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Iran and US relations, with historical ups and downs, have taken a new turn with the advent of Trump to power. With a clear departure from slight softening after the nuclear deal, Trump has increased the tempo of US actions targeting Iran. This article will elaborate on which direction Trump Administration’s policies pushes Iran to and economic and security repercussions of such policies for the European Union (EU). In the final section, remedies will be prescribed for EU to minimize the negative effects of US actions.

Background

Joint Comprehensive Plan of Action (JCPOA), or Iran nuclear agreement as more commonly known, was signed between P5, Germany and Iran on 14 July 2015 in Vienna. Despite its imperfections, the deal was regarded as a success by many especially in terms of preventing Iran from continuing plutonium production and uranium enrichment for a certain amount of time.

In the same vein, Obama administration had aimed to achieve following goals with the nuclear agreement:

(1) to prevent Iran from developing nuclear weapons in the mid-term,

(2) to control and harness Iran by keeping Iran embedded in the international diplomatic system,

(3) to contribute to development of democracy in Iran by abolishing the economic restrictions and increasing the prosperity level of the Iranian people.

However, immediately after taking office, even during election campaigns, Trump declared the nuclear agreement was the worst agreement ever made and called EU for the revision of the agreement. While Israel, Saudi Arabia and some Arab countries supported this call without hesitation, the EU, Russia, and China, which are parties to the agreement, favored keeping the agreement as it was.

After this call, Iran declared that it would adhere to the agreement as long as its interests were protected. Iran’s most extreme response to these developments was to threaten the whole world saying that if it could not benefit from the agreement, it would soon complete the enrichment of uranium. This threat alone testify for how a great contribution Obama administration has made to world peace by bringing Iran to the table.

Europe was more sceptic about the intended endstate by US President’s call of the agreement into question. In an interview with Israel’s Channel 10 television, German Chancellor Merkel clarified German stance and their non-zero game view of the agreement saying: “We believe it’s better to have this agreement, even if it is not perfect, than to have no agreement”.

The Cancellation of the Agreement

To implement hardline strategies, Trump wanted to prepare international society mentally for incoming steps. In this regard, his first products were tweets supporting anti-regime activists’ protests in Iran in the last week of 2017. The main reason for these social events was reflected in the world press as the anti-democratic practices of the Iranian government and its unwillingness in distributing the economic gains to the public after the nuclear agreement. These protests were assessed by the Iranian government as an attempted demolition of the regime by US, Britain and Saudi Arabia, and were suppressed with harsh intervention. During the events, 25 people lost their lives and nearly 1000 people were injured.

Then on May 8, Trump declared unilateral withdrawal of US from the agreement despite warnings from Allies and other states.

In his first press conference on May 21, 2018, the new Foreign Minister Pompeo presented a painful 12-item recipe to Iran, saying it would face severe economic sanctions if it did not accept them. With this move, US caused questioning of prospects of attaining international peace and order and further of functioning of the latter.

Based on the statements made by Trump and Pompeo, it is possible to say that the Administration may have two different calculations about Its withdrawal from the agreement. Although US does not hold the belief that economic sanctions are direct steps toward changing the Iranian regime, it may calculate that the economic troubles of the Iranian people after the economic sanctions to be imposed will contribute to the attainment of this goal indirectly. A second calculation may be that Iran may return to the table with more concessions based on the pain It suffers because of cancellation of the agreement. (Trump; 12th of July 2018, NATO summit).

It is not possible to gauge the validity of either calculation at this point. The only clear thing is that, after the cancellation of the agreement, Iran will have less in its treasury and less incentive to conform international norms.

In the Aftermath of the Cancellation

On May 23, 2018, Iranian Leader Ayatollah Ali Khamenei formulated Iranian response to such developments at the highest level. He specified seven conditions for European powers if they want Iran to stick to the nuclear agreement after withdrawal of U.S. To form another important step on this issue, a meeting was held in Vienna on July 6, 2018, with the participation of foreign ministers of the other parties to the treaty, with the exception of US. The main theme of the meeting was how to protect the nuclear deal and keep trade open to Iran.

The main problem is that the sanctions imposed by US hang like Sword of Domocles over heads of big corporations. US has many tools to punish defying companies to include restricting access to the US financial system, capital markets, government procurement and export credit financing. Large European companies that do not operate exclusively in the Iranian market, do not want to face those sanctions. The best example would be the exit of four major giants (Total, carmaker PSA, KLM and French shipping group CMA CGM) from the Iranian market before the first US economic sanctions enter into effect in August 2018.

On the other hand, the effectiveness of the initiative launched by UK, Germany and France aiming to realize the trade to Iran with Euro in lieu of USD is yet to be seen.

