Can The EU Secure Its Strategic Interests Through The JCPOA? – Analysis

By Manuel Herrera*

The EU’s strategic interests with regard to Iran and the Joint Comprehensive Plan of Action (JCPOA) rest on four main pillars: maintaining stability in the Persian Gulf which is vital for global oil supply and prices; resolving conflicts in the Middle East so as to prevent further refugee movement toward Europe; diversifying energy supplies by increasing Iranian imports and reducing Europe’s significant energy dependence on Russia; and boosting the export of its industrial goods by expanding economic relations with Iran to address weak European growth rates over the past decade. This article will explore these four pillars in pursuit of the argument that the JCPOA is critical to the EU’s strategic-security concerns, and consider the primary challenges that the EU faces in its attempts to preserve the deal.

Military Escalation in the Middle East and Consequences for the EU

The current US approach towards the Middle East – and particularly Iran – is seen with concern in Europe because it heightens the risk of a nuclear arms race and further military escalation in Europe’s backyard. In an already unstable region, US foreign policy towards Iran may force Tehran to resume its nuclear programme, and in the event that Iran is able to develop a nuclear weapon, this could likely trigger a US-Israeli bombing campaign. Iran, with decades-long experience in asymmetric warfare, would then mobilise its allies in Iraq, Syria and Lebanon in retaliation. And, with the Iranian bomb eventually becoming a real prospect, the temptation to emulate would become irresistible in Riyadh, Ankara and Cairo. Although this is a hypothetical scenario, the consequences of the Middle East plunging into a nuclear arms race and major regional war must be considered.

A major war in the Middle East will have an immense spillover effect on the EU. Since the beginning of the Syrian civil war in 2011, about one million displaced Syrians have moved to Europe – this figure will only increase. Also, a military confrontation where Iran is involved could easily disrupt oil and gas exports, in particular from the Gulf, with consequences for global prices. Additionally, any major war with Iranian involvement will paralyse European investments in the country. To Brussels, therefore, the JCPOA is much more than just a nuclear agreement. Its preservation is a strategic imperative.

Challenges Confronting the EU

Despite the chord that links the JCPOA to the EU’s security considerations, the latter has failed to achieve anything significant to preserve the deal so far because of the US withdrawal, and European companies fleeing Iran as a result. This draws from reasons arising from two different geographical contexts. The first reason is the EU’s inability to counter the US position on Iran. Economically, US dominance in the international financial system influences many European business decisions. Geopolitically, the US policy of ‘maximum pressure’ poses a big challenge to the EU policy of cooperation and rapprochement with Iran, of which the JCPOA is the centrepiece.

The second reason relates to Iran’s foreign policy rationalisation based on economic motivations. The Iranian regime has publicly stated that the country will leave the JCPOA if the deal is unable to fulfil its national interests, particularly those that relate to its economy. According to the World Bank, Iran’s annual GDP growth in 2017 was +3.8 per cent, -1.5 per cent in 2018, and is expected to be -3.6 per cent by 2019. Iran ended 2017 with an unemployment rate of 11.7 per cent; the rate increased to 12.1 per cent in 2018. Finally, despite the lack of official public figures on poverty in the country, it is estimated that more than 40 per cent of Iranian households live below the poverty line. If the JCPOA is unable to address these critical economic indicators, Iran may choose to abandon the deal and thereby forego the current limitations on their nuclear programme, which will once again have a negative fallout for security in Europe.

Conclusion

Safeguarding the JCPOA and managing a new relationship with Tehran is the best option for the EU to have a meaningful influence in a region where it has tangible security interests at stake. If the nuclear deal is undermined, instability in the Middle East is likely to deteriorate further. In this case, the EU will be dragged once again into a confrontational course with Iran and definitely suffer from regional de-stabilisation and escalation. In order to preserve the JCPOA, therefore, the EU must maintain commercial interactions with Iran, particularly through small and medium companies that do not operate in the US market. For example, Central and Eastern Europe have many local companies (most of which build medical equipment) that do not have a presence in the US market and thus have no reason to fear US secondary sanctions. Finally, the EU could also work on allowing Iran to export its oil to Europe and enable European financial institutions to process payments through alternative mechanisms such as ad hoc payment schemes or entities that channel Iranian payments.

The EU will have to necessarily undertake a set of targeted measures to help secure the JCPOA, and, as a consequence, its own strategic-security interests, in the face of opposition from the US, and a less than favourable regional environment. The silver lining despite this grim outlook is that ultimately, it is not all out of options.