JCPOA Is Neither Alive nor Dead: How Iran and Its Partners Adapt to the Unstable Balance

On the one hand, preservation of the Iranian nuclear deal and resistance to the unjustified US pressure meets the political and economic interests of Europe. On the other hand, many European countries would be glad were Iran to violate its commitments and Europe could again be on “the right side of history” alongside Washington, believes Valdai Club expert Andrey Baklitskiy

The Joint Comprehensive Plan of Action (JCPOA) on Iran nuclear issue was considered a triumph of multilateral diplomacy but the US administration’s decision to walk away from it instantly undercut all its achievements. Was it possible to predict such a turn during the signing of the deal?  

Considering the polarization of US party approaches to settling the Iranian nuclear issue, the Barack Obama administration was certainly unable to have it approved by Congress and could only sign a political agreement to this effect. To be fair, it should be made clear that even if the United States had signed a legally binding agreement, the new Republican President could have backed out of it. Thus, the agreement would only have been sustainable had the White House been occupied by a Democrat in 2016. Another strategy would have been Tehran’s full compliance with the agreement and US allies applying pressure on Washington.

After Donald Trump unexpectedly won the presidential race, Washington was unlikely to continue its participation in the agreement, but the position of its allies and part of the administration kept it from withdrawing from the deal for a full year and a half.

US Withdrawal From the JCPOA and Anti-Iranian Sanctions: Pros and Cons
Ivan Timofeev
Sanctions researchers and enforcers are acutely intrigued by the question of whether the new sanctions imposed by the United States on Iran would be effective. By withdrawing from the Joint Comprehensive Plan of Action (JCPOA) on the Iranian nuclear program, the United States dealt a heavy blow to multilateral diplomacy.

 Although Europe demonstrates its political will to preserve the agreement, US sanctions compel major European companies to leave the Iranian market. What will be the future of relations between Iran and Europe? 

On the one hand, preservation of the JCPOA and resistance to the unjustified US pressure meets the political and economic interests of Europe. On the other hand, Europe lacks confidence and is uncomfortable in confrontation with the main guarantor of its security. Many European countries would be glad were Iran to violate its commitments and Europe could again be on “the right side of history” alongside Washington. As for European companies, practically all of them opted for the US market, which is many times bigger than the Iranian one. Tehran also has different approaches to relations with Europe. Part of the Iranian elite believe that even political support on behalf of Europe is important for US international isolation and, moreover, after the change of the US administration the European market will be open again. 

According to an alternative point of view, Europe is not an independent entity; it merely obeys US decisions and it makes no sense for Iran to maintain relations with the EU. As a result, both Europe and Iran got compromise strategies. Tehran remains part of the JCPOA, but scales down its commitments, demanding tangible economic assistance from Europe, first of all, in terms of oil purchases and financial transactions. Meanwhile, the European countries are not ready to move beyond creating a mechanism for trade with Iran and using it for trade with goods which are not subject to US sanctions. At the same time, the EU is ready to tolerate certain departure of Tehran from JCPOA and is using calls on Iran to comply with its commitments rather than sanctions. The biggest problem is that such balance is unstable in the long run. It is fraught with sporadic crises, any of which can result in collapse of the deal.

Fool-Proofing: Why Europe Needs INSTEX?
Stanislav Tkachenko
The EU is enviously keeping an eye on how Russia is exchanging its dollar reserves for gold, renminbi and euros in fear of today’s most dreadful “black swan” called the “collapse of the US dollar.” The global financial markets have been expecting it for the last 40 years and know how to live with this threat.

 How do the current developments around Iran influence the world oil market? 

US sanctions did not achieve their declared goal of reducing Iranian oil exports to zero, but they cut them significantly. Coupled with sanctions against Venezuela’s oil sector, the instability in Libya and Algeria and a decrease in oil production in Saudi Arabia, this has led to the reduction of supply in the oil market. At the same time, fears related to the US-China trade war and the general slowdown of the world economy as well as large oil reserves in the United States contain the growth in prices, which were not significantly influenced even by Iran’s capture of a British tanker in the Strait of Hormuz. 

The US does not conceal its goal of regime change in Iran. Will the Islamic Republic be able to hold out in these conditions? Will it demonstrate higher adaptation to the unfavorable foreign policy environment? Is it possible to expect domestic political changes in this context? 

US economic and political pressure is exerting a noticeable effect both on Iran’s population and its political elites. Despite the ongoing inter-elite struggle, the leaders of the country have closed ranks and are adhering to a common position as regards the US: not to hold talks with the Trump administration unless it changes its conduct and not to enter into an armed conflict with the US, waiting for the change of president there. 

At the same time, the Iranian population is bearing the brunt of US sanctions and the slackening economy, which are aggravated by natural calamities and miscalculations of government policy. The Iranians are becoming increasingly discontent with this situation. Yet, after the imposition of US sanctions in August 2018, there were no mass-scale protests in the country, which may mean that the population is trying to wait out the economic crisis. At the same time, it is difficult to predict what will happen if economic conditions there continue to deteriorate. Also, it seems Iran does not have an alternative plan in case of Trump’s re-election or the refusal of the new president to return to the JCPOA. 

How did US withdrawal from the JCPOA affect Asia’s trust in Washington? 

On the one hand, Trump’s behavior in the international arena and his willingness to change the rules of the game midway through it reduce trust in Washington all over the world. On the other hand, neither US allies nor opponents have long had any illusions about US conduct: Washington mostly does what it must to meet its interests at any given moment. However, the US remains one of the world’s strongest powers and the states of the region will be compelled to build relations with the US regardless of which administration is in power.

Gordian Knot of JCPOA
Pavel Cheremisin
Does the Gordian knot around Iran’s nuclear programme need to be hacked or untangled? And is it still possible to unravel it? What will Washington's policy of tough negotiations and unwillingness to listen to its allies lead to?
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.