Once the USA exited the JCPoA (The Joint Comprehensive Plan of Action) in May, 2018 – commonly referred to as “the Iran Deal” – the EU scrambled to find a workaround solution. Efforts were placed on salvaging the agreement to maintain trade and economic ties between Iran and European countries, while skirting American sanctions. As a result, on June 29th a “special purpose vehicle”, known as the Instrument in Support of Trade Exchanges (Instex) became operational, to allow Iran to obtain non-sanctioned goods from foreign companies.
However, Iran has since said the instrument did not meet its needs.
While the trading vehicle will assist in importing humanitarian goods, Instex will not enable Iran to trade oil, as it seeks. To complicate matters further, the USA has warned the EU that it can either seek trade with America or with Iran – but not both.
“The Europeans are basically trying to placate them [Iranians] by setting up this trade mechanism. It’s basically a barter trade system. They had high expectations that it could handle such things as oil, which we saw as unrealistic,” said Henry Rome, Eurasia Group analyst on Iran. “It’s mainly designed to allow Iran to buy humanitarian goods.”
In response, on Sunday Iran announced it would soon boost its uranium enrichment above the 3.67 percent cap established in the 2015 nuclear deal, adding in a televised news conference, that it would continue to reduce its commitments every 60 days unless the signatories to the agreement – namely, the European Union, Germany, France, United Kingdom, Russia, and China – were able to protect Iran from US sanctions.
“We are fully prepared to enrich uranium at any level and with any amount”, said Behrouz Kamalvandi, spokesman for Iran’s Atomic Energy Organisation.
European signatories quickly responded, condemning Iran’s breach of the agreement.
French President Emmanuel Macron condemned Iran’s decision but also declined to trigger the nuclear deal’s so-called dispute resolution mechanism, which sets off a series of negotiations that could end with reinstated UN sanctions on Iran within 65 days. “It’s not an option at this moment”, a source in Macron’s office told Reuters. Instead, he wants to give it a week to get all parties at the table again.
A meeting is set to take place between European and Iranian diplomats on July 15th.
Britain’s Press Association quoted a ministry spokesman as saying, “While the UK remains fully committed to the deal, Iran must immediately stop and reverse all activities inconsistent with its obligations.” The spokesman said Britain is coordinating with other countries that are part of the accord “regarding the next steps under the terms of the deal, including a joint commission”.
The EU said that it is “extremely concerned”, and added that parties to the 2015 deal are discussing a possible emergency meeting after Iran’s announcement.
US President Donald Trump said that Iran is “playing with fire”. Tensions between Washington and Tehran increased when Trump pulled Washington out of the JCPoA last year and moved to bar all international sales of Iranian oil.
Washington also blames Iran for attacks on oil tankers in the Gulf – something Tehran denies – leading to further escalation. As a result, the European signatories to the JCPoA have sought to pull back the two states from direct confrontation, fearing any misstep could lead to war.
Raising the temperature, Israeli prime minister Benjamin Netanyahu reiterated his pledge that Israel would not allow Tehran to develop nuclear weapons. “Today I call on all of the European countries: stick to your commitment”, he said. “You committed to act as soon as Iran violates the nuclear deal, you committed to activate the mechanism of automatic sanctions that were determined by the security council. So I’m telling you: do it. Just do it.”
Why Salvaging the JCPoA Matters
Uranium needs to be enriched to 90 percent, or more, to build nuclear weapons. However, once a country enriches uranium to 20 percent – a level Iran had previously reached – scientists say the time needed for a country to reach the 90 percent threshold is halved.
Through the JCPoA, Iran agreed to limits on all uranium enrichment and enrichment-related activities. Most importantly, however, the deal set a cap on the country’s level of enrichment at 3.67 percent, or below, until 2031.
It is worth noting that Iran’s enrichment of uranium only commenced one year after the US’ withdrawal from the JCPoA. Immediately after the withdrawal, Iran’s supreme leader, Ayatollah Ali Khamenei, declared that “The Iranian nation and its government will not tolerate to be both subject to sanctions and have its nuclear programme restricted and imprisoned.”
Since then, Iranian escalations – while real – have been limited, indicating only that reciprocity is essential to the survival of the deal, and the restriction of Iran’s nuclear activities. Iran has not taken drastic steps like abandoning the Non-Proliferation Treaty altogether, nor added advanced centrifuges to its already extant Fordow underground enrichment facility.
Any steps taken by Iran, to date, have been restrained – and remain reversible.
Nonetheless, the turn of events may ultimately lead to a complete resumption of international sanctions on Iran.
“The more Iranians do things that potentially violate the accord, the less inclined we are to make efforts to help them”, said a European diplomat anonymously. “It’s a vicious circle. If they go in this direction they will be all alone, face snapback and be ostracised by everyone.”
And yet, it is widely believed that upping the ante would also be a mistake, whether it’s by the USA or European states. While the USA, and its accompanying sanctions, can very well drive Iran to the brink of economic collapse, this will not force the kind of changes in Iran that are being sought after.
And while Iran cannot insulate itself from US sanctions, they are not defenceless; its leaders can strike back in ways that hit the Trump administration where it hurts – in the economy, via moves that disrupt oil supply, or merely create enough uncertainty to raise oil prices enough to slow global economic growth.
Nor can the world rely on Iranian restraint forever. The long-term application of pressure without diplomacy will, sooner or later, backfire, leaving the USA and its allies with less leverage than before – and Iran closer to ending all constraints on its nuclear program. Without a replacer or successor to the JCPoA, Iran is closer to an internationally recognised and legitimate nuclear programme, with very little to stop it from obtaining weapons capability. To avoid this, a serious diplomatic initiative is required.
Failure to do so won’t only result in worse tensions between the USA and Iran, or Iran and the EU; it may also cause a refugee crisis that would primarily affect Europe. Luxembourg’s foreign minister, Jean Asselborn said that “There is a danger that three million Afghans living in the country will leave Iran. Most of them are unlikely to return to Afghanistan because of the security situation, but will go to Turkey and then to Europe.”
“There is a risk of a giant wave of refugees“. he said.
“We want to defuse the crisis”, said a European diplomat. A French diplomat noted that more time for dialogue is of the essence. “In the immediate term, Iran must return to its obligations. There is room for dialogue”, a French diplomatic source added.