The Iran nuclear deal: challenging Trump’s new sanctions
12 Oct 2018|

There’s no doubt US President Donald Trump’s renewed sanctions will hurt Iran, but it is not a given that they will halt its nuclear and missile programs, or its other activities in the region. The challenges the president faces, from the Europeans especially, will test the effectiveness of US leadership on the issue.

Major players in the Iran nuclear deal (the Joint Comprehensive Plan of Action, or JCPOA) have used the latest UN General Assembly meeting, or acted simultaneously with it, to strengthen their positions for and against the agreement.

Supporting the deal were a joint ministerial statement on 24 September from the JCPOA participants (Britain, France, Germany, Russia, China, Iran and the EU) and an address from Iranian President Hassan Rouhani to the UN on 25 September.

Trump attacked the JCPOA in his UN address, also on 25 September, and in his opening remarks on 26 September as Security Council chair. The release of two US State Department documents, the Annual country reports on terrorism 2017 and Outlaw regime: a chronicle of Iran’s destructive activities, was timed to provide more detailed support for Trump’s claims of Iranian ‘malign activities’, regionally and globally.

Israeli Prime Minister Benjamin Netanyahu complemented Trump with his own address to the UN on 27 September.

Predictably, the joint statement strongly reasserted participants’ commitment to the JCPOA, and to the EU’s ‘blocking statute’, updated on 7 August, that legally protects all EU businesses that defy Trump’s reimposed sanctions and continue to trade with Iran. Also announced was the creation of a ‘special purpose vehicle’ to provide businesses in the EU and elsewhere with ‘secure payment channels’ that would bypass US financial systems. However, the statement noted that operational aspects of the vehicle were yet to be finalised.

In a clear challenge to Trump’s actions to severely restrict international trade with Iran, the joint statement referred to the importance of ‘normalising trade and economic relations’ and securing ‘the continuation of Iran’s oil and gas condensate, petroleum products and petrochemicals’. It also emphasised that these objectives were consistent with UN Security Council resolution 2231, which endorsed the JCPOA in January 2016.

In his address to the UN, delivered with notable restraint, Rouhani criticised the US withdrawal from the JCPOA—but not Trump by name—and emphasised the importance of adhering to international agreements and obligations. He also warned of the dangers of undermining international institutions and referred to the anomaly of the US using sanctions to pressure other countries to ‘violate’ international law, in the shape of the UN-endorsed JCPOA, and threatening to punish them if they didn’t. Rouhani defended Iran’s presence in Syria as being at the invitation of Bashar al-Assad and emphasised Iran’s role in combatting terrorism. He identified the Israel–Palestine issue as ‘the most pressing crisis in the Middle East’.

In a bid to counter Trump’s reimposed sanctions and withdrawal from the JCPOA, Iran had lodged a claim with the International Court of Justice that the sanctions violated the US–Iran 1955 Treaty of Amity. That treaty goes back to the days of a compliant shah and ignores the decades of hostility since. On 3 October, the court ruled that the US should lift sanctions linked to humanitarian goods and civil aviation safety, but added that it had no mandate to rule on the broader dispute (it also has no power to enforce its rulings). The US responded by terminating the treaty.

In his UN address, Trump described Iran as the ‘world’s leading sponsor of terrorism’ and said the ruling regime was a ‘corrupt dictatorship’ that sows ‘chaos, death and destruction … across the Middle East and beyond’. He said Iran must never gain access to nuclear weapons, develop ballistic missiles capable of delivering them or acquire the funds to pursue its ‘agenda of aggression and expansion’. Trump also re-emphasised the importance of the reimposed sanctions and of other countries’ compliance to prevent Iran pursuing its agenda.

Trump did not call for regime change, although it was implicit. He did say that after the next round of sanctions hit on 4 November, ‘more will follow’. It’s thought any new measures will include punitive targeting of countries and businesses that continue to trade with Iran.

Netanyahu said Iran still aspired to develop nuclear weapons. He said there was a ‘a secret atomic warehouse’ in Tehran containing unspecified nuclear equipment which Iran should have disclosed and destroyed as part of the JCPOA. Netanyahu also challenged the International Atomic Energy Agency’s ability to detect and demand access to suspected covert nuclear facilities. Noting the irony of this, Iran’s foreign minister, Javad Zarif, tweeted the following day that it was ‘time for Israel to fess up and open its illegal nuclear weapons program to international inspectors’.

None of the stakeholders, then or since, has indicated any willingness to compromise, although sources claim there’s been intense back-channel discussion seeking a solution. Rouhani rejected a US proposal to meet with Trump on the sidelines of the UN assembly, saying that any such talks had to be held within the JCPOA framework.

Several developments over the next few weeks will shape the way ahead. On trade, a key factor will be the impact of the next round of sanctions on Iran’s economy. They primarily target Iran’s oil and gas exports, the source of up to 70% of its foreign currency income. It’s not clear how many countries will cease importing Iranian petroleum products. China is expected to continue this trade with Iran, as will India, at least in part.

Also critical will be how many businesses cease direct and indirect trade with Iran for fear of punitive secondary sanctions, especially the loss of access to US markets, despite the EU’s safety net.  Major international businesses have already withdrawn from Iran, or intend to do so, including Total, Maersk, Peugeot, Siemens and Boeing. But one US concern is the extent to which China, Russia and possibly India could exploit the opportunity to fill all or part of the vacuum.

The outcome of the 6 November US midterm elections could also affect developments. If the Republicans poll well, Trump will read that as support for his Iranian (and other) policies. If they poll badly, that lack of support might allow for some flexibility in the US position.

Right now, Trump holds the stronger hand, but his ability to continue to do so is facing a serious challenge.