Europe’s Iran plan

Europe’s Iran plan

The EU has promised Iran that it will remain committed to the Joint Comprehensive Plan of Action (JCPOA). The question is: how long can the EU withstand American pressure, even if it is serious in its passionate commitment?

European leaders are either in an apparent dilemma to realise their pledge with Tehran or going astray like Donald Trump – who has ditched the nuclear deal that was reached after 12 years of intense diplomacy. By opting for a ‘my way or the highway’ style, Trump may have become predictable in realpolitik and reliable to his right-wing voters, but he has buried the confidence in international agreements. Following in his footsteps will only mean that European leaders will become utterly unpredictable and unreliable, not only to their own political parties but to the wider world as well. Can they afford to do so?

As a matter of fact, the JCPOA was not only a positive factor for Iran but was also important for its other signatories. The deal had opened billions of dollars worth of trade opportunities for industrially-strong but energy-hungry Europe. To their advantage, Iran had preferentially given contracts to European companies after sanctions were removed.

The UK-Iran trade volume has increased by 50 percent after the deal was signed and the Franco-Iran trade is about to touch $3 billion. Germany and Iran’s economic ties have grown by 42 percent to a total of over $4 billion. Though not a signatory, Italy is leading from the front, resulting in EU-Iran trade worth $21 billion in 2017. Until now, this has limited Europe to choose an emergent business strategy over the business of diplomacy. Then why is Europe taking a ‘one step forward two steps back’ approach?

The US has nothing to lose as trade between Tehran and Washington is merely $230 million. Despite all the lucrative deals, trade with Iran constitutes only 0.6 percent of the EU’s total world trade. Iran’s major trade partners China and the EU, which account for 22.3 percent and 23.6 percent of Tehran’s total trade, respectively. Iraq and South Korea are its other partners. But even Russia – the most important ally – is struggling to hit a $3 billion annual trade. If trade is not that important, what matters most for European leaders who are making bold statements for standing by the deal?

French Finance Minister Le Maire says that “there is a true realisation among all European states that they can’t keep going in the direction we are headed today where we submit to American decisions”. And he has raised a question: do we want to submit or do we prefer becoming independent or sovereign?

Before issuing such a passionate statement, Le Maire didn’t check with French company, Total, that had signed a $5 billion deal to help Iran build South Pars, the world’s largest gas field in collaboration with the Chinese firm. Since Trump’s unilateral withdrawal from the JCPOA, Total has also backtracked from the deal as US banks are involved in more than 90 percent of the company’s financing operations. Its US assets represent more than $10 billion of capital employed and US shareholders represent more than 30 percent of Total’s shareholdings. The company has admitted unwinding its Iran operations before November 4 unless it is granted a waiver by the US, with the support of the French and European authorities.

Franco-German Airbus, which received 100-plane orders, also signed off as more than 10 percent of its parts come from the US. Boeing and Airbus can bear this $40 billion loss as these companies will be compensated in other capitals. Siemens, a German company, had signed almost $1.6 billion contracts to upgrade Iran’s railway. But Trump has broken this circuit as well. The company has signalled that it will comply with all the relevant export control restrictions as it makes about $20 billion a year in the US.

The US-German trade volume is almost $13 billion while goods and services trade between the US and the EU states are at more than $ 1 trillion. Realistic German Chancellor Angela Markel has reflected on the situation by saying that “we cannot pretend that we are stronger than we are”.

European governments are in no position to replace deals signed by their respective companies and they also have to closely watch security interests with the US. Britain and France have recently joined hands to bomb Syria. The EU is also looking for its share in the other Middle Eastern countries where regimes were toppled in the name of the Arab Spring. There are countries in Asia where US diplomats look into the files of the treasury and foreign ministries in order to verify that the respective governments are following orders or not – something prevalent in the Shah of Iran’s era as well. America also listens to its European allies from the backdoor. In such a situation, Europe can never ditch the US, but it may pose a scenario that can help it bargain better on other issues.

At a time when Europe is dragging its feet away and Saudi Arabia is seen by some to be pushing for war against Tehran, Pakistan and Iran have dramatically improved bilateral economic ties. Last year, both countries witnessed a 15 percent increase in trade volumes. From March 2017 to March 2018, an upward trend led to bilateral trade worth $1,336 million. Pakistani companies exported $412 million, with a 13 percent increase as compared to the same period in the last year, while Iranian companies exported $942 million, which achieved an increase of 16 percent as compared to the previous year. It will be interesting to see if Pakistan sustains this level of trade.

With Israel and Arab countries pushing Iran to the corner, how long can Tehran wait for Europe to walk the talk? Rouhani can’t do that for long as the conservatives have started thumping ground. Is it only because of the nuclear programme? To a European diplomat, if Iran’s nuclear programme had any military dimensions, then a career diplomat like Javad Zarif wouldn’t have led the JCPOA talks and Rouhani would have been thrown to the wolves instead of being re-elected to the presidency. The whole game is about the Middle East and the aim is to cut the tentacles of Iran in Iraq, Lebanon, Syria, Yemen and Palestine that are strangulating Israel. Iran can’t compromise on that as it is a matter of its own survival.

Can the US push for a change of regime? In any such effort, it is impossible for Trump to export puppets like Hamid Karzai or Ahmed Chalabi in Iran The international media has covered violent protests against Rouhani in the past, but has avoided showing millions who have supported him. Even if his regime is toppled, it will turn out to be the recipe for a bigger disaster.

No country has more of an interest in avoiding such a catastrophe than Russia. For Moscow, Mike Pompeo’s visit to Pyongyang was as alarming as Henry Kissinger’s visit to Peking. Russia doesn’t trust Brussels and also can’t leave Iran to China, which has almost sacrificed North Korea at the altar to save the One Belt One Road project.

By: Nasim Haider

Leave a Reply

Your email address will not be published. Required fields are marked *