The U.S., Iran, and the European Union are heading for a three-way showdown. At contention is President Trump’s seemingly imminent withdrawal of the U.S. from the Iran nuclear agreement. That decision is likely to occur on or before May 12 and is given weight by the looming arrival of John Bolton as national security adviser and Mike Pompeo as secretary of state.
Both men are Iran hawks who have long opposed the Iran deal as counter to U.S. interests. But what happens when the U.S. withdraws from the deal?
Well, the Chinese and Russians will say America is endangering international peace, but they have long ignored existing sanctions on Iran anyway, so their attitude is effectively irrelevant.
The European Union reaction will be more consequential. The Germans will strongly condemn the U.S. withdrawal and commit to doubling down on the existing deal framework without any changes. Indeed, in the context of her new coalition with Germany’s center-left SPD party, Chancellor Angela Merkel may even relax Germany’s enforcement of existing safeguards and restrictions under the deal.
That said, as Benjamin Weinthal has extensively documented, Germany’s commitment to ensuring the enforcement of existing sanctions on Iran has always been paper thin.
What of the British and French? They will also complain that Trump is endangering international peace, but they’ll do so in a slightly more circumspect way.
As Britain seeks to keep Trump on side in the pursuit of a post-Brexit trade deal and in sustainment of the special relationship, Prime Minister Theresa May will attempt to act as a mediator between the U.S. and the E.U.
While President Emmanuel Macron of France will be tempted to follow the German example and make it easier for French businesses to engage in lucrative deals with Iran, those temptations will be tempered by Macron’s real concerns about Iran’s ballistic missile program and its broader policies in the Middle East. Although little noticed, Macron has taken a tougher line on Iran than his processor.
Yet the true degree of U.S.-E.U. tension is likely to be measured by what Trump does to enforce a more effective sanctions regime on Iran once he withdraws from the deal. Because European multinational companies have far greater business connections in Iran than their U.S. counterparts, a restoration of U.S. sanctions on Iran won’t alone be enough to alter Iran’s ambitions or behavior.
Unless, that is, Trump decides to sanction foreign — including E.U. — multinationals that continue to do business in Iran. If he does so, many European multinationals will pull their operations from Iran in fear of losing access to the far more lucrative U.S. market.
But that course of action will spark fury in Berlin and Paris, leading to a serious degradation in transatlantic relations and to possible reciprocal sanctions on U.S. businesses from the E.U. bloc.
In the context of increasing China trade tensions and associated economic fears, Trump may wish to proceed cautiously toward sanctioning European businesses. On the flip side, John Bolton is likely to push Trump in the opposite direction.
But whatever Trump decides to do, it will also have an outsized impact on how Iran reacts to the U.S. withdrawal. If the U.S. withdraws and introduces new unilateral sanctions but allows European firms to continue operating relatively unencumbered, the more-moderate Tehran power bloc under President Hassan Rouhani’s control will likely hold sufficient sway over the hardliners. That means Iran staying in relative compliance with the nuclear deal and avoiding a major showdown with the U.S.
Yes, the Iranians will still issue threats and continue their regional activities, but they are unlikely to escalate against U.S. interests through fear that doing so will alienate European investment. Strengthening Rouhani, here, is the growing disenchantment of Iranian civil society toward the hardliners’ waste of their nation’s resources on foreign adventures.
Conversely, if the U.S. makes it nearly impossible for European firms to continue doing business in Iran without losing U.S. market access, the Revolutionary Guard’s hardliners will seize the initiative and escalate against the U.S.
Some of this escalation will be visible; perhaps in attacks on U.S. vessels or international shipping routes in the Persian Gulf. But Iran would also unleash proxies such as the Lebanese Hezbollah to conduct attacks on U.S.-aligned interests and to boldly destabilize the Middle East. In the context of ongoing internal Iranian jockeying over which power blocs will benefit most from Ayatollah Khamenei’s succession (he’s dying), the hardliners might take highly unpredictable action.
At that point, Trump will be forced to respond with military force to corral the hardliners away from further escalation. But considering escalating Iranian tensions with Israel and Saudi Arabia, an overlapping regional conflagration could not then ruled out.
Interesting days await us.
