After ripping up the Iran nuclear deal in May, the Trump Administration is fanning out across the globe to rally support for a return to economy-crippling sanctions against Tehran.
The effort comes ahead of President Donald Trump’s trip next week to Europe, where he is expected to pressure leaders into joining the far-reaching campaign to handcuff major aspects of Iran’s economy, including driving oil exports to zero. If European allies don’t join, Trump has threatened secondary sanctions on any company that does business with Tehran.
The president hopes his bare-knuckled approach will coerce European leaders to unite behind him, even as they publicly oppose a return to sanctions and scamper to salvage the existing nuclear deal without American participation. It’s a high-stakes test of American leadership, the first of its kind for the Trump Administration’s Iran strategy.
“The stakes are huge,” said Richard Goldberg, who was lead Senate Republican negotiator for several rounds of Congressionally enacted sanctions that helped pressure Iran into curbing their nuclear program. “There’s going to be enormous amount of pressure brought to bear on U.S. allies to comply.”
Teams of personnel from the State and Treasury departments are focusing on France, Germany and other European Union countries to cooperate with the “maximum economic and diplomatic pressure” campaign to wall Iran’s economy off from the rest of the world. The Administration’s stated goal is to deter Iranian Supreme Leader Ayatollah Ali Khamenei from pursuing ballistic missile development and to curtail its support for Shiite militant groups in Yemen, Syria and Lebanon.
American and European banks and companies that invested in Iran after the landmark deal known officially as the Joint Comprehensive Plan of Action (JCPOA), which took effect in 2015, have a brief window to wind down business ties before incurring penalties. The first group of sanctions on Iran’s automotive sector, gold trade, and other industries will “snap back” beginning on August 4. A more rigorous set of sanctions on oil and transactions with the central bank of Iran will come into effect November 6.
European nations were far more willing to participate in Washington’s no-holds-barred approach toward Iran during the Obama Administration when Tehran was widely perceived to be racing toward a nuclear bomb. In 2010, Germany joined the five permanent members of the U.N. Security Council—Russia, China, Britain, France and the U.S.—to impose tough new sanctions on Iran’s banking and financial sectors and to block its ability to get paid for oil sales.
Even more surprising, all six countries enforced the sanctions with unity and resolve over the following five years, even though it cost them in trade and diplomatic ties with Iran. The reason was basic power politics: all five had an interest in trying to reimpose the exclusivity of the nuclear club.
Now, however, all signatories believe Iran is fully complying with the terms of the 2015 nuclear deal, even if it continues to be the world’s leading state sponsor of terrorism and is involved in every serious conflict in the Middle East. Trump is sure to drive home Tehran’s role in those bloody conflicts when he arrives at the NATO summit next week in Brussels, and days later in Moscow when he meets with Russian President Vladimir Putin.
“If any major corporation, any country, is openly in violation of U.S. sanctions — and in particular if they are giving the Iranian regime access to hard cash — that would greatly undermine the Administration’s strategy and would likely give the Iranians a lifeline to survive to the next presidential election,” says Goldberg, who is now senior advisor for the Foundation of Defense for Democracies, a right-leaning Washington think tank.
Seeing an opportunity to drive a wedge even further, Iranian President Hassan Rouhani is visiting Switzerland and Austria this week to press Europe to stay committed to the 2015 deal. “After the JCPOA, we showed very clearly that whatever promise we make, we stand by,” Rouhani said Tuesday alongside Swiss President Alain Berset. On Friday, the top diplomats from Britain, France, Germany, as well as China and Russia will join Iranian Foreign Minister Mohammad Javad Zarif in Vienna to discuss a “European incentive package and the solutions to preserve Iran nuclear deal after US illegal action to withdraw,” according to Iran’s state-run news.
Meanwhile, a major focus of Trump’s campaign is to drive Tehran’s economy-sustaining oil exports to zero. Iran’s oil exports recently hit their highest point, 2.7 million barrels per day, since international sanctions were lifted January 2016. Around 1 million barrels per day are exported to Europe, and nearly 2 million go to Asian countries like China, India, South Korea and Japan.
After the Trump Administration announced its intention last week to eliminate Iranian exports, global oil prices reached their highest point since November 2014 driven, in part, by concerns over supply. Trump moved to assuage markets over the weekend when he tweeted that he asked Saudi Arabia to boost its oil production, but his claim has yet to be substantiated in Riyadh.
Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to high! He has agreed!
— Donald J. Trump (@realDonaldTrump) June 30, 2018
Brian Hook, the State Department’s director of policy planning, tamped down concerns even further Tuesday when he told reporters the Administration will consider requests for waivers from economic sanctions but stopped short of committing to any relief. “We are prepared to work with countries that are reducing their imports on a case-by-case basis,” Hook said.
Hook said more than 50 international companies had committed to leaving the Iranian market, particularly in the oil and financial sectors. He said U.S. teams of State Department and Treasury officials had visited 13 countries in Europe and East Asia so far, to dissuade governments and companies from doing business with Iran. In the coming days, he intended to travel to Europe to carry out “very close consultations” Germany, France, and Britain ahead of Trump’s anticipated visit.