EU Caught in the Middle of U.S.-Iran Nuclear Showdown

The International Atomic Energy Agency (IAEA) has confirmed Iran’s July 1 claim that the Islamic Republic had surpassed the amount of enriched uranium it can possess under the limits imposed by the Joint Comprehensive Plan of Action (JCPOA), commonly referred to as the Iran nuclear deal.

The JCPOA is a 2015 agreement aimed at halting Iran’s nuclear drive. It was signed by Iran along with the United Kingdom, France, Germany, Russia, China, the European Union and the United States, the last of which pulled out of the deal in 2018, claiming it was not strict enough.

Iran says it will further speed up its program in terms of the level of enrichment if steps are not taken to relieve the economic strain that re-imposed U.S. sanctions have placed on the country’s economy. It gave July 7 as the target date for exceeding the stipulated enrichment levels of its stockpile.

The IAEA’s findings will do nothing to ease the already sky-high tensions between the U.S. and Iran, which says its adherence to the rest of the agreement now depends on Europe, which is trapped in the middle of the face-off between Washington and Tehran.

In an effort to save the nuclear deal, senior diplomats from the U.K., China, France, Germany and Russia met with Iranian officials in Vienna on June 28. They announced that a trade mechanism called INSTEX, designed to circumvent U.S. sanctions, was now operational. But Iran says that is not enough.

Still, Ellie Geranmayeh, senior policy fellow and deputy head of the Middle East and North Africa program of the European Council on Foreign Relations (ECFR), said the wording of the meeting’s final statement indicates the diplomats believe solutions can be found.

“There has been some progress made,” she said. “[Even if] Iran officials said this is not enough to essentially stop Iran from going [past] its stockpile threshold, if you look at wording that came out of the joint commission on [June 28], there is a sense that through diplomatic means, they may be able to solve the stockpile issue.” 

Geranmayeh said how the situation unfolds hinges largely on how much progress Iran sees in the talks and how much oil it will be able to sell. Tehran has had conversations with Beijing and OPEC regarding oil exports, she said.

U.S. Special Representative on Iran Brian Hook has given the Europeans an ultimatum, saying the EU can either trade with the United States or do business with Iran.

“No company of note has chosen Iran [over the U.S.],” Mohamed Ismaeel, assistant researcher at DERASAT, the Bahrain Center for Strategic, International and Energy Studies, said in an email.

“As a result, while European countries may support the deal, they cannot ensure the Iranian economy continues to benefit in any way,” he said. “I believe the Iranians are attempting to push the Europeans into a corner [saying they will not stick to the nuclear deal] as a final negotiation tactic to see if the Europeans can provide anything of note to assist the Iranian economy — the Iranians have little to lose and no cards to play but this one.”

According to the International Monetary Fund’s April 2019 report, Iran is facing a 37.2% level of inflation since the Americans re-imposed sanctions last year.

One implication of the growing tensions will be an increase in the number of cyberattacks by both sides, according to Yossi Mansharof, Iran and Shiite expert at the Jerusalem Institute for Strategy and Security and the Ezri Center for Iran and Persian Gulf Studies at Haifa University. He said Iran already had used its “significant cyber capabilities” to attack “vital” targets in the U.S. and Saudi Arabia, including oil infrastructure.

“I believe the Iranians are attempting to push the Europeans into a corner [saying they will not stick to the nuclear deal] as a final negotiation tactic to see if the Europeans can provide anything of note to assist the Iranian economy — the Iranians have little to lose and no cards to play but this one.”
— Mohamed Ismaeel

“The [recent] shooting down of the U.S. drone by Iran was very dangerous for [Iran], and they realized they had crossed a red line with [President Donald] Trump,” he said. “So now … they will move their offensive operation to the cyber field.” 

Although the EU also opposes Iran’s expansionist ambitions in the Middle East and its negative role in various arenas in the region, its insistence on preserving the nuclear agreement and its persistent efforts to establish a mechanism for evading American trade sanctions are encouraging Iran to escalate its subversion throughout Europe, Mansharof said.

“The plan of the radical wing of the regime headed by [Ayatollah Ali] Khamenei and the Islamic Revolutionary Guard Corps is to expend more pressure on Europe to get economic concessions from it,” he explained. “From the very beginning of the nuclear deal, the Revolutionary Guard did not want [it]. Since the pragmatic wing [in the Islamic Republic] is very weak, it is very easy to understand why Iran is acting like this.”

Iran is hitting back to convince the United States to ease its maximum-pressure campaign, as it feels isolated and in a state of economic war with the U.S., according to Geranmayeh.

“Iran is signaling that actions from the U.S. are going to be costly, not just for Iran but for the region as a whole, whether by the energy market being disturbed or U.S. military assets disturbed,” she said, noting that Iran had determined that the “strategic patience card” was not working.

“It will come at a cost,” she continued. “Iran will not abide [by] the [nuclear] agreement while sanctions [are in place].”

She said it was difficult to determine how Trump would react to such a strategy as he has not eased sanctions on China or other countries, although he did reverse his decision on a retaliatory military strike after the drone was shot down.

Iran wants to make a deal, but on its own terms, Mansharof said, noting that during the previous decade and under the pretext of fighting the Islamic State group, it had built up transnational Shiite networks in Yemen, Bahrain and Iraq.

“Iran spread out its influence and if it wants to, it can target American soldiers and bases across the Middle East,” he said. “From an American point of view, [if Europe bypasses the sanctions], it is financing the radical wing of the [Iranian] regime.”

Iran also has warned Europe that along with a continuation of its nuclear program, it will work on the development of long-range missiles that can reach Europe, according to Mansharof. 

DERASAT’s Ismaeel noted that the current tensions also could destabilize the entire Persian Gulf region, which he believes is key to the stability of the world in general.

“Gulf security is world security, and if Iran chooses to escalate [the situation], there will be a globally negative effect — oil prices will skyrocket, as will gold, and world trade will be under huge threat,” he said. “Iran seeks to destabilize the region and has for the past few years threatened our security. I hope the current situation helps in curtailing Iranian negative behavior, even if only from a financial perspective.”

Essentially, Mansharof said, neither side actually wanted a war, and Iran was biding its time, waiting for the 2020 U.S. presidential election in the hope that Trump will be voted out of office while at the same time making sure that the current administration is not taking further steps in the military field.

“We can never say never, and [if there is] even one more attack by the Islamic Revolutionary Guard, I can see Trump having no other choice and attacking Iran just to hold his [credibility] as president,” he said. 

Sanctions of this measure had never previously been imposed on Iran, Mohamed said, and Tehran currently is under maximum pressure.

“These sanctions are the only way forward, and they are effective,” he added. 

The ECFR’s Geranmayeh sees things differently. While Iran might not actually want an outright war with the U.S. if it continues to feel squeezed into a corner, she said, it could feel it has “less to lose and very little to gain” by taking no action, inching the possibility of war even closer.