By Arab News
By Dr. John C. Hulsman*
International relations so often amount to a dialogue of the deaf, with the contending powers knowing next to nothing about each other. After my decade in Washington, I fully accept foreign criticisms regarding America’s breezy insularity from the rest of the world. But this dangerous ignorance works both ways. In the decades I have lived away from the US, I must admit to finding the leaders of the rest of world equally (and often proudly) ignorant of the history, culture and way of life of the most powerful country in the world.
This ignorance about America can presently be seen in the Iranian government’s ham-fisted efforts at nuclear blackmail. It is abundantly clear that Iran’s recent abrogation of its nuclear deal is at base a power play designed to leverage terrified Europeans into open defiance of the Trump administration’s policy of “maximum pressure,” and the surprisingly effective sanctions that have disrupted the already-creaking Iranian economy.
On Monday, in announcing its abrogation of the terms of the Joint Comprehensive Plan of Action (JCPOA), Tehran has heaped enormous pressure on a Europe desperate, at almost all costs, to salvage the nuclear deal after the Trump administration walked away from it. Tehran has allowed stocks of low-enriched uranium to exceed the 300-kilogram limit previously agreed. This move amounts to diplomatic signaling, letting London, Paris and Berlin know in no uncertain terms of Tehran’s flagging patience with the tattered agreement, which has yet to deliver it the hoped-for economic benefits that were the reason for the deal (from Iran’s point of view) in the first place.
More ominously, Iran has threatened — around or on July 7 — to increase the level at which it enriches uranium above the 3.7 percent limit agreed in the JCPOA to about 20 percent. While the lower figure is only enough to fuel a commercial nuclear power plant, the higher number halves the time it would take Iran to produce weapons-grade uranium, and amounts to a clear and present danger to the rest of the world.
Ideally, Iran may hope that sustained and severe European pressure will force the US to lessen its draconian sanctions on Tehran, or at the very least force Washington into allowing the EU-3 to trade in a far greater volume with Iran than has been possible, without risking devastating American secondary sanctions. It is not too much to say that Tehran’s ultimate geostrategic goal is to use its efforts at nuclear brinkmanship to prod the Europeans into directly challenging the Trump administration’s Iran policy.
The Instrument in Support of Trade Exchanges (INSTEX), the European-created investment vehicle, allows goods to be bartered between Iran and European companies without involving direct financial transactions, thereby avoiding American secondary banking sanctions. But, at present, INSTEX simply does not help Iran all that much, as it is not capable of allowing for trade in the key sectors of Iran’s economy that are suffering the greatest pain, particularly the oil industry. Iran’s UN envoy Majid Takht-Ravanchi rightly describes INSTEX as “a very lovely car but without any gasoline.”
Tehran has been pressing the EU-3 to use INSTEX to establish credit lines so Iranian oil exports to Europe can be financed through it. Iran’s vital energy industry has been decimated by new US sanctions, with oil exports tumbling to a mere 400,000 barrels per day. However, at present, INSTEX only allows for trade in humanitarian goods.
However, for all Tehran’s diplomatic subtlety, this is a gambit doomed to failure due to a fundamental lack of understanding of how the present transatlantic relationship, Trump’s America, and even modern capitalism, actually work.
It is certainly an understatement to say that the Trump administration would win no popularity contests in any European capital. Saying that, for all the friction, very few European leaders see any real alternative — given their obvious relative decline — to a continued alliance with the US.
Even in the highly unlikely event the Europeans managed to create a unified stance to challenge Trump over his Iran policy, it is astronomically unlikely that the White House would blink. Trump’s fervent Jacksonian posture places a premium on retaining America’s right to independent diplomatic action above all else.
Finally, Tehran is pressuring the wrong people. European governments do not determine the rate of trade with Iran, European businesses do. The mere threat of American secondary sanctions if they dare to do business with Iran, and the fear that they might be excluded from the vital American market, has deterred almost all large European companies, including banks, from trading with the relatively unimportant Iranian market.
So Iran’s nuclear blackmail plan is surely doomed to fail, as the country’s leaders do not begin to understand the workings of the transatlantic relationship, the Trump White House, or modern capitalism itself. The only question is whether, in its brinkmanship, Tehran will go ahead with enriching to the 20 percent level. Far from breaking up the transatlantic alliance, such a move will unify it, as the EU-3 will then find it almost impossible to sustain the JCPOA. As ever, cultural ignorance has its price.
- Dr. John C. Hulsman is the president and managing partner of John C. Hulsman Enterprises, a prominent global political risk consulting firm. He is also senior columnist for City AM, the newspaper of the City of London. He can be contacted via www.chartwellspeakers.com.