US President Donald Trump and French President Emmanuel Macron hold a joint press conference at the White House in Washington, DC, on April 24, 2018. (Photo by Nicholas Kamm / AFP)        (Photo credit should read NICHOLAS KAMM/AFP/Getty Images)
Trump: If Iran threatens us, they will pay
00:55 - Source: CNN
CNN  — 

The clock is ticking towards the May 12 deadline when US President Donald Trump will decide whether the US will withdraw from the Iran nuclear deal or sign up to extending it.

Trump reiterated Tuesday that he regards the pact, agreed by his predecessor in 2015, as “insane” and “ridiculous.” Standing alongside French President Emmanuel Macron, the two leaders indicated they want to aim for a new deal to curb Iran’s regional ambitions and ballistic missiles program that would run alongside the existing international nuclear pact.

Macron, who was in Washington for a state visit this week, is leading the charge in shaping these measures, investing his hard-won political capital with Trump in the process.

On Wednesday, Macron seemed resigned to Trump ditching the existing deal, telling journalists he thought there was a “big risk” he would leave.

“My view – I don’t know what your President will decide – is that he will get rid of this deal on his own, for domestic reasons,” Macron told US reporters in Washington on Wednesday, according to multiple reports.

The stakes are high on many levels. If Washington decides not to renew, the Western allies will be split – with Europe likely to support Russia and China in keeping alive what’s known as the Joint Comprehensive Plan of Action (JCPOA).

And if Washington walks away from an international agreement, with all the safeguards and guarantees that it embodies, what message does that send to North Korean leader Kim Jong Un?

“Nobody knows what I’m going to do on the 12th,” Trump told a news conference in Washington Tuesday. And it’s been a hallmark of his administration that policy-making is a very fluid process. But several scenarios are possible.

US drops out; Iran follows suit

Despite the President’s hints this week, debate continues within the Trump administration over whether to abandon the JCPOA. The new National Security Advisor, John Bolton, appears to think it’s beyond repair.

The administration is not claiming that Iran has cheated on the deal; just last week, a senior US State Department official told a Congressional hearing that Iran was in compliance. This administration thinks the deal should never have been done in the first place.

The administration’s view, forcefully expressed by the President himself, is that Iran will renew its uranium enrichment program when the deal expires in 2025. It also believes that Iran needs to be punished for its ballistic missile program, which was not part of the JCPOA, and for its “malign activities” in Yemen, Syria and Lebanon.

If the US decides to opt out, Iran may be tempted to follow suit. Hardliners within the religious establishment and the Revolutionary Guard Corps have never been fans of the accord and accuse the US of deception by threatening new sanctions.

As much as the reformers, led by Iranian President Hassan Rouhani and Foreign Minister Javad Zarif, feel that the JCPOA is the only way to open Iran to the outside world, pride and nationalism might overwhelm them.

“If the United States officially withdraws from the JCPOA, the immediate implication would be that it would free Iran of any obligation to remain,” Zarif said this week.

If Iran did follow suit, the UN nuclear inspections would cease, and the world would be back to guessing Iranian intentions and capabilities. That in itself is destabilizing.

Iran would suffer few direct losses from a US withdrawal. American trade and investment in Iran is very modest; Boeing is one of the few companies to have multi-biliion dollar deals with Iran. Many sanctions that apply to US persons and companies have never been relaxed.

The real effect of renewed US sanctions on the Islamic Republic would be indirect – aimed at non-US companies that want to invest in Iran but also have extensive business in the US.

The French company Total has already said it would reconsider its role in developing the vast South Pars gas field in Iran in the face of fresh US sanctions.

If the US bails from the deal, the sanctions that would “snap back” penalize foreign companies that (for example) have dealings with Iran’s central bank, oil and shipping industries. Some would likely be reimposed in May; others in July. Indeed, a cascade of sanctions could be reintroduced across the summer.

The timing of a US withdrawal, weeks before an expected summit between Trump and Kim Jong Un, would be hugely significant. This is not lost on the Iranians. Iran’s Zarif says no leader would see any value in agreements with Washington.

