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EU Moves to Block U.S. Iran Sanctions
June 2018
By Kelsey Davenport
U.S. President Donald Trump’s decision to withdraw from the nuclear deal with Iran and reimpose sanctions on that country is spurring Europe to block U.S. measures and shore up support to sustain the agreement.
By pulling out of the 2015 multilateral nuclear agreement, Trump delivered on a campaign promise to “tear up” the deal with Iran, which he has frequently disparaged as the “worst deal ever negotiated.” In doing so, he rebuffed personal last-minute appeals by French President Emmanuel Macron and German Chancellor Angela Merkel during their visits to the White House in late April.
Trump said on May 8 that if he “allowed this deal to stand, there would soon be a nuclear arms race in the Middle East.” Trump said the process he initiated in January to work with European partners to “fix” the accord is not possible under the “decaying and rotten structure of the current agreement,” despite U.S. Secretary of State Mike Pompeo telling allies days before the announcement that he felt an agreement could be reached to address U.S. concerns. (See ACT, March 2018.)
Following up the president’s action, Pompeo in a May 21 speech outlined a broad list of demands on Iran and said the United States will impose the “strongest sanctions in history” to force Iran to end certain nuclear activities and missile programs, aid to the Syrian regime and support for militant groups in the region. The set of demands, stopping just short of an explicit call for regime change, sets the stage for further U.S. tensions with European allies and the Islamic Republic.
Even before Pompeo’s policy speech, Trump’s announcement earned sharp rebukes from Washington’s partners in the agreement, as well as the European Union, and commitments by those nations to continue implementing the accord. The extent to which that is possible is unclear, given that major foreign companies face being cut off from the U.S. banking system and other punishment if they do not adhere to U.S. sanctions on Iran.
European Council President Donald Tusk was particularly direct in his criticism, tweeting on May 16 that “[l]ooking at the latest decisions of President Trump, someone could even think: With friends like that, who needs enemies?”
Iranian President Hassan Rouhani reiterated Iran’s commitment to continue abiding by the agreement, so long as Iran’s national interests are met, and said he was pleased that “the troublesome member has been eliminated” from the deal.
But Iranian Supreme Leader Ayatollah Ali Khamenei said that he wants to see “definite reassurance” and “practical guarantees” that Iran will receive the sanctions relief envisioned under the deal.
Federica Mogherini, the EU foreign policy chief, said that guarantees are not possible but that the EU is determined to “act in accordance with its security interests and to protect its economic investments.” She met on May 15 with Iranian Foreign Minister Javad Zarif and the foreign ministers of France, Germany, and the UK to discuss moving forward without the United States.
How Might Iran Expand Its Nuclear Capacity? In deciding to violate the 2015 Iran nuclear deal, President Donald Trump has put at risk the extensive measures the Joint Comprehensive Plan of Action (JCPOA) imposed to block Iran from building nuclear weapons. How long would it take if Tehran’s leaders now decide to race for the bomb? One accomplishment of the nuclear deal is that it imposed hurdles intended to ensure that Iran could not do it in less than a year. Further, for now, Iran would not be able to attempt it without being detected, thanks to the robust international inspection and monitoring required by the nuclear accord. That timeline and the inspection tripwires could, however, become less reliable depending on Iran’s actions following the unilateral U.S. decision to reimpose sanctions. Iranian leaders have raised the possibility of abandoning some or all of the tough nuclear restrictions they accepted in 2015 in return for the lifting of nuclear-related international sanctions. Iran could take steps, such as scaling up its nuclear program or reducing cooperation with International Atomic Energy Agency (IAEA) inspectors, that would violate its JCPOA commitments. “If necessary, we can begin our industrial [uranium] enrichment without any limitations,” Iranian President Hassan Rouhani said on May 8. “We will wait for some weeks and will talk with our friends and allies and other signatories of the nuclear deal, who signed it and who will remain loyal to it. Everything depends on our national interests.” Iran currently has 5,060 installed IR-1 centrifuge machines and a relatively small inventory of low-enriched uranium of less than 300 kilograms. Iran could quickly begin enriching the material to 20 percent uranium-235, although it would still take at least 12 months to amass enough uranium enriched further to bomb grade for one nuclear device. Ali Akbar Salehi, head of the Atomic Energy Organization of Iran, said on April 21 that if the decision were made, it would take just four days to resume enrichment to 20 percent U-235. Enrichment to that level is short of the enrichment level of 90 percent necessary for weapons use, but it would reduce the time needed to produce bomb-grade material. The nuclear deal limits enrichment to levels below 3.67 percent U-235, suitable for fueling nuclear power reactors. Iran also could reorient the Fordow underground enrichment complex, which became a physics and technology research center under the deal, and use some 1,000 IR-1 machines there. Iran’s centrifuge-based nuclear infrastructure could be further augmented with the redeployment of some 1,000 advanced IR-2M centrifuges, which were put into monitored storage under the JCPOA. Because these are two to three times more efficient than the IR-1s, their use, along with the IR-1 machines at Iran’s disposal, would reduce the time necessary to produce enough weapons-grade uranium for one bomb to two to three months. With the existing IAEA monitoring system in place, all of these steps would be promptly detected. But within months of a decision to exceed the JCPOA limits, Iran could have a vastly shorter “breakout” timeline. Breakout calculations must take into account the fact that, before 2004, Iran engaged in an organized program of experiments useful for the development and design of nuclear weapons. U.S. intelligence agencies and the IAEA report that program is no longer underway, although it is prudent to assume that Iran has the know-how to assemble a nuclear device. At present, Iranian engineers and scientists, building on past know-how, would likely need at least a year to assemble a workable nuclear device and mate it to a reliable ballistic missile delivery system.—DARYL G. KIMBALL |
Subsequently, at a May 17 meeting of the European Commission, the body agreed to take steps in response to Trump’s reimposition of sanctions, including revising a blocking statute used by the EU in the 1990s to protect entities from U.S. sanctions on Cuba. The blocking regulation “forbids EU companies from complying with the extraterritorial effects of U.S. sanctions, allows companies to recover damages arising from such sanctions from the person causing them, and nullifies the effect in the EU of any foreign court judgements based on them,” according to a May 17 press release.
