The Trump White House plans to break the Iran deal by sanctioning companies from Europe and Asia doing business in and with Iran. Ironically, President Obama paved the way to unilateral sanctions.
For three years, the comprehensive nuclear accord (JCPOA) has offered Iran relief from US, UN, and multilateral sanctions on energy, financial, shipping, automotive and other sectors. But recently that era came to a halt. “The United States will withdraw from the Iran nuclear deal,” President Trump said on May 8.
Two weeks later, Secretary of State Mike Pompeo, the ultra-conservative former head of the CIA, said Washington will impose “the strongest sanctions in history [on Iran] once they come into full force.”
In contrast, Chinese Foreign Minister Wang Yi has reiterated Beijing’s support for the deal. “China will continue to work to maintain the deal,” Wang said, stressing that the agreement was “hard-earned.” By the same token, the other key signatories of the nuclear deal—UK, France, and Germany, and Russia—say the deal will be sustained.
Breaking Iran by sanctioning EU and Asian companies
American internationalism began a century ago, when President Woodrow Wilson purported to “make the world safe for democracy.” That’s no longer the goal (if it ever was). Rather, the objective is now to ensure US unipolarity in a multipolar era, by any means necessary.
Regionally, Trump’s quest for primacy leans on Saudi Arabia for economic and geopolitical support, as evidenced by the $110 billion arms deal with Riyadh a year ago, and reinforced security ties with Israel, as reflected by US recognition of Jerusalem as capital of Israel—another fatal policy mistake that reversed decades of US foreign policy.
Now America also plans to “apply unprecedented financial pressure on the Iranian regime,” as Pompeo said. The administration’s objective is to restore primary sanctions that were lifted after the International Atomic Energy Agency’s (IAEA) certification in January 2016 that Iran had complied with the agreement. As secondary sanctions on firms have remained in place, along with sanctions applying to US companies, including banks, the White House will fortify them.
In a typical unipolar move, the Trump administration is extending sanctions over to EU firms that have done business in and with Iran since the 2015 nuclear deal, thus raising risks for their U.S. access. As Treasury Secretary Steven Mnuchin says, EU-Iran business agreements will be voided as “the existing licenses will be revoked.”
Along with Renault, PSA Peugeot Citroen and Sanofi, French companies have huge stakes in the deal, thanks to the $21 billion Airbus contract and the oil giant Total’s $2 billion deal to develop the South Pars oil field. Some 120 German companies, including Volkswagen and Siemens, operate in Iran and another 10,000 do business with Iran. Royal Dutch Shell would be adversely affected.
Economic pressure could harm significantly Iran’s oil industry which is the fourth largest reserve holder of crude oil in the world and whose largest buyers include China, South Korea, Turkey, Japan, Italy and India.
During the sanctions era, Iran shifted toward Asia and it has a vital role in the China-led One Road One Belt initiative. Indeed, through the worst days of the 2010-16 sanctions, Asian countries remained engaged in Iran’s economy. In the coming years, these countries hope to support Iran to become a major regional trading hub and to diversify its economy away from oil and gas. But if the White House sanctions EU companies for Iran business, it will sanction firms from Asia as well.
In the 2003 Iraq War, President Trump’s new National Security Advisor, John Bolton, relied on false data from U.S.-based Iraqi exiles. Since last fall, Bolton has been urging the US to implement a similar regime change with Mojahedin-e Khalq (MEK), which was de-listed as a terrorist group by Secretary of State Hillary Clinton in the early 2010s. MEK is an Iranian opposition group which has lucratively financed and then been lobbied by former heads of the CIA, FBI and the Homeland.
Bolton wants a new regime in Tehran before February 2019—the 50th anniversary of the revolution.
How Obama paved the way to Trump’s withdrawals
With his pledges to withdraw from the climate and nuclear accords and America’s key trade agreements (e.g., North American NAFTA, Asia-Pacific TPP, and US-EU TTIP), Trump has electrified the historical debate on the legality of US withdrawal from treaties and other international agreements.
While the US constitution sets forth a process whereby the executive has the power to make treaties with the advice and consent of the Senate, it does not specify how such treaties can be terminated. The nature of the agreement matters as well. When the president enters into executive agreements, these do not receive the Senate’s advice and consent. But such “political commitments” are not seen as binding. As a result, the US will withdraw if the Iran deal is not renegotiated.
Ironically, it was the President Obama who created the opportunity for such strategic maneuvering. When his administration concluded the JCPOA, it considered the plan of action a non-binding political commitment, which allows the Trump administration to argue it has ability to withdraw from the JCPOA. True, on 2015, the Security Council unanimously adopted resolution 2231 endorsing the Iran deal. So Trump’s critics could argue that the resolution converted at least some provisions in the JCPOA into obligations that are binding under international law which would mean a complex and long debate.
Yet, today such critics seem to be largely absent. When Obama concluded the Iran talks, most Democrats hailed the accord. Yet, most Democrats turned their coats in late 2016, the Senate and the House of Representatives unanimously extended the Iran Sanctions Act for a decade.
As a legal scholar, Obama knew well the loopholes his administration left to its successor. His (few remaining) supporters say he concluded the deal out of political expediency (not enough Republican support in the Congress). Others see it as a “Wilsonian” failure (adequate authority to sign the deal but not to implement it). But radicals believe that Obama, who was trained in the CIA front Business International Corp. in the ‘80s, was used to pave the way to withdrawal.
In a recent meeting with President Xi Jinping, German Chancellor Angela Merkel sought a common strategy to ward off a trade war, keep markets open and a unity in the nuclear deal. It is a stance that is aligned with the interests and values in Beijing.
Whatever the legal pretexts for Trump’s withdrawals, they herald the end of Wilsonian internationalism in America. In the past, Washington, Brussels and Tokyo shared similar interests and values, it was said. As the White House is substituting unilateral bullying for multilateral diplomacy, those days are busy fading into history.
This article was originally published by South China Morning Post (Hong Kong) on May 25, 2018.