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Wed 9 May 2018 08:52 AM

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EU faces uphill fight to keep Iran nuclear deal alive post-Trump

Russia said late Tuesday it was 'deeply disappointed' by the US decision to pull out of the deal

EU faces uphill fight to keep Iran nuclear deal alive post-Trump

Donald Trump didn’t kill the Iran nuclear deal. He just shrank its membership by one.

That was the line taken by Iran and the European Union immediately after the US president announced his withdrawal from the 2015 accord.

President Hassan Rouhani said his country will continue to work with the other participants - though he warned that it could step up enrichment of uranium if those talks don’t yield tangible results. Germany, France, the U.K. and Russia all said they’ll stick to their commitments.

But it’s not clear whether that will be enough to ensure Iran receives the promised economic benefits - including free access to international oil markets and accelerating flows of trade and investment - that persuaded the Islamic Republic’s leaders to sign up to an agreement capping its nuclear programme.

Even before Trump’s announcement on Tuesday, Western business had been reluctant to take the plunge into a country still subject to multiple US sanctions.

And Trump’s now promising to introduce a host of new ones that will likely test an economy already under strain.

Iran’s rial has hit record lows against the dollar in recent months, forcing Rouhani’s government to impose currency controls. Protests that spread through several Iranian cities in December and January were linked to stagnation and rising costs of living, as the nuclear deal failed to deliver economic liftoff.

‘Wind down’

In Iran’s capital, where many Iranians were glued to Trump’s speech on TV, 32-year-old masters student Golnaz said she’s worried that hard times may be ahead.

“What if the Europeans also apply sanctions,?” she said by phone from north Tehran.

“If people go back to those times when money was tight, food was even difficult for many to buy, it’ll be really bad.”

She declined to be identified by her family name because of the sensitivity of speaking to foreign media.

An early sign of American pressure on European business came within minutes of Trump’s statement at the White House. Richard Grenell, the US ambassador in Berlin, said on Twitter that German companies doing business in Iran “should wind down operations immediately.”

The EU has policy tools available that it’s used in the past to protect companies from US sanctions - but they’re often outweighed, in the eyes of executives, by the risk of losing access to the world’s biggest economy.

French oil giant Total, for example, says it will pull out of a joint venture in Iran if Trump re-imposes sanctions and it can’t win an exemption.

‘This Happened’

“Iran will now turn to the Europeans and say: “This happened. What are you going to do?’,” said Amir Handjani, a senior fellow at the Atlantic Council.

“Iran wants more than just political rhetoric from European leaders,” he said - and that won’t be easy to deliver.

“It’s one thing for EU to say we remain committed and we won’t take steps that will undermine the deal. It’s another for European companies and banks to trade and invest in Iran.”

EU’s foreign-policy chief, Federica Mogherini

The EU’s foreign-policy chief, Federica Mogherini, said the bloc will protect its economic investments in Iran. But Mogherini acknowledged that she was “particularly worried” by Trump’s threat to impose new sanctions on Iran.

The US Treasury said curbs will kick in after 90 days in some areas, and 180 days in others.

Rouhani said in a televised address that it was already clear the US under Trump wasn’t committed to an accord also signed by Russia and China. He said his foreign ministry will start talks with all the other participants on how it can still be made to work.

Russia said late Tuesday it was “deeply disappointed” by the US decision to pull out of the deal, and ready to work with other parties to keep it alive.

‘Horrible’ Deal

The Iranian president doesn’t have full control over the country’s nuclear work and other security issues -- that falls under the purview of Supreme Leader Ayatollah Ali Khamenei.

But Rouhani said that he’s given orders to the country’s atomic energy organization for industrial enrichment of uranium - subject to strict curbs under the nuclear deal - to be resumed without restrictions within a few weeks “if the need arises.”

The US withdrawal marks a personal defeat for Rouhani, who won election promising economic returns from an opening to the West. His hardline opponents, often said to be closer to Khamenei, had expressed more scepticism.

Trump said earlier Tuesday that the agreement was “a horrible one-sided deal that should have never ever been made.” He called for a new arrangement that would address Iran’s ballistic missile program, extend time-limits on Iranian nuclear work, and rein in its regional interventions and support for “terrorism.”

European leaders, led by French President Emmanuel Macron, have pledged to work with Trump on trying to get adjustments to the deal -- and Russia, a close political ally of Iran, signalled on Tuesday that it’s open to reviewing it. But Iran has ruled out renegotiation.