Can the Iran Deal Survive a US Withdrawal?

(as published on the website Lobelog Foreign Policy on November 16th, 2016)
As we all know by now, withdrawing from the Iran nuclear deal could be a very simple matter for the United States. It could come in three ways. First, a vote by Congress to reintroduce sanctions that were previously suspended or cancelled, if not waived or vetoed by the new president, would represent a sufficiently significant breach of the 2015 Joint Comprehensive Plan of Action (JCPOA) to constitute an effective withdrawal if any of the parties, including Iran, wanted to construe it as such. Second, the same outcome could be achieved if President Trump chose not to renew one or several “national interest” waivers included in U.S. sanctions legislation that President Obama used to comply with the JCPOA. Finally, on his own initiative, the new president or his secretary of state or even the White House spokesperson could merely declare that Washington was no longer bound by the JCPOA, as the agreement, after all, is no more than a common declaration of intentions adopted by consensus among the representatives of seven participant states, without the slightest signature.
We know, of course, that Donald Trump, having to face the real world, will likely be forced to renege on a good part of his promises. His declarations on Iran and the JCPOA have been outright contradictory, sometimes suggesting he will tear up the deal, at other time indicating that he intends to renegotiate its terms, and at still other times indicating that he’d prefer to end Washington’s unilateral sanctions so that U.S. business can compete for Iran’s market. But, considering the pervasive and well-established hostility of the U.S. Congress towards Iran, combined with the frame of mind of the future president’s entourage on the subject, the prospect of a chain of events leading ultimately to a US withdrawal from the JCPOA is not to be taken lightly.
Such an event by itself would not mean the end of the JCPOA, if the six other parties to the JCPOA—China, France, Germany, Russia, the United Kingdom, and of course Iran—decide to stand together to keep it alive. This new configuration would effectively take us back to the early 2000s, when Iran was able to trade almost normally with the outside world, with the exception of the United States. That situation was certainly not ideal for Tehran given the harsh U.S. sanctions then in place, which naturally exercised an intimidating effect on the other countries’ economic relations with Iran. But it was, all in all, far more comfortable than the almost comprehensive embargo that was gradually installed with the ramping up of the nuclear crisis in the years that followed.
Iran’s Choice
For the JCPOA to survive and to thrive “on three legs,” so to speak, a few conditions will nevertheless have to be met in the event of a U.S. withdrawal.
The first one, of course, is the decision for Iran not to use Washington’s withdrawal as a pretext to renege on its commitments, or to even try to renegotiate some of them with the remaining parties to the agreement. The most conservative and hard-line factions of the Iranian establishment will no doubt try to take advantage of the new situation to deliver the “coup de grace” to the JCPOA, which never enjoyed their support. For the “Principlists,” such an opportunity would allow them to severely undermine the popularity of President Hassan Rouhani and offer them renewed hope of regaining their hold on the Iranian society and economy.
If such an “April surprise” occurs before the presidential election scheduled for May 2017, then Rouhani’s chances for re-election would be seriously compromised. What could follow—the end of the current “moderate” experiment and the full takeover of the Iranian political institutions by the staunchest conservatives—would benefit neither the Middle East nor the world as a whole.
Europe’s Choice
The second condition is for Europe to display and maintain in the long run a clear determination in favor of the survival and continuation of the JCPOA. High Representative of the European Union for Foreign Affairs and Security Policy Federica Mogherini has so far made that very clear when she declared over the weekend
…Let me tell you very clearly that this is not a bilateral agreement, it is a multilateral agreement by the UN Security Council resolution. So it is in our European interest, but also in the UN interest and duty to guarantee that the agreement is implemented in full. For the whole duration of the agreement, which is 10 years. I have personally a specific role to guarantee that this is done by all sides, and for sure this is in European interest.
In the political sequence that will begin with the inauguration of the new president, at least two out of the seven parties to the agreement—China and Russia—will maintain their support for the JCPOA. Considering the uncertainties looming over Washington’s position and Iran’s reaction, Europe, with its three parties to the JCPOA—Germany, France, and the UK—could find itself in a leading role, be it in deterring the United States from leaving the JCPOA or, as a last resort, in convincing Iran to remain on board. If this time comes, will Europe rise to the occasion? 
To maintain Europe’s unwavering adherence, these three European countries have a singular responsibility. In such a situation, the UK’s position would be somewhat peculiar, as it is set, in principle, to leave the EU in two to three years. The JCPOA’s continuation is obviously in the British interest, especially as Iran is a significant potential customer in terms of trade, insurance, and financial services. Will the British prime minister find in the UK’s “special relationship” with the United States sufficient arguments to dissuade Donald Trump from committing an irreversible gesture? Or, as it starts to drift away from the EU, will Britain find itself, on the contrary, more sensitive to the arguments of the new U.S. administration, more vulnerable to U.S. pressure, and therefore more prone to join Washington in withdrawing from the JCPOA? It is difficult, at the present moment, to bet on Britain’s final position.
For Germany, Iran is also a significant partner for trade and investment, as well as a long-established and reliable interlocutor in the Middle East. It will stand without doubt in support of the JCPOA. And France? Between the UK and Germany, it could find itself in the pivotal role. As in 2003 in the run-up to the Iraq war, France has shown on a number of occasions its ability to resist U.S. pressure. On the other hand, during the JCPOA negotiation, and even a while after its conclusion, Paris has hinted from time to time that it did not consider the deal to be best of all possible agreements. Since then, however, the JCPOA has proved its effectiveness in curbing the Iranian nuclear program, and the specter of a war in the Middle East triggered by the nuclear question has clearly faded away. It is thus essential that the French government, right now as well as in the form in which it emerges after the May 2017 French presidential election, expresses without ambiguity its support for the continuation of the JCPOA and engages proactively in rallying all of Europe behind it. Will it make the right choice?

