Addressing the public on May 8 at the White House, President Trump put an end to the speculation about whether he would remove the U.S. from the Iran nuclear agreement. In Trump’s mind, the Joint Comprehensive Plan of Action was so poorly negotiated that Washington had no option but to move on and start from scratch.
The U.S. not only moved on from the deal, but committed itself to reimposing the very economic sanctions that were lifted in the JCPOA. With the first wave of renewed U.S. sanctions re-enacted on Aug. 6, Washington is hoping that the Iranian government’s finances will face such calamity that its leaders have to come back to the negotiating table.
Regardless of one’s thoughts on the JCPOA, the decision by the White House to unilaterally withdraw from a multilateral agreement could turn out to be one of the decade’s most serious geopolitical errors. The question is what the administration can do to alleviate the blowback.
There are a number of significant problems with Trump’s policy of pressure on Iran, the first being the administration’s expectation that Iran’s political leaders will cave to American demands.
Confronted with rising economic discontent, anti-government sentiment in the streets, and an unsustainable financial situation, the logic goes, Supreme Leader Ayatollah Ali Khamemei will be forced to authorize another round of nuclear diplomacy with Washington. The Iran hawks that populate the national security bureaucracy are confident that an economically distressed Iran will act like any other nation that struggles to pay its bills. Sooner or later, the mullahs will humbly crawl back to a European ballroom and be prepared to give away the store to ease the pain.
Iran, however, is not a typical nation that gives up easily — if at all. Rather, it is a nation led by a regime that takes great pride in combating foreign powers who dictate terms.
To assume Tehran will buckle quickly is to discount how Iran has operated for decades. Indeed, dealing with economic and diplomatic isolation is not a new phenomenon for the Islamic Republic. For most of its 40-year-old existence, there has hardly been a time when Iran’s clerical regime has been free of economic struggle, sacrifice, war, or regional rivalry. This is a government that fought a long, bloody conflict with its Iraqi neighbor in the 1980s when it had few, if any, friends; no external support; a depleted national economy; and a diplomatic environment that was overtly hostile and stacked against it. The Islamic Republic is a system that looks upon submission as the ultimate foible — even the strongest global sanctions regime in history wasn’t enough to curtail the Iran’s nuclear program. Only when the U.S. and the European Union provided Iranian officials with a diplomatic way out of the impasse did Khamemei approve talks with the U.S.
The Trump administration appears confident that its maximum pressure strategy is the right one, almost taking its success for granted. The strategy is quite logical: Administration officials believe Iran’s coffers will run dry because no major oil giant, corporation, manufacturer, or insurance company would be crazy enough to risk the profits and reputational damage of continuing to trade with Iran and be shut out of the U.S. financial system. Some companies have already jumped ship. Since Trump’s May announcement, European firms such as Total, A.P. Moller-Maersk, and Siemens have either left Iran altogether or are winding down their business.
By forbidding a large set of business activities and transactions with Iran and pressuring Western firms to pull out of the Iranian market, Washington has unintentionally offered China and Russia — two countries the Trump administration’s own National Security Strategy values as U.S. strategic competitors — a golden opportunity to fill the void left behind.
Oil and gas projects that were once joint ventures between Chinese and Western energy companies are now likely to be swallowed up by Beijing. There is a lot of money to be made in Iran, a burgeoning market of some 80 million people. With French, British, and German firms no longer competing in that market, China is well placed to cash in.
Much like Beijing has taken on the role of a giant lender and bank to countries like Sri Lanka and Venezuela, China could pursue a similar strategy with Iran by embedding itself deeper into a critical piece of geography in the Persian Gulf, drawing one of the world’s top crude oil producers into its strategic orbit.
Russia is also set to benefit from the White House’s Iran strategy. Moscow’s foreign currency reserves have been declining steadily due to low oil prices and U.S. and EU sanctions over its intervention in Ukraine. But with perhaps as much as one million barrels of Iranian oil off the market as a result of the European Union, Japan, South Korea, and Southeast Asia freezing or significantly decreasing their imports, Moscow will be able to exploit a short-term cash infusion due to lower supply and higher demand.
Washington will continue to lean on Saudi Arabia to boost its own crude exports in order to ensure the loss of Iranian oil from the global market won’t spike gas prices for Americans at the pump. The White House would also be wise to keep channels of communication with Iran open, particularly at a time when tension between Washington and Tehran is simmering.
U.S. and Iranian officials can’t underestimate the power of dialogue to resolve conflicts or incidents. An even bolder U.S. diplomacy with Iran would be a great strength. As a businessman, surely Trump understands that talking with your opponent is far preferable than shunning the valuable insight that can be gained through conversation?
But the most important thing the U.S. can do is derive a valuable lesson: In global politics, one decision can reverberate into other areas of American foreign policy. And if the decision is a poor one, America’s capacity to defend its interests could be eroded.
Daniel DePetris (@DanDePetris) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a fellow at Defense Priorities.
