By Arab News
By Cornelia Meyer*
As Joe Biden continues to close in on the US presidency, now is a good time to examine how a new US administration would look at Iran.
Donald Trump sent shockwaves through the world’s foreign ministries when he withdrew from the Joint Comprehensive Plan of Action (JCPOA), otherwise known as the Iran nuclear deal. He had a valid argument that the 2015 deal was far from perfect, but it nevertheless constrained Iran’s ability to produce nuclear weapons by mothballing most of its nuclear program and limiting the extent to which it could enrich uranium, under strict international supervision.
The agreement was signed by the P5+1 (permanent members of the UN Security Council, plus Germany) on one side and Iran on the other. The Europeans were particularly wedded to the deal; successive EU high representatives for foreign affairs and security policy were closely involved in the negotiations, as were the foreign ministers of Germany, France and the UK. Who could forget former German Foreign Minister Frank-Walter Steinmeier’s many press conferences in front of Swiss hotels on the shores of Lake Geneva in the depth of winter?
When Trump quit the agreement in 2018, the Europeans tried to cajole Tehran into keeping its side of the bargain, which it did for a surprisingly long time.
Biden seems to want to look into renewing the JCPOA, which will be less than straightforward. He is well aware of itsflaws, and is rumored to want to augment it, but new economic and political realities have been created since the summer of 2018. US sanctions have hit Iran hard.
Oil production has plummeted from 3.8 million barrels per day in June 2018 to 1.9 million in August 2020, with minimal exports.
There was no way to avoid the long arm of the US Treasury Department when it came to payment mechanisms. The Europeans tried to come up with a euro-denominated clearing house that would avoid the dollar and allow for payment in euros instead. INSTEX (Instrument in Support of Trade Exchanges), as the mechanism was called, never took off, because any participating bank would have faced sanctions on its US operations. UBS, Commerzbank, Barclays and the rest faced the stark choice of doing business either with the world’s 28th-ranked economy, or with its largest. When a UN arms embargo expired in October, Iran rejoiced — but the US slapped on more sanctions.
It is true that Russia and China have done business with Iran, but only to further their own interests in the Middle East. Moscow collaborated with Tehran in supporting Bashar Assad in Syria.
China is intent on extending its economic and geopolitical might in the Middle East and Central Asia. Iran is participating in the Belt and Road Initiative and is also an observer at the Shanghai Cooperation Organisation, a Eurasian political, economic and security alliance, which counts China, Russia and India among its members.
China has become Iran’s largest trading partner, with a volume of $20.7 billion for the year ending March 2020. Iran is exploring further economic cooperation with China in the energy, petrochemicals, military and maritime sectors.
On the political front, the Iranian regime has made it clear that it does not necessarily stand ready to re-enter the JCPOA, explaining that it negotiated with countries, not changing US administrations. The economic effect of US sanctions maysoften that stance, as may the devastation caused by the COVID-19 pandemic.
Nevertheless, President Hassan Rouhani staked his reputation on the JCPOA and an economic bounty that never materialized. Iran’s next elections are in May, which would leave a Biden administration just three months to reach a newagreement; if hardliners win power again in Tehran it would put a cold stop to any nuclear deal.
Let us also not forget that whoever the new US president is, fighting the pandemic and restoring the economy will be on top of his priority list.
As for the Europeans, they would welcome a revival of the JCPOA. The Middle East is the near neighbor of Europe, and as far as Brussels and the other European capitals are concerned, the fewer tensions the better.
Europe is also concerned by Russia’s geopolitical gains in the Middle East, and several European leaders are worried about Beijing’s growing political and economic ties with Tehran.
If a new US administration chooses to re-engage on the JCPOA, it can count on support from the EU high representative for foreign affairs, Josep Borrell, and foreign ministers in London, Paris and Berlin.
Any negotiations should avoid a fatal flaw of the last round, which was the failure to engage sufficiently with the Gulf states. If Europe is concerned about its neighborhood, so are Riyadh and Abu Dhabi, and they are considerably closer to Tehran than any European capital. Here, too, there are new realities on the ground: The Abraham Accords allow several GCC countries to more openly share Israel’s concerns over Iran’s nuclear arsenal and regional meddling.
Wherever one stands on the merits of the JCPOA (or lack of them), rekindling the spirit of 2015 will be difficult to say the least.
- Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources. Twitter: @MeyerResources