interview with "Tehran Times" (September 13, 2016)

     Despite the JCPOA, some major European banks are reluctant to enter banking transactions with Iran, fearing a punishment by the U.S. Treasury. What are the main obstacles?

The main obstacle is that the dollar cannot be used as a currency in transactions between Iran and Europe without triggering sanctions from the USA. But most international transactions use the dollar, even if for purely technical reasons. For instance, if you want to transform an important sum of rials into euros, it goes very often in the international banking system through a transformation of your rials into dollars before these dollars are in turn transformed into euros. That is enough to activate the US sanctions. Another obstacle is the gap existing between the Iranian banking system and the international system, as the Iranian system has been isolated for many years from the outer world. Finally, European banks are afraid of campaigns of « name and shame » in the United States if they develop relations with Iran. But I am confident that channels will be found with time to go around most of these obstacles.

 Why does Europe not want to cooperate with Iran ?

The Europeans certainly want to cooperate with Iran, as was shown by the numerous delegations of businessmen who have visited Iran and the important amount of agreements which have been signed. Current trade is already developing, but important projects take time to take shape. On the Iranian side, aloso, there have been delays, for instance for the adoption of the new model of Iranian Petroleum Contract, and till then nothing could start in this field. 

Why is US terrorizing European banks into not reviving business ties with Iran?

Frankly, I believe that Obama and Kerry are sincere when they say that they support the development of trade between Iran and Europe, but, as you know, there are still strong resistance from the US political establishment, the Neoconservatives, the Republicans, and all the people in the public and the private sector who wish to see the failure of the JCPOA.

 Is JCPOA in danger?

Yes, indeed. It is a very fragile agreement, which needs good faith and positive spirit on both sides, going beyond its sheer letter, to succeed in the long run.  But what will happen after Obama ? What will happen after Rouhani, if he is not reelected next spring ? This gives reasons to worry.

For Iran, the disappointing results of the nuclear deal in terms of opening up of channels of trade and investment have raised the opportunity for Conservators to play a role. How do you see the political perspectives?

Even with the best good will on all sides, one could not hope that things would change at full speed after the entry into force of the agreement. I understand very well all the reasons that the Iranians had to be impatient, but you illusioned yourselves when you thought that opening and prosperity would come back in a few weeks or months. It is only in two or three years than people will be able to feel fully the benefits of the agreement… If the agreement is still alive !

 What is your prediction for JCPOA ? What are the issues involved in implementing or violating the agreement?