The EU is aiming to have the measure in force by Aug. 6, the day some U.S. sanctions go into effect. Although the United States has reimposed sanctions, the U.S. Department of the Treasury announced on May 8 that entities would be given 90 or 180 days to wind down activities in Iran before sanctions would be enforced.
For large, multinational companies with a significant presence in the United States, the blocking regulation is unlikely to provide enough assurance for them to remain in the Iranian market. Several announced that they are winding down business in Iran and exiting contracts.
The regulation sends a strong political signal, however, and may provide cover for smaller businesses with less of a presence in the United States to continue doing business in Iran. The EU also launched a process whereby the European Investment Bank will be able to support investment activities in Iran.
EU measures to blunt the impact of sanctions call into question Trump’s plan to pressure Iran back to negotiations. Brian Hook, State Department director for policy planning, in a May 18 press conference described the goal of sanctions reimposition as creating “necessary pressure to bear on Iran to change its behavior and to pursue a new framework” that addresses Iran’s ballistic missile development and its support for terrorism, as well as its nuclear program.
In the lead up to the 2015 nuclear agreement, known formally as the Joint Comprehensive Plan of Action (JCPOA), EU sanctions and EU compliance with U.S. sanctions were a critical part of the pressure campaign that pushed Iran to negotiate. With the EU and China, Russia, and other states retaining business ties with Iran, it is unlikely that the United States will be able to press Iran into new negotiations.
Trump Draws International Criticism for Quitting Iran Deal U.S. President Donald Trump’s decision to unilaterally withdraw from the Iran nuclear deal drew unusually strong criticism from U.S. allies and from partners in the negotiations. Some of those reactions: “France, Germany, and the UK regret the U.S. decision…. The nuclear nonproliferation regime is at stake.”—French President Emmanuel Macron “Imagine all the mutually contaminating civil wars and internecine conflicts that rage across the Middle East today. Then turn the dial, and add the possibility of a regional nuclear arms race triggered by Iran dashing for a bomb. That is the scenario which the agreement has helped to prevent.”—UK Foreign Minister Boris Johnson
“I believe that it’s not right to unilaterally cancel an accord that was negotiated, that was confirmed in the UN Security Council unanimously.”—German Chancellor Angela Merkel “The action plan does not belong to the United States alone but is a domain of the entire international community, which has repeatedly reaffirmed its interest in the preservation and long-term sustainable implementation of the [Iran deal] for the sake of strengthening international and regional peace and security as well as the nuclear nonproliferation regime.... Russia is open to further cooperation with the other…participants and will continue to actively develop bilateral collaboration and political dialogue with the Islamic Republic of Iran.” “The agreement is not perfect, and we must continue to address concerns about Iran’s ballistic missile program and its role in the region…. The U.S. decision is a step backwards. The Netherlands will work with our partners to find a solution that safeguards our own security and that of the entire European Union.”—Dutch Foreign Minister Stef Blok “Australia is disappointed.”—Australian Foreign Minister Julie Bishop |
“The [deal], agreed to with Iran in 2015 and endorsed by the UN Security Council, is not perfect. It has, however, helped to curb a real threat to international peace and security. Canada regrets that the United States has decided to withdraw…particularly given that, according to the [International Atomic Energy Agency], Iran continues to implement its…commitments.”Iran has left open the option to resume troublesome nuclear activities in response to the U.S. violation and withdrawal from the deal. In a move likely meant to signal that Iran will leave the JCPOA if the remaining parties to the agreement cannot deliver on sanctions relief, Rouhani ordered the Atomic Energy Organization of Iran (AEOI) to be “fully prepared for subsequent measures if needed, so in the case of need, we will start up our industrial enrichment without limitations.”
Other Iranian officials, including AEOI head Ali Akhbar Salehi, have specifically said Iran would resume enriching uranium to 20 percent uranium-235, a level that would put Tehran closer to the 90 percent U-235 required for use in nuclear weapons.
Under the JCPOA, Iran is limited to enriching uranium to 3.67 percent U-235, a level suitable for nuclear power reactors, using no more than 5,060 installed centrifuges. The accord also limits Iran to a stockpile to 300 kilograms of uranium enriched to that level, a measure to hinder any nuclear-bomb effort.
Yukiya Amano, director-general of the International Atomic Energy Agency, confirmed on May 8 that Iran is meeting its commitments under the accord, and the agency’s May 24 quarterly report on Iran’s nuclear activities further confirmed that Tehran had not taken any steps to violate the deal after Trump withdrew.