So, in the absence of veritable solutions, the EU is obliged to submit to the pressures of the US. The Union, despite being unable to meet the political and economic demands of Iran, should ensure that country remains in the agreement. However, it is not clear how this can be achieved. A recent statement by German Minister of Foreign Affairs that full compensation of the companies due to the sanctions would not be possible, and his further warning to Iran that leaving the deal would lead more damage to its economy clearly shows the dilemma.

Probable Negative Repercussions

From international perspective, if Iran withdraws from the agreement; Its nuclear facilities and activities can no longer be scrutinized closely by international organizations, which was otherwise with the agreement. What is more, an Iran feeling less bound to the international norms will have more freedom in its fewer savory activities. In this perspective, Iran will have more free hand to increase its support to separatist activities in the region and follow its nuclear ambitions from where It left off before the agreement. Moreover, Iran may lead to an increase in world oil prices by restricting the transit of oil through the Hormuz Straits.

With a worsening economy and becoming more isolated, Iran may trigger a new wave of irregular immigration by heightening tension in the region. This wave of immigration will likely be consisting of Afghan refugees. Indeed, after the value loss of the Iranian currency against the US dollar, some news took place in the Iranian press alleging that Afghan refugees tend first to migrate to Turkey and then to EU if possible. Consequently, EU’s refugee problem, which is one of the most sensitive and contentious problems of EU countries, will come to the fore with a different dimension.

Is Iran Innocent?

So far, the benefits of the nuclear agreement, the importance of keeping Iran in the agreement, and the problems that may arise if Iran pulls out have been covered. It is equally important to review activities of Iran in the region, mostly financed through trade made possible after the agreement to have a more balanced view of the situation.

It is common knowledge that Iran has a well-established policy of using all the factions close to Itself or “proxies” to project power in the Middle East. Iran has opted to use a significant amount from the economic benefits thanks to the nuclear deal to follow a policy that will deepen and widen the instability in the region, rather than increasing the prosperity of its own people. This policy is still actively pursued.

In this regard, Iran has been waging a proxy war against Israel and the Saudi Arabia in the region with the groups it supports. Well operationalizing the grievance between Shiite and Sunnites, Iran has been funding Shiite groups within the region as competitors to ruling elites. The country is actively militarily present in Lebanon, Syria and Iraq. As It has been the game maker behind doors in Iraq, it has taken role in the fight against ISIL through both its indigenous units and proxies. The same applies to Syria with around eighty thousand volunteer troops.

The latest Saudi-Iran proxy war is ongoing in Yemen, the worst humanitarian crisis on Earth. The tension that began between the central government and the Houthis in 2014, has turned into a proxy war causing great destruction. The Houthi group has been supported by Iran, while the central government has been backed by coalition states led by Saudi Arabia. With a transition to hardline policies towards Iran, the Trump administration has begun implementing action plans aiming to reduce Iran’s influence in the region even sometimes with disregard to Its allies’ concerns. It is equally clear that proper measures must be taken against Iran’s activities aiming to increase its influence in the region and disturb the order. However, it is not clear how Iran will react. Will we see a more radical Iran or a more docile one? Whether those measures will make Iran more active or lack of finances will make Iran less ambitious is yet to be seen.

What Should EU Do?

Despite the tensions that will occur between the parties until November, it should be stressed what can be done to protect the nuclear deal and how to avoid from the harmful effects of economic sanctions. The issues that EU should focus and elaborate on regarding these developments can be cited as follows:

(1) The EU must insist on continuing its diplomatic and peaceful approach and discourse, and making supporting statements for the continuation of the agreement.

(2) It is evident that it is difficult to keep US, the key player and the one breaking the deal, on board. The EU should make great effort to convince US to return to the deal, and make US and Iran negotiate for Iran’s undermining activities and missile threats. The EU should not act in the region merely considering its economic interests; rather it should support all initiatives that contribute to security.

(3) US will gradually increase its political and economic pressure against EU in order to ensure that the EU acts along the same policies against Iran. Therefore, EU should introduce balancing initiatives.

(4) EU should have a close cooperation with Russia in order to prevent Iran’s disturbing activities in the region, which in turn make Iran more deliberate in its moves.

(5) Following the economic sanctions, it is obvious that the US will not grant any privilege to any country that trades with Iran, with perhaps a few exceptions. Hence, the EU should launch new initiatives to provide political and economic support to its own companies.

(6) The positive political atmosphere, which was created by the close coordination of the parties to the treaty except US after the meeting in Vienna, should be maintained after the economic sanctions to be imposed in August and November 2018.

(7) While the EU is trying to develop political and especially economic relations with Iran despite the US sanctions, it should not forget Iran’s undermining activities and its missile threats in the region. Moreover, it should also avoid activities that would contribute to the negative impact of Iran in the region while trying to salvage the agreement.

(8) The EU should prepare alternative scenarios, which in particular should include initiatives for refugee problem and regional security, considering the possibility of Iran’s withdraw from the deal.