Trump’s decision to leave the Iran deal is bigger than Iran. It’s exposing more cracks in the trans-Atlantic alliance.
The United States and Europe have had serious foreign-policy disputes before—notably during the Iraq War, when France and Germany split with the U.S. over the invasion. But since he took office in January 2017, President Trump’s decisions, including his withdrawal from the Paris climate accord and his imposition of steel and aluminum tariffs on European countries, have initiated a series of severe disagreements. And the U.S. withdrawal from the nuclear agreement with Iran may be the gravest yet.
It was the combination of European and U.S. sanctions that helped bring Iran to the negotiating table over its nuclear program, ultimately resulting in the accord Iran, the U.S., the EU, and others struck in 2015. But that coalition has split with the U.S. withdrawal, and the Europeans are now openly flirting with ways to skirt the coming reimposition of the U.S. sanctions on the Islamic Republic that had been waived as part of the deal.
“Even mass media are talking about extraterritorial measures, sovereignty, and standing up to the U.S.,” Delhpine O, a French lawmaker with President Macron’s En Marche party, said at a panel discussion Wednesday at the Atlantic Council in Washington. She added: “And all of a sudden this becomes something of national pride, which I’ve not seen … for a number of years. We have to be careful with this because it will probably become a matter of public opinion … of sovereignty, or pride, of standing up to protect our own interests.”
In an attempt to protect European companies’ investments in Iran, the European Commission said it would enact regulations that would prevent those companies from complying with sanctions the U.S. will reimpose. It’s unclear how exactly this will work—European companies are already starting to withdraw investments from Iran for fear of U.S. reprisals. Iran stands to lose substantial European investment regardless, calling into question whether the Europeans can save the deal, which was premised on Iran’s getting economic benefit from accepting restrictions on its nuclear program. But ultimately the dispute says more about trans-Atlantic relations that it does about Europe’s ability to get its companies to invest in Iran.
The U.S. and Europe continue to cooperate closely on a wide range of issues, including counterterrorism and security, and a tough sanctions regime against Russia for its actions in Ukraine. They share common goals, the tariffs notwithstanding, on global trade. “Neither side wants this disagreement [over the Iran deal] to affect other parts of the relationship,” Axel Hellman, a policy fellow at the European Leadership Network, said Tuesday at a separate panel discussion at the Atlantic Council. “But … we might see foreign ministers start to question the very foundations of their relationship with Washington. Security has always been a cornerstone of that relationship, and from a security point of view this is really kicking the EU in the teeth.”
Or as Caroline Vicini, the deputy head of the EU delegation in Washington, said Wednesday at the Atlantic Council: “We’re unfortunately out of lockstep with the United States. We’re on two sides of this … very unfortunate affair.”
The debate in the U.S. over the Joint Comprehensive Plan of Action, as the nuclear deal with Iran is formally known, generally deals with the questions of whether the agreement was a good one and whether President Obama, who advocated for the accord, gave up too much to Iran in exchange for too little. But Europe sees the issue differently. European negotiators had worked toward the accord for 12 years—the U.S.’s subsequent participation starting in 2008 gave the process teeth—and saw it as the most effective way to achieve security for the continent in the face of Iran’s nuclear program.*
“There had been lots of discussions and controversies across the pond for the last decades, but this is the hardest one because we see our core national-security and continental-security interest being just ignored,” Omeed Nouripour, a German lawmaker with the Greens, told me. “This drives us into the hands of the Chinese and the Russians.”
Those two countries are also party to the JCPOA, and have signaled their intention to remain in it. But working with them presents its own challenges: Europe, like the U.S., views China as an unfair trade partner; and Russian actions in Ukraine and Syria, where it is involved on the side of President Bashar al-Assad, make Moscow an unlikely ally. Yet German Chancellor Angela Merkel has visited Russia twice in the past month—visits that prompted Russian media to ask whether a thaw in relations was imminent.
What this adds up to is that the fate of the Iran deal is bigger than Iran—it stands to fundamentally shift how EU foreign policymakers view the trans-Atlantic alliance. If the Paris climate accord, the steel and aluminum tariffs, and the digs about NATO spending weren’t enough, the Iran deal has reinforced the European perception that on certain issues they are on their own.
“It is no longer such that the United States simply protects us, but Europe must take its destiny in its own hands,” Merkel said after Trump withdrew from the deal. “That’s the task of the future.”
Similar comments echoed across the bloc in the wake of the U.S. withdrawal. Federica Mogherini, the EU’s foreign-policy chief, said that while the signatories to the JCPOA “regretted” the U.S. action, the bloc would look to maintain and deepen “economic relations with Iran.” French Finance Minister Bruno Le Maire told Europe-1 radio: “Do we want to be vassals who obey decisions taken by the United States while clinging to the hem of their trousers? Or do we want to say we have our economic interests, we consider we will continue to do trade with Iran?”
The most potentially significant response from Europe came Thursday when European Commission President Jean-Claude Juncker said the commission would work to enact a never-used statute that blocks European companies from complying with U.S. sanctions. That statute—the so-called blocking regulation—would make it illegal for European companies to comply with U.S. sanctions laws that have extraterritorial reach. But European officials have acknowledged that the blocking regulations have limited impact, and the U.S. reportedly is considering ways to ensure European compliance.
“There has not been a huge rush by European companies precisely because the chilling debate about whether this agreement would continue, whether sanctions might come back, has meant that there’s been a very limited amount of economic benefits for Iran,” David O’Sullivan, the EU ambassador to Washington, said this week.
Now, Iran says it will remain in the agreement as long as the Europeans guarantee the economic benefits that were supposed to come with the JCPOA. Because this wasn’t realistic even when the U.S. was part of the agreement—when political uncertainty over its fate prevented promised investments from materializing—it will now be virtually impossible for Europe to create by itself the economic climate that will draw investors to the Islamic Republic under the possible threat of U.S. sanctions. For the largest European companies, the choice of doing business in the United States, a country with a $18 trillion economy, and Iran, one with a $400 billion economy, is simply no choice at all.
Indeed, Total, the French oil giant that has investments in Iran, has already said it will withdraw from the country if it can’t get waivers on the U.S. sanctions. And Airbus, the European aircraft manufacturer that has signed an agreement to sell 100 passenger planes to Iran, will almost certainly back out without a waiver, as well.
Juncker’s pledge notwithstanding, European officials have acknowledged that they can do little to encourage the largest European companies to enter Iran, though they said they would work with smaller firms and financial institutions. Although that may bring some foreign investment into Iran, it won’t be anything close to what the Islamic Republic needs to kickstart economic growth.
Mark Dubowitz, the chief executive of the Foundation for Defense of Democracies and a critic of the JCPOA, told me the Trump administration is going to pursue a maximum-pressure campaign against the Iranian regime. “And, of course, that only works if you also use financial and economic coercion, and that only works if you deter European and other companies from returning to Iran because if Iran ends up with tens of billions of dollars from international companies, then your maximum pressure campaign is a failure,” he said.