Why Is Europe So Committed to the Iran Nuclear Deal?

Faisal Al Yafai

Next month, the Middle East could enter uncharted territory, all because of a missing signature. On May 12, the US president, Donald Trump, must sign a waiver suspending US sanctions on Iran for another four months, as part of the Iran nuclear deal. President Trump has consistently attacked the deal and if he refuses to sign the waiver, it could bring about its collapse.


To some degree, the disagreement is the politics of spectacle. Twice before, at the start of this year and last autumn, Trump has spoken of intending to end the deal, prompting a flurry of diplomatic activity, but in the end he signed. Yet the mood music appears to be different this time, particularly with the appointment this month of John Bolton, a veteran hawk on Iran, as national security advisor. The possibility of the US pulling out of the deal has sparked a war of words, with Iran’s president Hassan Rouhani saying in a speech last week that if the US withdraws from the deal, it would “regret it.”


Ending the deal would bring unpredictable results in a region already dealing with multiple wars.


But, at least in the Gulf, it would be welcomed. Since the nuclear deal was signed and Iran received tens of billions of dollars that were previously frozen, regional capitals believe there has been an uptick in Iranian support for militias and governments like that of Bashar Al Assad. The Arab countries also see that Iran has transferred missiles to non-state groups like the Houthis in Yemen and Hezbollah in Lebanon. Far from bringing Iran into the fold of nations, the deal appears to have merely given the regime additional resources with which to meddle.


Cancelling the deal would also create a rift between the United States and Europe. Because right from the beginning, the Europeans have been the staunchest defenders of the nuclear deal. Part of the reason lies in the belief that the deal is working, preventing Iran from acquiring nuclear weapons, while opening up the economy to the world. “Nobody has come up with a better idea,” was how Britain’s foreign secretary, Boris Johnson, put it in January, when he, along with the foreign ministers of France, Germany and the European Union, all signatories to the deal, met in Brussels with Iranian leaders to show solidarity – a rather remarkable show, given that it was the EU siding with Iran against the United States.


But a greater part is a divergent view with the current White House incumbent on the value of multilateral diplomacy. Europe, in particular Paris, Berlin and Brussels, appear to believe that, with the deal in place and the Iranians fulfilling the letter – Trump believes they are not fulfilling the spirit – of the deal, it should be honored, otherwise the very idea of such agreements could be thrown into doubt.


But the main reason is economic. European companies have benefited far more from the deal than American ones, and whatever concerns European capitals may have, are being sidelined in favor of the economic rewards. Last year, Reuters conducted an investigation into the businesses that had benefitted from the Iran deal. It found over 100 contracts had been signed, with a value nearing $100 billion, covering energy, infrastructure and pharmaceuticals. European companies, especially German, French and Italian companies, as well as Russian, had signed the most. Some of the biggest European companies – the French car company Peugeot, the German makers of Mercedes and the European aircraft manufacturer Airbus – have already lined up deals with Tehran.


By contrast British and American businesses have complained of being late to the party, with even major US energy companies like ExxonMobil wary of going in while Washington has been so critical.


For the Europeans, too, there is the sense that it is Britain and America who are leading the charge politically, while they lose out economically. Prior to 2006, when sanctions on Iran first started, the European Union was the country’s prime trading partner. In the decade since, the EU has lost out, seeing China and the UAE take almost a quarter of all Iran’s trade each.


Now there is a sense of making up for lost time. EU-Iran trade jumped 94 percent between 2016, when the deal was signed, and the next year. The economic rewards are too great and the Europeans appear unwilling to give them up without a fight. Next week, France’s president, Emmanuel Macron, arrives in Washington, with aides letting it be known that saving the nuclear deal will be close to the top of his agenda.


Even if Trump does de-certify the deal, Europe may charge ahead. EU leaders have said they are considering contingency plans if sanctions were re-imposed. Foremost among these would be finding ways to maintain the contracts that EU countries have with Iran, even with the sanctions. The main way, since Iran’s oil is sold in euros, would be for European banks to extend credit lines in that currency, avoiding US markets. Another would be to negotiate exceptions for European companies.


All in all, the Europeans appear prepared to brush aside any political risks to preserve their economic interests. Keeping the nuclear deal has become the priority for EU states, even if that means pitching themselves in the same camp as China and Russia – isolating the US in a way, perhaps, that neither Washington nor Tehran would mind.


Faisal Al Yafai is currently writing a book on the Middle East and is a frequent commentator on international TV news networks. He has worked for news outlets such as The Guardian and the BBC, and reported on the Middle East, Eastern Europe, Asia and Africa.