Europeans scramble to save Iran nuclear deal, but face new concerns over U.S. sanctions
PARIS — European leaders opened a diplomatic push Wednesday to salvage the Iran nuclear accord without the United States, opening direct talks with Tehran but also looking ahead to possible battles with Washington over European business ties with Iran.
“The deal is not dead,” said French Foreign Minister Jean-Yves Le Drian, speaking on France's RTL radio. “There’s an American withdrawal from the deal, but the deal is still there.”
The sentiment was shared in other capitals backing the 2015 nuclear deal: Brussels, Berlin, Moscow and Beijing.
European leaders now plan to engage directly with Iran in hopes of keeping alive the deal, which placed limits on Iran’s nuclear program in exchange for lifting international sanctions.
President Trump on Tuesday said the United States was exiting the accord, claiming it did nothing to stop Iran from one day possibly seeking nuclear weapons.
It now leaves a gapping hole in the deal — a signature foreign policy achievement of the Obama administration — as Trump officials move toward reimposing economic sanctions. The United States almost immediately set a confrontational tone with Europe, including the U.S. ambassador in Berlin insisting Germany must cut its extensive business ties with Iran.
Bruno Le Maire, France’s finance minister, fired back for the European Union. Speaking on French radio, he said the United States should not consider itself the world’s “economic policeman.”
French President Emmanuel Macron — Europe’s leading emissary to Washington to defend the deal in the run-up to Trump’s announcement — planned to speak later Wednesday with Iranian President Hassan Rouhani. Immediately after Trump’s announcement, Rouhani ordered his diplomats to engage with their European counterparts.
But Iran’s supreme leader, Ayatollah Ali Khamenei, suggested Iran might take a harder line in the talks by seeking a “guarantee” of European support for the deal, also known as the Joint Comprehensive Plan of Action, or JCPOA.
“I don’t trust these three EU countries either,” said a tweet posted to Khamenei’s site. “If the govt. wants to make a contract, they should ask for a guarantee, or else they will all do just as the U.S. did. If there’s not definite guarantee, the #JCPOA cannot continue.”
Federica Mogherini, the E.U. foreign policy chief, said the bloc will remain “committed to the continued full and effective implementation of the nuclear deal” as long as Iran abides by its end of the bargain. The U.N. nuclear watchdog agency has said Iran has not violated provisions of the accord.
Beyond the major policy break with Washington, however, another rift loomed: European businesses that have moved into Iranian since the deal took effect.
The United States plan to reimpose sanctions on Iran could also spill over to European firms and others doing business in Iran — possibly raising risks for their U.S. access to the much larger U.S. market.
Moments after Trump’s decision, Treasury Secretary Steven Mnuchin told reporters that these Europe-Iran business agreements will be voided. “The existing licenses will be revoked,” he said.
In Germany, the U.S. ambassador, Richard Grenell, said via Twitter that “German companies doing business in Iran should wind down operations immediately.”
Approximately 120 German companies operate in Iran with their own staff, and 10,000 German companies do business with Iran, according to the German-Iranian Chamber of Commerce.
Grenell’s remark sent shock waves through Europe.
“It’s incomprehensible that the activities of German companies should still suffer” given the E.U. commitment to the accord, said Erik Schweitzer, the head of the Association of German Chambers of Commerce and Industry, in a statement.For French companies in particular, the economic stakes of preserving the Iran deal are high.
In December 2016, for instance, the Airbus Group, a French aviation firm, won a contract to provide Iran’s national carrier, Iran Air, with 100 airplanes for approximately $19 billion at list prices. The U.S. aviation firm Boeing also secured a contract, but that is now likely to be abandoned.
But perhaps no company has benefited as much from the Iran deal’s lifting of sanctions as the French oil giant Total, which signed a $2 billion deal to develop the South Pars oil field, shared between Iran and Qatar.
“Today, for Total, is a historic day, the day we come back to Iran,” Patrick Pouyanne, Total’s CEO, said at a signing ceremony in Tehran last July.
Oil prices rose more than 3 percent on Wednesday, hitting the highest levels in more than three years.
“The E.U. has repeatedly stressed that the sanctions lifting has a positive impact on trade and economic relations with Iran,” said an E.U. statement. “The E.U. stresses its commitment to ensuring that this can continue to be delivered.”
At the same time, European companies will likely respond to an ultimatum from Washington, political analysts said. Given the size of the U.S. market, and the power of U.S. banks, European companies would have comparatively little leverage.
“The E.U. can take steps to mitigate the impact of the sanctions, but overall, companies will be scared. They will also prioritize their businesses with the U.S.,” said Luigi Scazzieri, a research fellow at the Centre of European Reforms, a Brussels-based think tank.
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