As Trump mulls withdrawal from Iran deal, Europe braces for fallout

Vahid Salemi/AP/File
A Ghadr-H missile (c.), a solid-fuel surface-to-surface Sejjil missile, and a portrait of the supreme leader Ayatollah Ali Khamenei are displayed at Baharestan Square in Tehran, Iran, in September 2017. Facing a second suspected Israeli strike killing Iranian forces in Syria, the Islamic Republic has few ways to retaliate as its officials wrestle both domestic unrest at home and the prospects of its nuclear deal collapsing abroad.
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European leaders such as French President Emmanuel Macron had hoped they might convince Donald Trump to keep the United States in the Iran nuclear deal, however much he hates it. Add-on agreements could be negotiated to meet White House concerns, perhaps. But as a May 12 deadline for a Trump decision approaches, diplomats in Europe are gloomy; the US president seems intent on tearing up the deal. That is bad news for Europe – and for everyone else who trades oil and other goods with Iran. The sanctions the White House is likely to impose will be extraterritorial, which means non-US companies will risk big fines and exclusion from American markets if they have any dealings with Iran. There is still some hope in European capitals that they will be exempted from some sanctions; that might allow enough trade to offer enough economic benefit to incentivize Iran to stay in the nuclear deal. But those hopes are thin. The White House seems determined to kill the deal stone dead.

Why We Wrote This

The deal to crimp Iran’s nuclear program, one of President Trump’s top bugbears, came under attack this week from another direction – Israel. What can the agreement’s strongest defenders, European nations, do about it?

European leaders fear they are running out of time to convince President Trump not to ditch an international agreement to stall Iran’s nuclear ambitions.

The US president must decide by May 12 whether to keep the US in the 2015 agreement, under which Iran agreed to curb its enrichment of uranium that could be used to build a bomb, in return for an end to most international sanctions.

Washington’s European allies, fierce defenders of the agreement, call it the world’s best bet to prevent Tehran from becoming a new nuclear weapons power.

Why We Wrote This

The deal to crimp Iran’s nuclear program, one of President Trump’s top bugbears, came under attack this week from another direction – Israel. What can the agreement’s strongest defenders, European nations, do about it?

But Mr. Trump has called the accord “the worst deal ever.” After talks last week in Washington with Trump, French President Emmanuel Macron told reporters that “my view is there is a big risk he will leave.” And Trump's convictions were likely bolstered by a heavily hyped TV presentation Monday from Israeli Prime Minister Benjamin Netanyahu, which lambasted Iran for lying about its nuclear arms program before the deal was signed.

That has left Europe's leaders in a bind. They see no indications of violations of the nuclear deal by Iran, and are convinced that remaining in it is the best way to ensure Tehran's continued compliance. But Trump seems to be committed to pulling out of the agreement, despite European efforts to dissuade him. And if the US does withdraw, the costs to European business and security could prove high.

“There was always a concern that the US would pull out,” says Aniseh Bassiri Tabrizi, an Iran expert with the Royal United Services Institute, a London-based think tank. “But those concerns have grown deeper in the last few days.” [Editor's note: The original version misspelled Dr. Tabrizi's first name.]

Nothing not already known?

In a TV presentation that he gave in English – clearly aimed at the United States, if not at Trump himself – Mr. Netanyahu, an avowed enemy of the Iran accord, offered what he said was evidence of a secret Iranian nuclear weapons program, operating before Iran signed its agreement in 2015 with the US, Russia, China, Britain, France, Germany, and the European Union.

Experts said the half-ton of documents, allegedly taken by Israeli spies from a warehouse outside Tehran, contained nothing that was not already known. European leaders said that in fact they provided further proof of the value of the nuclear deal, not of its flaws.

“It is clear that the international community had doubts that Iran was carrying out an exclusively peaceful nuclear program,” said a German government spokesman on Tuesday. “It was for this reason that the nuclear accord was signed.”

“The fact that Iran conducted sensitive research in secret until 2003 shows why we need the intrusive inspections allowed by the Iran nuclear deal today,” British Foreign Secretary Boris Johnson added. “The Iran nuclear deal would make it harder for Iran to restart any such research,” he argued. “That is another good reason for keeping the deal.”

European Union foreign affairs chief Federica Mogherini noted that Netanyahu had not questioned Iran’s compliance with the deal, and pointed out that it was struck “exactly because there was no trust between the parties, otherwise we would not have required a nuclear deal to be put in place.”

No appetite to 'fix' the deal

The International Atomic Energy Agency reiterated its statement from 2015, just before the deal was sealed, that it had “no credible indications of activities in Iran relevant to the development of a nuclear explosive device after 2009.”

The Vienna-based agency has issued 10 reports confirming Iran’s compliance with the terms of the nuclear accord. But Trump has called on European signatories to “fix” what he sees as a weak deal; US and European diplomats have been talking for several months about how the agreement might be improved.

The White House complains that the terms of the deal run only for 10 years, until 2025; that the agreement does nothing to limit Tehran’s ballistic missile program; that IAEA inspectors do not have unfettered immediate access to military sites; and that the deal does not address Iran’s growing role in the region, through proxies and a military presence in Syria, Lebanon, and Yemen.

That seems enough to have persuaded Trump to pull out of the agreement. The Europeans have proposed maintaining the deal but building on it to meet the US president’s concerns. They do not appear to have had much success.

Nor is there any sign that Tehran is prepared to reopen the deal for negotiation. “The Iranians are already complaining about how little they have got out of the deal” in economic benefits, says Dr. Tabrizi. “I’m not sure anything would appeal to them at the moment.”

‘It is simply to unravel the deal’

The stakes for Europe are high. If Trump refuses to extend a waiver on sanctions on May 12, he will make it illegal under US law for any non-US firms to do business in Iran. That would “chill European trade and investment in Iran to nominal levels,” warns Ellie Geranmayeh, an Iran expert with the European Council on Foreign Relations. [Editor's note: The original version misidentified Ms. Geranmayeh's organization.]

Sanctions would mean that any bank dealing with Iran would lose its access to the US financial system; that would mean an end to Iran’s oil exports and to most other trade, since no major international bank would be prepared to carry out the necessary transactions and thus sacrifice its business in the US.

Washington showed its teeth on this issue in 2014, when a New York court ordered French bank BNP to pay $8.9 billion to settle accusations that it had violated US sanctions by dealing with Iran, Cuba, and Sudan.

European negotiators are still hoping they might persuade the United States to offer them, and other nations, exemptions from sanctions. That would allow them to do enough business with Tehran to offer an economic incentive to stay in the pact and to abide by its restrictive nuclear terms.

“It’s worth a European push to keep the Iranians on board with the deal, but it’s going to be extremely difficult,” says Ms. Geranmayeh. “The White House is seeking Iran’s economic isolation.”

Nor does Tabrizi hold out much hope of such a soft US approach to its allies. “If the US pulls out with no evidence of any violations by Iran, and with no international support, it means the decision is not based on security concerns, or on concerns for relations with the European Union,” she says. “It is simply to unravel the deal, to make sure that it is no longer in place.”

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