February 27, 2019 11:06
News ID: 4488

(Persia Digest) - Europe is clearly caught in purgatory with respect to the Islamic Republic of Iran. On the one hand, it seeks to prevent the nuclear deal from total collapse. On the other, it wants to do so without undermining its strategic partnership with the United States or inviting American retaliation.

Maysam Behravesh writes in The American Conservative that apart from its cost-benefit calculations and political resolve to stand up to the Trump administration, Europe’s success in resisting Washington’s “maximum pressure” policy towards Iran will depend significantly on whether Tehran plays its own part well.     

Perhaps the most clear takeaway from both the U.S.-led Middle East summit in Warsaw and the Munich Security Conference was the widening divide between the United States and Europe over how to deal with Iran in general and the nuclear deal—officially known as the Joint Comprehensive Plan of Action (JCPOA)—in particular.

The absence from the Warsaw meeting of Europe’s foreign policy chief Federica Mogherini as well as the foreign ministers of Germany and France, coupled with Vice President Mike Pence’s unrequited and embarrassing “pause for applause” at the Munich conference, clearly demonstrated European reluctance to toe the U.S. line on a number of strategic matters. Among them was “maximum pressure” against Iran.

The U.S. failure to rally the European powers behind its Iran policy and build a transatlantic coalition against the Islamic Republic suggests that the Trump administration’s tough approach to Tehran—underpinned by comprehensive economic sanctions and diplomatic isolation—is starting to exhaust itself.

Iran-orchestrated assassination and bombing plots over the past year against opposition groups in France, Denmark, and the Netherlands have arguably helped narrow the rift between the U.S. and the EU. Nonetheless European leaders are worried that any further push might prompt Iran into radical action, including withdrawal from the JCPOA. The total collapse of the nuclear accord and Tehran’s potential breakout (or even “creepout”) towards advanced-level nuclearization could elicit a military response from Israel or the United States. That could lead to another all-out war in the Middle East, with grave implications for Europe’s economy and security.

In order to salvage the nuclear agreement following the U.S. pullout in May 2018 and the ensuing reimposition of crippling sanctions on Iran’s oil industry and banking sector, Germany, France, and Britain set up a Special Purpose Vehicle (SPV) or Instrument for Supporting Trade Exchanges (INSTEX), a new channel for non-dollar trade with the Islamic Republic. According to a joint E3 statement, INSTEX “will support legitimate European trade with Iran, focusing initially on the sectors most essential to the Iranian population—such as pharmaceutical, medical devices and agri-food goods.”


Read more:

Iran responds to EU statement

Europe is not bluffing on Iran

EU will work with Iran through INSTEX


Even though the trade vehicle will take several months to come into operation and does not aim to “violate or bypass U.S. sanctions against Iran”—according to the German ambassador to Iran, Michael Klor-Berchtold—INSTEX is the most prominent measure adopted so far by European powers to guarantee that the Islamic Republic continues to receive the economic benefits of staying in the deal.

However, Europe can only succeed in pushing back against Washington’s confrontational approach if Iran sets its house in order. While external pressure on the Islamic Republic is building up, internal political schisms and factional infighting seem to pose an equally formidable if not greater challenge.

One important area of contention is the implementation of the Paris-based Financial Action Task Force (FATF) requirements. The dispute over FATF measures—which include anti-money laundering and countering the financing of terrorism (AML/CFT) and the UN Convention Against Transnational Organized Crime (the Palermo convention)—have heightened tensions between Iranian moderates and hardliners. Though the Rouhani government has proposed four bills to Iran’s parliament to meet FATF conditions, powerful hardliners have obstructed their passage. These elements are concerned that consenting to FATF might affect Iran’s national sovereignty and hinder its support for groups like Lebanese Hezbollah and Palestinian Hamas.

E3 powers have not formally made the enforcement of FATF requirements a prerequisite for INSTEX, but the effectiveness of the non-dollar trade vehicle—if and when it comes into force—practically depends on it.   

As Iranian Vice President for Legal Affairs Laya Joneydi had hoped, FATF extended Iran’s deadline once again in its latest plenary meeting earlier in February. The global watchdog gave Tehran until June to institute anti-money laundering and terrorism financing rules or face countermeasures automatically. Reentry into the FATF “blacklist” would lead to extraordinary scrutiny of all business dealings with Iran by its members, including the extraction of detailed information on financial transactions, enhanced controls over such transactions, and the monitoring of patterns for greater scrutiny in the future.

This could considerably undercut European efforts to rescue the nuclear agreement and help the Iranian economy stay afloat in the face of Washington’s relentless pressure.

Finally, the Islamic Republic also needs to rein in its hardline forces and check the power of “rogue elements” within its state security apparatus, who have gone to great lengths to sabotage Iran-EU relations. They are known for having hatched assassination and bombing plots on European territory and used the imprisonment of dual citizens as a source of diplomatic leverage in bilateral negotiations.

Indeed, Tehran’s self-inflicted wounds have usually proven more harmful than the external pressures of its nemeses. We’ll see if these latest divisions doom hopes of keeping the nuclear deal alive.

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