This week Iran threatened to walk away from parts of the nuclear deal that was negotiated in 2015. More concretely, Iran will keep its surplus of enriched uranium instead of selling it to foreign countries, which they committed to as part of the deal. The country also threatens to begin producing highly-enriched uranium.
There is every reason to be critical of the Iranian regime. It oppresses its own people and contributes to instability in the whole region. But the main reason the deal is at risk of falling apart is not Iran at all, but rather the irresponsible solo act of the U.S. It has now been a year since president Donald Trump, despite strong objections from his nearest allies, withdrew the U.S. from the deal and reinstated severe sanctions against Iran.
Russia, China, and the European countries that negotiated the deal all remain committed to it for making the world safer. They have attempted to keep it alive, but unfortunately this has proven difficult. The American sanctions have worked well and have sent Iran’s economy into a deep crisis. Europe’s promise to work to maintain trade with Iran has resulted in hardly anything. Instex, a new instrument that was established to be able to trade with Iran, has been extremely time-consuming to put into place. The first transaction has not yet occurred.
The fundamental problem is that most international companies, in one way or another, are dependent on the U.S. domestic market, banking system, or currency. Few dare to do anything that would contravene the American sanctions. That would put them at risk of being prosecuted.
The halting attempts to save the Iran deal are a reminder of how much power the U.S. has over the global financial system. Despite China’s growth and the establishment of the Euro, the dollar has retained its place as the “global currency.” The dollar, for example, comprises over 60 percent of the currency reserves of central banks globally, according to the IMF.
The U.S. and EU have complementary interests on many issues, but not all, which Trump’s policies in the past years has shown. If the EU will be able to defend its economic and foreign policy interests, the union must position itself to act independently to a greater extent than it does today. This is something the conflict around the Iran deal illustrates well.
The U.S. and Iran are saber-rattling, and the deal’s fate remains unclear. The best that the European countries can do is continue to use the tools they have to avoid it breaking apart altogether.