Ever since the US’ unilateral exit from the 2015 Iran nuclear deal, known as JCPOA, the EU members of the deal – France, Britain and Germany (E3) – have been trying to find ways to salvage the deal. The E3 first restored to ‘defying’ the US and created a so-called “special purpose vehicle” called INSTEX for Europe-Iran trade. Ever since then, they have failed to operationalise it, mainly out of their inability to actually defy the US and adopt an independent policy. At the same time, the economic benefits that Iran/Iranian economic market offers to Europe are abundant and too big for Europe to ignore. Europe is, therefore, in a fix. It recently threated Iran with invoking the dispute mechanism of JCPOA to resolve the issues related to Iran’s implementation of JCPOA, but it can hardly do so—and Iran knows it—unless other members of JCPOA i.e., Russia and China agree to it; hence, the E3’s dilemma whereby it can neither force the US to lift sanctions on Iran or force Iran to not resort to what is a legitimate course of action even according to the terms and conditions of the deal.
One important reason why Europe, unlike the US, continues to somehow cling to the deal is the economic potential Iran offers for the Europeans. For instance, as the latest available data indicate, the total value of Europe’s technology—industrial equipment and machinery— related exports to Iran have reduced by almost 50 per cent. Before the US sanctions resumed in November 2018, Europe’s average monthly technological export stood at US$970 million, falling to an average of US$433 million in 10 months subsequent to the sanctions. The continuing trade despite sanctions is between European companies and Iran’s private enterprises not covered under the US sanctions. Another worrying thing for Europe is that even a small decline in their exports to Iran is readily filled by China, which sees Iran as a key territorial link towards westward expansions of its Belt and Road Initiative (BRI). Chinese expansion in terms of providing Iran with crucial industrial equipment and machinery is especially worrying some for Europe because Iran, ever since its last major industrial transformation in early 2000s, has been a buyer of European technology. While dependence on European technology may make it difficult for Iran to rapidly distance itself from Europe, Iran’s recent actions indicate that between industrial path-dependency and economic survival, it will choose the latter imperative; hence, Iran’s continuing distancing from JCPOA because of E3’s non-compliance.
Accordingly, on November 7 Iran announced that it has begun refining uranium at Fordow, a secretive site built inside a mountain to the north of the holy city of Qom, leading the E3 to criticise this step and linking it with (real or imaginary) “severe proliferation implications.” Iranian response, however, sounded not only adequately strong but potentially defiant. On November 11, Iran’s envoy to the United Nations Ali Nasimfar said in categorical words that “ Iran alone cannot, shall not and will not take all of the burdens anymore to preserve the JCPOA, adding further that “If timely adequate, serious and practical measures are not taken by other JCPOA participants, Iran will be forced to exercise its right under the JCPOA Paragraphs 26 and 36 to further limit the implementation of its commitment every 60 days.”
The reason why Iran remains defiant in the face of EU despite knowing that the EU might hit back with its own sanctions is the support it continues to receive from Russia and China. When Macron recently visited China and discussed with the Chinese the JCPOA, he was forced to emphasise, yet again, the need to lift some of the US sanctions to open a path of dialogue, adding that any pressure on Iran to force it to return to full compliance with JCPOA “must be accompanied by an easing of some [US] sanctions”, meaning thereby US unilateralism could not be hoped to ease the situation.
Russia, too, remains a critics of the E3’s position on JCPOA. Russian foreign ministry spokesperson, Maria Zakharova, recently said in an interview that “European partners” have “showed an inability to guarantee the conditions proposed to Iran.”
This support is in addition to the support Russian continues to provide Iran in developing its nuclear power plant capacity. On November 10, just when the E3 were gearing up to meet next day to consider Iran’s actions and issue their warning, Russia and Iran began pouring concrete for a second reactor at Iran’s sole nuclear power plant in Bushehr on the Gulf coast, sending a clear message to both the E3 and the US, and compounding the E3’s ‘to be or not to be’ nuclear-deal dilemma. No matter what actions E3 might take, Iran will continue to act in a way that suits its interests.
Salman Rafi Sheikh, research-analyst of International Relations and Pakistan’s foreign and domestic affairs, exclusively for the online magazine “New Eastern Outlook”.