Donald Trump has declared his recent summit with North Korean leader Kim Jong Un, the main topic of which was denuclearization, a victory. And he may be getting his way on another nuclear deal — namely, the one he yanked the United States from last month: the Joint Comprehensive Plan of Action, better known as the Iran nuclear deal.
Even as the United Kingdom, France, and Germany assure Iran and the world that they are committed to remain in the agreement, European businesses, spooked by American threats and the specter of secondary sanctions, are leaving.
French oil company Total SA has announced it would abandon a billion dollar deal made with Iran if it did not obtain a waiver from the United States, which the administration has not rejected outright (though it has vowed to put “maximum economic pressure” on Iran). French car manufacturer Peugeot said the same. The list goes on.
“Despite the rhetoric, Europeans have very little leverage to save business in Iran, especially for large companies with business in the US. Total, Airbus or Allianz have already announced their intention to leave,” Benjamin Haddad, a research fellow at the Hudson Institute specializing in European affairs, told BuzzFeed News in an email. Regulations that the EU set up in the 1990s to undermine the US embargo on Cuba have little impact here, he said.
A spokesperson for the German Embassy in Washington, DC, wrote in an email in response to a request for comment that saving the deal means making sure Iran sticks to its commitment. “It is not about doing business there,” the spokesperson added. But Iranian President Hassan Rouhani told French President Emmanuel Macron just Tuesday that European words of commitment to the JCPOA are not enough; Iran will only remain in the deal if it benefits from the deal.
All of which raises a question: How, if at all, can European countries reconcile their commitment to the deal with the reality that their companies are more committed to the US market?
Part of the problem for Europeans is that, while they know what they want — to keep Iran in the deal — they are less clear on what, exactly, the United States wants, another European diplomat told BuzzFeed News. And in the meantime, major multinational companies, which have far more business in the United States than they do in Iran, are leaving.
There is something working in favor of the Iran deal, the European diplomat said: so far, the withdrawal of European companies from future deals in Iran hasn’t hurt Iran’s current bottom line or forced it to recalculate its commitment to the deal. And Tehran must know that the one way to get the Europeans to go along with US sanctions on Iran is to withdraw.
“I think the bigger question for Tehran,” the European diplomat continued, “is whether they’re able to preserve their oil exports,” adding, “It is still possible if Europeans are able to shield oil exports from US pressure, it might allow for Iran to remain in and comply with the deal.”
“The European governments understand that most of their major multinational companies find the US a much more important market than Iran,” said Peter Harrell, who served as the deputy assistant secretary for counter threat finance and sanctions in the State Department’s Bureau of Economic and Business Affairs during the Obama administration. But the Europeans are trying to send Iran the message that they will continue to work with Iran in certain concrete areas, oil being the most important.
“The Europeans, being aware of this, are trying to press the Iranians to be realistic … Europeans and now the Iranians are very focused on, can they set up a concrete mechanism that would allow Europe to continue importing Iranian crude?” Harrell said.
Europe isn’t the main customer for Iranian oil exports — the major importers are India and China (neither of which is free of sanctions drama; India’s Reliance Industries, a oil-refining complex, already has announced it will no longer accept Iranian crude oil imports). But European companies play a crucial role in that process, acting as tankers and insurers. And China and India could always insist on getting Iranian crude at a discount if the Europeans stop buying.
What’s more, European purchases of Iranian oil mean more to Tehran than just the bottom line. “I do think there’s kind of a national prestige issue,” Harrell said.
Harrell also warned against seeing Europe’s as a binary choice -- to buy or not to buy Iranian crude. In fact, he said, they have three choices: stop buying; keep buying at current levels, or make significant reductions in purchases of Iranian oil.
The last of the options — to continue to buy Iranian oil, but to buy less of it — might allow the Europeans to save face. They could always argue to the US Treasury Department that they've made a significant reduction while insisting that they’re not being bullied by US sanctions.
Whether Iran will buy that line while Europe buys less oil is, of course, another story.