Iran and Trade with the European Union

Iran trade deal

 

The European Union (EU) invested a considerable amount of resources and political capital into arranging the 2015 Joint Comprehensive Plan of Action (JPCOA) initiated under the Obama Administration. A few years later, the EU also tried hard to prevent former President Trump from withdrawing from the JPCOA. 

 

Currently, with President Biden in office, the EU is once again moving toward positioning itself as the middle man between the Iranian regime and Washington. Given the EU’s continued investment in nuclear and trade policy with Iran, it begs the question, what does the EU stand to gain from the outcome of this arrangement?

 

If a deal similar to the JPCOA were to be reenacted between Washington and Tehran, sanctions would be softened, facilitating trade between Iran and Europe. EU states opposed Trump’s maximum pressure campaign, which placed restrictive sanctions on Iran. However, Trump’s maximum pressure sanctions had about the same impact on Iran-European Union trading as the multilateral sanctions did before the JPCOA was enacted. As far as the EU is concerned, Trump’s sanctions serve as a return to the status quo of restricted trade with Iran. The JPCOA represented an opportunity to change this ‘norm.’ 

 

Moreover, while EU states have access to many trading partners, Iran does not. If sanctions were to be lifted or softened, states in the EU would benefit financially from a more exclusive trading arrangement with Iran. A large part of the impact of sanctions is related to limiting the importation of crude oil from Iran. The JPCOA softened sanctions on Iran, opening up avenues for EU states to gain financially from the treaty through trade and investment opportunities.

 

Foreign policy researchers indicate that other countries, such as Saudi Arabia, stand to gain from sanctions on Iran. See here for more information on foreign policy research. With oil exports from Iran restricted, other countries such as those in the EU turn to Saudi Arabia for crude oil imports. About 46 percent of oil exports from Saudi Arabia go to the EU. A given country’s position toward sanctions with Iran can reflect what they stand to gain or lose.

 

The lifting of sanctions provides the EU with an opportunity for financial investment and trade with Iran. During the height of sanctions with Iran, both before the JPCOA and during Trump’s presidency, EU trade with Iran dropped significantly. Additionally, Iran imports goods from the EU. With sanctions in place, the EU is faced with a negative economic impact due to restrictions on importation.

 

According to experts on international sanctions such as the Foundation for Defense of Democracies, states in the EU stand to gain and seek to open up with Iran. This, despite the negative consequences of less restrictive sanctions policies. The lifting of sanctions and returning to an arrangement similar to the JPCOA trade could empower the Iranian regime and facilitate their nuclear weapons ambitions. 

 

With renewed trade and a growing economy, the theocratic regime in Iran would be bolstered and strengthened. This strengthening of political capital in combination with greater financial resources would provide Tehran with the means to grow its military and nuclear capabilities to dominate the Middle East and further perpetuate terrorist attacks and human rights abuses.

Biden has No Iran Policy

 

Over the past several months, the Islamic Republic of Iran has increased its uranium enrichment closer to bomb purity levels, approaching 60%. Additionally, the Iranian regime has further blocked the International Atomic Energy Association (IAEA) from being able to observe or investigate Iran’s nuclear-related activities. Iran maintains confidential nuclear sites and other related facilities that are not monitored or reported on by any third-party organization. Recent reports suggest that Iran could be as close as one month away from possessing sufficient weapons-grade uranium to produce nuclear weapons. What has the Biden administration been doing about this?

The Biden administration began its term with the intention of reviving the Joint Comprehensive Plan of Action (JPCOA) originally instituted by the Obama administration and later withdrawn from by Trump in 2018. However, six rounds of negotiations later combined with Iran’s continued advancement of its nuclear weapons production; President Biden appears to be still willing to lift sanctions further or allow weapons advancements just for the opportunity to talk with Iran. Iran appears to be gaining desired concessions from the U.S. without providing anything in return.

Historically, American diplomatic relations with the Iranian regime have been characterized by Washington conceding first and Iran achieving the upper hand. Biden appears to be aimed at continuing this pattern. At this point, Tehran does not appear interested in reentering the JCPOA as it was. Moreover, Tehran is trying to extort further concessions from the United States and its allies in order to simply enter discussions. Given that President Biden has already eased sanctions on Iranian oil exportation without Iran producing anything in return, it appears likely Biden is going to produce further concessions just to get Iran to talk. 

According to a think tank in defense of democracy, following the leadership of the Biden administration, the world appears to be approaching a time where the Islamic Republic’s nuclearization and domination of the Middle East are accepted as the status quo. It has become clear over the past eight months that Biden is not willing to take a hardline against Tehran’s nuclear weaponization or regional domination. As such, in all likelihood, Iran will soon reach a point where it can easily realize its nuclear and regional dominance-related aims. According to organizations that report on nuclear weapons proliferation, such as Foundation for Defence of Democracies, soon there will be no turning back.

Consequently, a nuclear-armed Iran will dominate the Middle East. The United States and other countries will no longer have the ability to significantly influence the region. Other countries such as Saudi Arabia and Israel are strongly interested in limiting Iranian nuclear capabilities, however, they may not have the ability to change Iran’s trajectory. While the current U.S. president and his team may be averse to wielding American power, their current stance will lead to the U.S. becoming unable to wield power in the future. With a region as important as the Middle East at the political whim of the Iranian regime, this will only spell problems for the region and much of the world in the future.