As anticipated, the United States last week reimposed trade sanctions with Iran. Sanctions were suspended by the 2015 international agreement reached with the government of Iran that capped its nuclear program. U.S. President Donald Trump has been unyielding in his hostility to that deal, and withdrew his country from it earlier this year. He hopes that renewed pressure on Iran — and its trade partners — will force Tehran to change its behavior. That is an overly simplistic — and optimistic — assessment. Instead, the move will likely deepen rifts between Washington and its allies, and give Iran, which had been abiding by the deal, reason to abandon it.
The Joint Comprehensive Plan of Action (JCPOA) was widely agreed to have succeeded in halting Iran’s progress toward the development of a nuclear weapons capability. Trump, however, believed that the deal was flawed on several counts. It capped, rather than permanently curtailed, Tehran’s ability to acquire a weapon, and it did not address other forms of Iranian misbehavior, such as support for proxies elsewhere in the region.
All other parties to the agreement, including the International Atomic Energy Agency, which was responsible for assessing Iranian compliance, agreed that “the JCPOA is working and delivering on its goal, namely to ensure that the Iranian program remains exclusively peaceful,” as a statement from European signatories noted. And while the deal did not tackle the thorny issue of Iran’s disruptive behavior, it was not for lack of trying. Negotiators labored for nearly two years on an agreement and Iran absolutely refused to extend the scope of the agreement beyond nuclear issues. The agreement was not perfect, but it was good enough to win the support of all involved.
During the 2016 presidential campaign, Trump promised to withdraw from the agreement and he honored that pledge in May. He also promised that he would reimpose sanctions on Iran as well as secondary sanctions on those countries that continued to trade with Tehran. In other words, the U.S. sought to deter other countries from doing business with Iran, even if their own governments thought the deal was working. Or, as Trump tweeted last week, “Anyone doing business with Iran will NOT be doing business with the United States.”
Trump’s decision to pull out sparked anger among those other signatories; secondary sanctions, which went into effect on midnight Tuesday (Washington time), have infuriated them. Those sanctions prohibit Iran from acquiring U.S. bank notes; from trading in gold and other precious metals; and from acquiring key components of industrial manufacturing, such as graphite, aluminum and software, among others. In the second phase, which is scheduled to go into effect in early November, the U.S. will sanction all of Iran’s petroleum trade and all transactions by foreign financial institutions with Iran’s Central Bank.
European governments continue to believe that the deal is “crucial” to global security and the European Union has created a “blocking statue” that will protect European firms doing “legitimate business” with Iran. Some large companies, such as Daimler and Total, nevertheless, have agreed to go along with the sanctions.
The U.S. strategy is to force a choice on the Iranian regime. As a U.S. statement explained, Tehran must “either change its threatening, destabilizing behavior and reintegrate with the global economy, or continue down a path of economic isolation.” Yet even if European companies toe the U.S. line, that policy is unlikely to succeed.
The primary reason is that China and Russia do not back the U.S. position. China needs Iran’s oil and can obtain it under preferential terms if it breaks with Washington. Russia does not need the oil, but it — like Beijing — does not want to validate a U.S. policy that disrespects international agreements to which they were a party and which applies U.S. law beyond its territory.
Japan is in a precarious position. Over the last fiscal year, Japan’s imports of Iranian oil fell 28 percent from the previous year. But in the first quarter of 2018, Japan still got about 5.3 percent of total crude imports from Iran. That has Japanese officials and businesses worried that the oil cutoff — as well as the secondary sanctions — will hit them hard. Japan trade officials have asked their U.S. counterparts for waivers from the sanctions, but Washington remains adamant that it wants Iran to export no oil after November.
As noted, that is unlikely. Nor is there likely to be the public uprising that the Trump administration believes will force the Tehran government to shift course. Instead, hardliners who argue the U.S. cannot be trusted will be emboldened and their hand strengthened. Worse, Tehran is now theoretically free to disregard the JCPOA and resume its nuclear weapons program. Trump’s unhappiness with the Iran deal is no reason to tear it up — especially when he has no real alternative.
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