Iran: Preserving the Nuclear Deal

The Trump administration’s decision to exit the 2015 Joint Comprehensive Plan of Action (JCPOA) and unilaterally reimpose sanctions on Iran as part of a “maximum pressure” campaign has put the agreement in significant jeopardy and set the U.S. and Iran on a possible collision course. The remaining signatories to the deal, including the EU and three member states (France, Germany and the UK, collectively known as the E3), are striving to preserve it and Iran has continued to adhere to it. But as sanctions take a severe toll on the Iranian economy, the urge to retaliate against the U.S. withdrawal is building up in Tehran. The accord’s collapse would lead to a renewed and perilous nuclear crisis at a time when tensions across the Middle East are already high, including between Iran and regional powers such as Saudi Arabia and Israel.

The EU and its Member States Should:

• Uphold the JCPOA so long as Iran remains in compliance with its nuclear obligations and implement mechanisms such as the Special Purpose Vehicle (SPV) to ensure the accord delivers at least some of its anticipated economic dividends.
   
• Undertake more effective public diplomacy, particularly toward Iran and the European private sector, to clarify its policies and explain the complexity of European efforts in adopting such mechanisms.
   
• Continue discussions with the U.S. regarding member state exemptions on secondary sanctions, particularly with regards to humanitarian trade with Iran.
   
• Separate efforts to save the JCPOA from their response to other security concerns, including purported plots against Iranian dissidents on European soil and Iran’s ballistic missile tests and transfers.
   
• Encourage Iran to deepen and widen ongoing EU-Iran discussions on Yemen to include other regional issues as well as Iran’s ballistic missile program and human rights.

In May 2018, President Donald Trump announced that the U.S. would terminate its participation in the JCPOA and reimpose sanctions lifted in 2016 as part of the nuclear agreement. Washington’s repudiation of the JCPOA is part of a wider “maximum pressure” campaign against Iran seeking to not only coerce Iran into renegotiating the terms of a concluded and functioning multilateral accord, enshrined in a UN Security Council resolution, but capitulating to a longer list of U.S. demands on Iran’s regional policies and ballistic missile program. The risks in the coming year are threefold: that Iran, seeing dwindling benefits from its continued adherence to the JCPOA, decides to curb or terminate its participation in the accord, sparking a renewed nuclear crisis; that the U.S. and Iran will keep edging toward a direct conflict; and that regional frictions between U.S. and Iranian allies could escalate and draw in other parties.

If Iran’s dividends from the nuclear deal keep shrinking, hardliners in Tehran who call for abrogating the JCPOA and assuming a more confrontational posture in the nuclear realm and the region could gain ground. Sanctions have already weakened Iran’s economy, driving a significant devaluation of the rial, pushing up inflation, curbing the country’s oil revenue (some limited oil waivers notwithstanding) and sinking the economy into a recession. With a parliamentary election in 2020 and a presidential vote in 2021, pragmatic politicians associated with an increasingly fruitless diplomatic approach could lose ground to more hard-line forces critical of international engagement.  

At the same time, tensions over Iran’s regional role and a U.S.-led drive to curb it could leave Washington and Tehran jostling for the upper hand across a string of regional flashpoints, from Afghanistan and the Gulf to Iraq, Syria and Lebanon. Tensions between Iran and Israel are of particular concern, with Israel acting more frequently to counter what it perceives as Tehran’s rising influence across the Levant. A confrontation between Hizbollah and Israel, for example, could rapidly escalate in Lebanon and Syria, drawing in Iran and the U.S. in support of their respective allies.

As core participants in the nuclear deal, the EU and three of its member states have thus far delivered a consistent and unified message against Washington’s JCPOA withdrawal and sanctions. High-level European participation in the upcoming ministerial meeting on the Middle East in Warsaw, which will likely see significant U.S. emphasis on criticising Iran, could erode this message and European credibility in Tehran. EU measures to protect the deal, such as the blocking statute introduced in August 2018 and the SPV expected in early 2019, backed by the E3 and designed to facilitate European trade with Iran in a way that bypasses U.S. sanctions, are critical to forestalling the accord’s collapse, and should be fully implemented. Such efforts would be more effective alongside more robust political signalling and public diplomacy campaign underscoring the extent of the EU’s work to preserve the JCPOA, both to the European private sector and Iran itself. Visits by high-level EU officials to Iran, outreach to Persian-language media platforms explaining EU decisions and policy, and the production of readily-accessible information in Persian of relevant EU statements and announcements could each serve to increase the visibility and explain the importance of EU decisions on Iran. Brussels should also intensify its consultations with the Islamic Republic to allow the establishment of an EU delegation in Tehran.

In parallel with these efforts, the EU should encourage the U.S. to issue extended and ideally expanded sanctions waivers for member states, and press for clarity on nuclear and humanitarian exemptions. It can also maintain its dialogues with Tehran on Yemen (there were four rounds of discussions that France, the EU, UK, Germany and Italy held with Iran in 2018) while exploring wider avenues of engagement on both regional and domestic issues. Such conversations may be crucial for eventual talks on building on the nuclear agreement, not least if the U.S. chooses to re-engage diplomatically in due course. 

Preserving the JCPOA does not preclude the EU from pressing Tehran on other security issues, particularly alleged assassination attempts against Iranian dissidents on European soil, renewed ballistic missile testing, and potential Iranian weapons transfers to local allies in the Middle East. The JCPOA does not constitute a carte blanche for Iran to behave in ways that damage European interests. Still, should the EU and its member states eventually place targeted sanctions on Iran, it should make it clear that these measures do not prejudice continued cooperation on the nuclear front.