The JCPOA should clearly be seen by all parties as a precious common good to be protected by all means, but, sadly, it is not the case today. There are powerful opponents in the United States, but also in Iran, and Europe is caught in between, without the capacity to counter these oppositions.

 Are the doubts and opposition over Airbus and Boeing sales to Iran, not a clear violation of JCPOA ? As it targets the basic needs of the lives of ordinary people ? How do you see the future of this deal?

 Again, these are heavy and complex decisions which take some time to take shape. But I am optimistic about the return of Airbus and Boeing in Iran. The US administration has to give its agreement to the sales, under a few conditions, as a denial would be a clear violation of the letter and spirit of the JCPOA.

 How do you analyze the cooperation between Iran and Europe in the energy sector?

On this point too, I am confident that cooperation will develop and blossom as never before…There is a real need in Iran and European companies are eager to play a major positive role in your country. You have « to give time to time » as former French President François Mitterrand used to say…

What would be the consequences if JCPOA is not implemented?

It would be, of course, a major disaster for everybody, : for Europe, for the United States, for Iran, for the whole Middle East, with the return of tension, economic depression, risks of war…. Let us hope that these perspectives will stop short the opponents of the agreement from reckless behaviour... 

 Is Europe willing to cooperate with Iran to combat terrorism?

 In principle, yes, of course. But the difficulty is to agree precisely on who is a terrorist and who is not. As you know the Middle East is at the moment a region where the friend of your friend is not necessarily your friend, the enemy of your enemy is not necessarily your friend either, the friend of your enemy could very well be your friend, and the enemy of your friend could also be your friend…

 How do you see the future of relations between Iran and Europe?

There has always been a deep and close relationship between Iran and Europe, not always easy, but made of mutual respect, admiration and understanding. Frankly, I believe that, all in all, in spite of all the past crises, the Europeans remain the best and closest friends of Iran in the whole world. Our task today is to build on this basis to reach new heights… here, the sky is the limit !

interview with Mehr News Agency (August 2016)

-What is your prediction about the future of the Joint Comprehensive Plan of Action (JCPOA)?

In spite of all the odds playing against it, my bet is that the implementation of the JCPOA will go on, as the cancellation of the agreement would create too many problems and uncertaincies for all the parties involved. Iran, which has been able to protect in this agreement the core and the future of its nuclear program, has certainly no interest in experiencing the return of all the sanctions lifted or eased by the agreement, in particular sanctions against its oil exports. The United States or Europe have no interest in seeing all the guarantees given by Iran about the peaceful nature of its nuclear program suddenly disappear. So all in all, the implementation has a good chance to go on, in spite of all the frustrations and bickering that it is bound to produce.

- Iran has been fulfilling its nuclear commitments under the JCPOA, however the other side, particularly the U.S., has not fully respected its obligations in lifting sanctions, especially those related to banking transactions. Please explain?

I would say that the United States is applying the letter of the JCPOA but much less its spirit, as the « constructive atmosphere » that each party to the agreement should maintain is lacking on the US side. The US opponents to the agreement have not given up their intention to destroy it and lead a kind of legal guerilla that the White House has difficulty to resist. Concerning the American banking sanctions, they have actually been lifted for non-Americans, but many constraints remain such as the interdiction of using the dollar in transactions with Iran. Therefore, the major European banks are still reluctant to intervene in Iran, considering that the rules they would have to respect are too complex and the risks still too high. I hope that solutions will be found to solve this problem, but il will take time. In what concerns Iran, the governement is certainly applying the agreement in good faith, but all the controversies which seem to develop around it as the Presidential election comes closer, do not help either. It is a pity that there is no national unity on either side in favor of an agreeement which is so evidently advantageous for both parties.

-Do you think the next president of the United States will honor the JCPOA? Will the allies back Washington if the next U.S. president violates the JCPOA?

I guess the next President will hesitate to denounce the JCPOA without serious motivation, since the unilateral termination of the agreement would create a major crisis between the US on one side, the European Union, Russia and China on the other side. But there is always the risk that the new President applies the agreement grudginly, reluctantly, and this, of course, will tend to raise negative reactions on the other side, all of this beeing highly detrimental for the smooth implementation of the agreement. Sometimes, to come out of such difficult situations, one as to be « clever for both sides », as we say in French…