The Russians, with barely concealed glee, make the same point. A senior Russian arms control envoy, Vladimir Yermakov, said: “The efforts to settle the nuclear problem on the Korean peninsula through diplomatic means will to a large extent depend on the JCPOA.”

US drops out; Iran stays in, and Europe tries to protect itself

There is no chance that the European powers – the UK, Germany and France – will abandon the JCPOA. They regard it as a binding agreement by which, according to the International Atomic Energy Agency, Iran is abiding.

They also see the alternative as dangerously destabilizing.

German Foreign Minister Heiko Maas tweeted Monday: “The situation in the Middle East would become much more dangerous without the nuclear agreement with #Iran.”

But the Europeans realize that the reach of US sanctions extends across the Atlantic. Some European companies have paid the price in the recent past for trying to disguise their role in Iran. French bank BNP Paribas forfeited nearly $9 billion in 2015 after admitting in a US court that it had contravened US sanctions against Iran, Sudan, and Cuba.

There has been some talk, mainly in the European Parliament, of resurrecting what’s known as a “blocking mechanism” that would seek to protect European companies by prohibiting them from abiding by US sanctions. That would raise the ante with Washington, just as Europe tries to work through a bruising clash over tariffs. Such a scenario would be damaging to all.

Diplomatically, a Trump withdrawal would drive a dangerous wedge between America and its allies. The Europeans would suddenly be in the same camp as Russia and China, and against the US. The Russians would of course be delighted; a major goal of their foreign policy is to split the US from its European allies. Russian Foreign Minister Sergey Lavrov has promised that “Russia will obstruct attempts to sabotage these agreements.”

US stays in – but the deal is overhauled

This is emerging as the most likely scenario, but the language and sequencing is critical.

Factions of the Iranian state agree on little, but they do agree on this: the text of the JCPOA can’t be renegotiated. President Hassan Rouhani said Wednesday Iran will not accept “to add or omit even a simple sentence” from the deal.

Macron believes in a broader architecture to underpin the JCPOA. “For a number of months I have been saying that it is not a sufficient deal,” he said Tuesday.

He referred to a “four-pillar” strategy:

  • The JCPOA would be preserved.
  • A new accord would be negotiated to address US concerns about the “sunset” provisions that release Iran from some of its obligations in 2025. Such a pact could take years to hammer out, even if Iran agrees in principle to negotiate.
  • A separate track would open negotiations on limiting Iran’s ballistic missile program.
  • Action would be taken to contain Iran’s activities elsewhere in the Middle East, though just how is unclear.

It’s a very ambitious project, especially with so little time left, but Trump said he was open to a “new idea with solid foundations.” Much of the Macron project kicks tough issues into the long grass beyond May 12.

The risk is that if the deal is supplemented by heavy-duty international sanctions, Iran may just walk away. Many Iranians already grouse that the agreement has not brought the promised “peace dividend”of trade and investment. The Iranian riyal is at historic lows against the dollar; the banking system is laden with bad debts.

“If the benefits of the deal for Iran start to diminish, then there is no reason for Iran to remain in the deal,” Zarif told CBS on Sunday.

There is a school of thought in Iran that it can get along without western investment: that Indian, Korean and Chinese companies are thirsting to exploit the Iranian market. Indian companies are building new ports; Chinese oil companies such as Sinopec and China National Petroleum are spending tens of millions of dollars while hoping the likes of Total pull out. Qatar’s trade with Iran is rising.

But a lot can change in the next few weeks, both inside the White House and in the Middle East. What if an Iranian militia in Syria launches another drone attack against Israel? What if Macron can’t persuade other European governments (Italy is very skeptical) to sign up to his four pillars? What if Trump senses deep opposition in Congress (or from the office of the National Security Adviser) to extending the JCPOA?

President Macron believes his visit to Washington has been a “step forward” towards strengthening the deal. Plenty of pitfalls lie ahead.