Secretary of State Mike Pompeo’s speech on Mondayin the wake of the U.S. exiting the nuclear deal was met with formidable opposition among European allies, who worry renewed sanctions could harm European businesses.
Pompeo declared that Iran is set to face “strongest sanctions in history” and laid out an extensive laundry list of conditions the Iranian regime would need to satisfy — including ending support for all Middle East terror groups — to enter into a new deal with the U.S. Pompeo reiterated the Trump administration’s position that Iran’s behavior in the region must be combatted forcefully and collectively, in contrasts to the 2015 nuclear agreement, which dealt only with Iran’s nuclear program.
Under the deal, known as the Joint Comprehensive Plan of Action (JCPOA), the U.S. and other world powers offered sanctions relief in exchange for Iran giving up its nuclear capability. President Trump announced in early May the U.S. would withdraw from the accord.
Reacting to Pompeo’s speech, British Foreign Secretary Boris Johnson committed to shielding European companies from renewed sanctions.
“We are going to do everything we possibly can,” Johnson said of protecting European companies. “I’m not totally pessimistic about the situation.” Johnson said a “new jumbo Iran negotiation” would not be “very easy to achieve.”
For the time being, at least, Europeans are not shrinking away from the JCPOA. Federica Mogherini, the high representative of the European Union, explained that Europeans will remain committed to “full and effective implementation” of the JCPOA so long as Iran upholds its commitments. She also explained that Europeans are still unsure of the U.S. rationale for leaving the deal.
“Pompeo’s speech has not demonstrated how walking away from the JCPOA has made or will make the region safer from the threat of nuclear proliferation or how it puts us in a better position to influence Iran’s conduct,” she said on Monday.
Still, diplomats acknowledge that European companies may decide to stop doing business in Iran on their own accord, regardless of reassurances by the European Union to shield them from sanctions. Last week, the French energy company Total said it would be forced to end a multi-billion dollar project in Iran unless it receives a sanctions waiver by November.
Pompeo gave no indication that European companies will be given waivers. He said on Monday that economic pressure on Iran needs to impact a wide array of actors in order to be effective.
“Any time sanctions are put in place, countries have to give up economic activity,” Pompeo said. “I’ll concede there are American companies who would love to do business with the Islamic Republic of Iran. There’s a huge market there. It’s a big, vibrant, wonderful people. But everyone is going to have to participate in this.”
Europeans say that Pompeo’s speech does not leave much room for negotiating with Iran. Pompeo said that the long list of demands was Iran’s fault, and that crippling sanctions would bring them back to the negotiating table.
“Iran will be forced to make a choice: either fight to keep its economy off life support at home or keep squandering precious wealth on fights abroad. It will not have the resources to do both,” Pompeo said.
For the time being, many European diplomats hope they can find loopholes for certain companies to continue doing business with Iran, by using small German banks for transactions, for instance. But acknowledge that they cannot force big companies to change their own economic calculation.
“It is not necessarily effective because companies make their own decisions,” explained a European diplomat. “If they choose their commercial interest is to trade with U.S. and not to seek new contract with Iran, that’s for them.”
Still, many question how effective U.S. sanctions will actually be. In the eyes of Europeans, the multilateral sanctions that brought Iran to the table to negotiate the 2015 deal are viewed as far more effective than any potential sanctions imposed by the U.S. unilaterally.
“There is no assurance on how this is going to be amazingly effective. You just have to ask, how are you going to get overwhelming pressure on Iran to submit to this radical all-encompassing set of requirements if your sanctions coverage is pretty patchy?” explained a senior European diplomat, who was granted anonymity to speak frankly. “And even if European companies make their own minds up and decide to end contracts with Iran, you still have the Russians and the Chinese out there who can do quite well in terms of buying Iranian oil.”
The U.S. exit from the nuclear deal has strained transatlantic relations. Europeans maintain that the JCPOA is the only deal in town and say now they are the ones keeping Iran from a nuclear weapon, not the U.S. Last week, the president of the European Unionthe strength of the longstanding alliance.
“Looking at the latest decisions of President Trump, some could even think: ‘With friends like that, who needs enemies?” Donald Tusk said.