BERLIN — In a decision that could deepen the transatlantic rift, President Trump may “decertify” the Iran nuclear deal on Friday, or later this week ahead of a Sunday deadline. Trump previously called the 2015 agreement disastrous and has argued that it isn’t in the United States’ best interests, though he did reluctantly certify Iran’s compliance in the past.
The deal’s decertification would put Congress in charge of whether U.S. sanctions on Iran should be reimposed. Even within Trump’s administration, however, many top officials agree with European leaders and businesses that preserving the deal would be the smarter choice.
So, why are European leaders — who, unlike some top officials within the Trump administration, are more easily able to argue their cases — in favor of upholding the deal?
Europe thinks that a deal is better than no deal
Even though there might be flaws, the current deal is better than no deal, European governments are arguing. “We have no indication of Iran violating its JCPoA commitments,” said an official in the German Federal Foreign Office, referring to the Iran deal’s acronym, the Joint Comprehensive Plan of Action. French officials recently reached the same conclusion, and even American officials have made the case that Iran is in compliance.
“It is essential to maintain it to avoid proliferation. In this period when we see the risks with North Korea, we must maintain this line,” French Foreign Minister Jean-Yves Le Drian said in mid-September. The U.N. watchdog tasked with monitoring compliance has reached a similar conclusion.
Intelligence agencies have recorded a decrease in Iranian proliferation efforts in Europe
Germany’s intelligence service said that Iranian “proliferation efforts for its nuclear program” significantly decreased following the deal’s implementation. Officials did not respond to questions about the details of that decrease, but authorities in Germany’s most populous federal state, North-Rhine Westphalia, said that attempts to try and obtain resources which could be used to pursue its nuclear program had dropped from 141 in 2015 to 32 the following year. German officials argue that the slackening Iranian efforts are one indication that the 2015 deal is working.
Europe could still stick to the deal without U.S. support
The lifting of sanctions under the deal prompted a rush of European corporations to do business in Iran. These are now lobbying their governments to prevent the dismantlement of the deal and are hoping that Iran may continue to adhere to its conditions if Europe refrained from reimposing sanctions.
Theoretically, the deal’s non-U.S. signatories which include Britain, France, Germany, China, Russia and Iran could agree to stick to the deal without American participation. Asked about such a possibility at a European-Iranian investment conference last week, Philippe Delleur, the senior vice president of public affairs for transport company Alstom, said: “I suppose that they will not put again the European sanctions. [In that case], we should be able to continue to work.”
Such a decision could still have severe implications for transatlantic relations at a time when Trump has already faced open disagreement and anger from many of his allies there over defense spending, trade, climate change and other issues.
Existing trade connections and investments make the deal’s dismantling increasingly difficult
Iranian exports to the E.U. increased by 375 percent from 2015 to 2016 and European companies have already invested a significant amount of money in the country, raising the stakes of any decision which could result in the deal’s collapse.
The surge in trade volume has been facilitated by the reintroduction of banking connections between Iran and the West, although major European banks have so far refrained from directly dealing with Iranian institutions. European credit agencies have stepped in to provide export guarantees to companies willing to trade with Iran.
The Danish Export Credit Agency has so far approved eight Iranian banks for credit lines or guarantees. “If snapback [sanctions] make it illegal to transfer money out of Iran, we would cover their losses. We offer banks this risk,” said the agency’s director, Jørn Fredsgaard Sørensen.
Would Europe be able to protect its businesses from U.S. sanctions?
Such a model to save the Iran deal could unravel, however, if the U.S. decided to punish European companies, banks or agencies cooperating with Iran. Officials are examining options to protect European companies and individuals from U.S. sanctions.
Some European business leaders doubt whether such efforts would provide sufficient protection. “Our stance and the stance of international companies is that we need to be compliant with international law, applicable law. And if sanctions come back and that means we cannot do our work inside or outside Iran, then we will stop,” said one senior executive at a major multinational corporation who spoke anonymously to discuss sensitivity of decertification.
“People have discussed the idea of protective legislation [EU blocking sanctions]. I think in practice, with real multinational companies, they wouldn’t want to rely on that to do Iran investment,” the executive said.
In any case, European governments would still face an awkward decision: Would they side with a regime they frequently accuse of human rights violations, or with the U.S.?
Erin Cunningham reported from Istanbul.