways in which their concerns would have been taken into account  outside the JCPOA.
For now on, Europeans’ goal should focus on preparing a mechanism that would ensure the deal’s survival without the United States. Of course, this implies that Iranians themselves would agree on such an arrangement. This is actually still possible, given the fact that restarting its nuclear program would not greatly benefit the Islamic Republic. 

The Iranians will have, and in fact already have, one priority: pursuing economic trade with Europe. Business between Europe and Iran has doubled in the past year but, as the International Crisis Group poll suggests after interrogating 60 senior managers (cf. annex): 79% delayed plans to enter the Iranian market since JCPOA’s implementation. 83% are stunned by the perspective of U.S. secondary sanctions’ snapback. 

In this context, the challenge would be to build a “safety net” to guarantee European businesses engaged in large projects in Iran that they won’t suffer from U.S. secondary sanctions, and to guarantee the Iranians that the deal’s economic component will be maintained. We often hear inside the circles involved that the “blocking regulations” the EU already possesses should be expanded in order to counter the American laws’ extraterritoriality. Let us be clear: the prospect of Europeans getting involved in a trade war with the United States, or of major banks taking risks they did not even consider under Obama, when conditions were more favorable, is very unlikely, to say the least.  

One realistic objective could be that of creating a combination of funding sources, free from American jurisdiction, of European governmental guarantees, of long-term partnerships on targeted key-sectors and… of a discrete agreement with the U.S. administration. Indeed, even if it left the deal, it could still be interested in maintaining continuous economic relations, under specific circumstances, between Iran and Europe, and even Iran and the United States (cf. Boeing), so the Iran-Russia-China relationship is not the only one left. 

On the political front, Europeans have no interest in complying with Mr Trump's ultimatum. It is worth noting that the White House press release has been the subject of a remarkably moderate joint response from the main European capitals: "we will coordinate with the E3 and the other EU Member States to jointly assess the statement and its implications". This is the right way to respond. One should hope that European governments will agree on a proper assessment of the regional threats posed by the Islamic Republic, given its military activities up to the shores of the Mediterranean, or its ballistic missiles. This assessment should lead them to a series of positions - incentives but also tougher sanctions - which on these subjects, as on the human rights issue, may cross-check or defer those of the United States on a case-by-case basis.

To name but a few: Europeans cannot adopt the same approach to Hezbollah as Americans. They have another way of dealing with human rights issues, even though they may join the American appreciation of certain aspects of the IRGC's action, or of the proliferation of Iranian missiles in the region.

All in all, the European "Plan B" as outlined above would be difficult to implement - perhaps even very difficult.  It would nonetheless provide a solid basis for a necessary dialogue with Iran, whilst making it acceptable for our regional allies (no complacency towards Teheran), and without opposing America’s true interests. 

Among the more than 60 senior managers at leading international companies interrogated under the International Crisis Group’s survey:

• 79% delayed plans to enter the Iranian market in the past two years.
• 50% say Trump’s failure to recertify the Iran deal in October negatively affected their decision to engage the Iranian market.
• 83% believe that if the U.S. unilaterally reimposed sanctions, European and Asian companies would be “very to somewhat” averse to trade and investment with Iran.

However...

• 63% believe that the JCPOA can potentially survive if the U.S. unilaterally withdraws from it.
• 54% say an EU move to reinstate the “blocking regulations” to shield European companies against unilateral U.S. sanctions, while Iran remains committed to the deal, would positively affect their decision to invest in Iran.
• And anyway, 33% did not cease trading with Iran between 2006 and 2015, when multilateral sanctions were at their peak.