Can the Iran accord survive Trump’s nuclear no?

Can the Iran accord survive Trump’s nuclear no?
Not everybody in Iran would be displeased should the nuclear deal unravel. Plenty of hardliners in the Islamic Republic view the accord as surrendering to Western powers that cannot be trusted.
By bne IntelliNews October 10, 2017

Naming the major world leaders not content to carry on with the Iran nuclear deal in its current shape and form is a rather simple task. For the only vocal opponent is Donald Trump, backed by a somewhat obsequious Israeli Prime Minister Benjamin Netanyahu. Even the US president’s own secretary of state, Rex Tillerson, and Pentagon chief, Jim Mattis, have lately accepted the Iranians are complying with the deal and that the wise thing to do for now is to stick with it. But Trump is Trump and his determination to do something about what he has called “the worst deal ever” and “an embarrassment” to the US will this week see him make a major announcement.

The most probable scenario is that he will refuse to issue the required regular 90-day approval of Tehran’s compliance with the formally titled Joint Comprehensive Plan Of Action (JCPOA) and will send the issue to Congress, which will be asked to vote on whether Washington should drop out of the deal, perhaps in tandem with pressuring Tehran to renegotiate for a reformulated deal. If Congress then fails to decide what to do within 60 days, the decision would return to Trump.

The deep disappointment that the accord — generally seen as so successful that those who negotiated it on behalf of Iran and six major powers were thought of as genuine contenders for the Nobel Peace Prize — is facing destruction at the hands of Trump or the Republicans in Congress was tangible at the fourth Europe-Iran forum in Zurich last week, attended by bne IntelliNews. Over the two days of the event, it was no doubt the elephant in the room, and a sizeable one at that. Several Iranian CEOs told this publication that despite their best efforts Europeans had lately grown cooler on financing possible future trade and investment with the Islamic Republic.

The negativity felt extra-cumbersone given the absence from the conference of some high-level Iranian speakers, said to be too busy with other commitments, despite having been on the roster for several weeks. IranAir's new female CEO, Farzaneh Sharafbafi, appointed in July, was conspicuous by her absence, although reports out of Tehran noted that she had to stay back in the Iranian capital to be confirmed for her new position by government officials on October 5.

Europe riding to the rescue

All in all then, not encouraging, but wait one moment… what’s this on the horizon? Quite possibly knights in shining armour in the form of the European Union and European business riding to the rescue — even by sending delegations to Washington to talk to senators and members of Congress — to keep the JCPOA functional whatever course of action ex-reality TV star Trump relates to his audience during his next “episode”.

Speaking at the forum, Helga Schmid, secretary-general of the European External Action Service, reassured business leaders that the EU was committed to the accord, saying that “as Europeans we will do everything to make sure it stays”. Speaking to a packed out conference hall, she added: “The nuclear deal is working and delivering, and the world would be less stable without it.”

Schmid left no doubt about the strong feelings in Brussels about retaining the JCPOA, also saying that the EU “supports economic cooperation between Iran and Europe – at the political and policy level”.

At one panel, comprised of a gathering of European ambassadors to Tehran, including those of the UK, the Netherlands, Belgium, Denmark and Poland, there were declarations of the success of the nuclear deal in building up trade and investment in an Iran freed of crippling economic sanctions and keeping the country from the path of temptation when it comes to pursuing a nuclear weapon. The British ambassador, Nicholas Hopton, for one, emphasised that Downing Street had told its Washington ally that the deal must be adhered to because of its security and economic benefits. He referred to the UK this year seeing trade with Iran grow by 78% in the first quarter, although admittedly, because of the years of sanctions, it expanded from a rather low base.

Conference attendees were also encouraged to learn that while major banks are still reluctant to handle Iranian transactions — fearing the triggering of future obstacles in dealing with the US financial system – some 30 Iranian banks are now reconnected to Swift electronic banking and 200 or more international lenders have begun correspondent relations with Iranian counterparts.

The run-up to the showdown with Trump over the survival of the deal has also seen moves by the credit agencies of several European countries including Denmark, Austria and Italy to extend export guarantees to Tehran, while several major credit lines, including a €1bn facility from Austria’s Oberbank and a €500mn financing package from France’s state investment bank Banque publique d'investissement (BPI France), have been opened to assist Europeans doing business in Iran. 

Jorn Fredsgaard Sorensen, the director of the country, bank and sector risk department at Danmarks Eksportkredit (EKF), Denmark’s export credit agency, told the Guardian on October 6 that the Danes’ export guarantees “…should hopefully give comfort to banks that are not yet willing to work with Iran that they can work with Iran because we show our commitment to it.” He added: “I think the Europeans are committed to the nuclear deal but we also believe in it because, if we didn’t believe that Europeans would uphold the agreement, then we shouldn’t be issuing these types of guarantees.”

Patently dishonest

Critics of Trump’s demonisation of Iran say that it is patently dishonest because the instability of the Middle East is not in any significant measure the consequence of Iranian policies or actions. To blame Iran for terrorism in the region or the West is misleading at best — let’s not forget Tehran itself became a horrific victim of Islamic State back in May — because most Islamist terrorism worldwide is driven by extreme versions of Sunni Islam, not by the Shia Islam of Iran.

But Trumpworld does not brook such rational arguments and is not at all impressed that not only has the International Atomic Energy Authority (IAEA) eight times confirmed that Iran is meeting its JCPOA verification and inspection standards, all the other signatories to the deal — namely the UK, Germany, France, China and Russia — have not hesitated in stating that they want to see the deal, signed in late 2015, endure and flourish. That’s particularly pertinent when it comes to keeping open the door to a market of 80mn people amid a world that is still struggling to re-find its feet economically after the Great Recession.

It’s true that the JCPOA addresses neither Iran’s ballistic missile development nor the Iranians’ roles in Middle East conflicts such as those in Syria and Yemen and its support for Lebanon’s Hezbollah in its struggle with Israel. But it was never designed to do so, thus Trump’s frustrations that he can’t use the deal to turn some screws in these spheres amount to a failure to grasp how international diplomacy works (if you want to address those matters, negotiate another treaty). Not only that, but in repeatedly stating that Iran is somehow breaching “the spirit of the deal” Trump overlooks how he himself has apparently regularly done so by urging investors to stay out of Iran — the JCPOA prohibits such behaviour from a signatory.

The provocation that Trump might direct at Tehran this week looks grave, with reports on October 10 looking at how his administration might try and designate Iran’s Islamic Revolutionary Guard Corps (IRGC) as a terrorist organisation. That might prove a provocation too far for Tehran but another scenario is that some Republican senators will decide that Trump has overplayed his hand and that the deal is worth protecting for the sake of American business. After all Boeing would like Washington’s go-ahead to push through some multi-billion-dollar deals it is eager to deliver on for Iranian airlines.

If the Americans don’t come through to stall or block their own president, all eyes will turn to Europe and its suggestion that it can keep the JCPOA alive with the Iranians, Russians and Chinese. Iran’s Foreign Minister Mohammad Javad Zarif has already lobbied for such an outcome and on October 6, Ali Akbar Salehi, head of Iran’s nuclear agency, made some possibly revealing comments while talking to Iran’s Fars News Agency. Iran, he said, would be forced to abandon the accord if other nations followed a US exit and reimposed sanctions. However, he tantalisingly added: “But if the US leaves the deal on its own with the others adhering to it, the situation will be different.”