With relations strained after US President Donald J. Trump’s decision to walk away from the Joint Comprehensive Plan of Action (JCPA) with Iran, a new source of tension in the Euro-Atlantic alliance has strained relations to their worse levels in decades after Trump bucked conventional wisdom by labelling the EU a “national security threat” and slapping stiff import tariffs on European steel and aluminium.
New Europe’s Violetta Rusheva talked to Emmanuel Dupuy, President of the Institute for European Prospective and Security (IPSE), to find out the perspectives of the Trans-Atlantic relations and learn how Europe should protect its economic interests
NE: Since the US immediately announced its withdrawal from the JCPA and followed-up with re-imposing economic sanctions against Iran, Trump warned his European allies that he would impose stiff sanctions on EU companies who either do business in Iran or who decide to honour legally binding business contracts with Iranian companies. What will be the consequences for European companies who will continue working on the Iranian market?
Dupuy: European companies will be the ones most targeted, which is exactly what Trump’s National Security Advisor John Bolton explicitly said. He earlier reiterated that the US will not differentiate between big companies and small ones when it comes to working with Iran.
I agree with the fact that the EU expected a very harsh position from Washington when it came to oil companies like Total or tech giants as Airbus or Renault. But what we see is that all companies, no matter the size, may be targeted. Unfortunately, European companies are being taken hostage in this situation because it has become a commercial war between the US and the EU. Washington is targeting European companies because it knows that Europe will react less stringently than, for instance, China, who holds $420 billion of the US’ treasury bonds.
Moreover, the EU is incapable of speaking with one voice and has no instruments to counter the decision by the Americans as there are no European institutions with the same clout as the US’ Office of Foreign Assets Control or the Treasury Department, which allows the Americans to oppose sanctions. It definitely gives the US a dominant position in this regard.
NE: Considering the deep interdependence of the international finance system, not to mention the EU-US strategic partnership, how do you see Europe’s response in terms of economic interest protection?
Dupuy: First, the EU should have its own SWIFT system (international banking system), because at present it is run by the US. We should have done it many decades ago, but now it is needed more than ever. We also should consider an option of trading in different currencies other than the US dollar, in the way that China and Russia do.
Secondly, the EU should have a kind of D’Amato-Kennedy Act. (A law adopted by the Republican-led US Congress in 1996 that punishes rogue states for their support for international terrorism, their desire to obtain weapons of mass destruction, and their hostility to the Middle East peace process. The law stated that in exchange for the EU’s commitment to try to dissuade Iran from acquiring weapons of mass destruction, the United States agreed to lift the sanctions against European companies that had made investments in Iran. The bill allowed the American government to punish any investment of more than $20 million a year in the energy sector in Iran and the then-Muammar Gaddafi regime in Libya.) This would allow Brussels to put significant pressure on US companies that do business worldwide.
Finally, there should be a compensation procedure, perhaps within the framework of the European Investment Bank and applied to the European companies who bear the brunt of the loses from US sanctions for deals signed after 2016, but not for the latest.
Total, who invested $2 billion in the development of the giant South Pars gas field and now has to withdraw from Iran is a good example. But how you can expect Total not to shut down its business there if 90% of the company’s activities are linked to the buying-and-selling operations that are carried out in dollars and 30% of its shares belong to private bankers who have links to the US? I am sure that there is a new mindset in the position of some European leaders to fight back when the Americans attack the interests of European companies. But it takes time to change from a weak-to-strong policy.
NE: Is there a realisation by the EU for the need to more effectively address the problem of European business interest protection, which may change the stance of the Member States? How can the EU influence Trump in terms of sticking to a legally binding deal that was signed by the previous administration of Barack Obama?
Dupuy: Look, when it concerns the protection of economic interests, we can see it with the recent statement made by Trade Commissioner Cecilia Malmström. The EU is ready to go to the WTO and file a case over the steel and aluminium tariffs to protect the EU market from trade disruption caused by the US’ new restrictions. We should do the same with the Iran nuclear deal as it is the only international agreement ratified by the UN under Resolution 2231.
This was the first time that an agreement signed outside of the jurisdiction of the UN is legally binding for all members of the organisation. When the UN adopted Resolution 2231, there were no vetoes from either the US or any other member of the Security Council. When Trump unilaterally decided to withdraw from the deal, he ignored not only the position of the five other countries – Germany, France, the UK, Russia, and China – who were the guarantors of the Iranian deal with the US but also the others 187 countries in the United Nations.
What is the point of international law if it comes to that? That’s not an act of democracy building, but of regime-change. This implies that ‘if we do not like you, we will change you. And if we do not like you in 10 years, we will change you again’. It is a sort of Machiavellian approach, which excludes any morality.
NE: How do you see the role of Iran in helping to stabilise the situation in the Middle East?
Dupuy: We do not have to ignore the growing role of Iran in the region. We may or may not like it, but the recent elections in Lebanon showed that Iranian Revolutionary Guard Corps-aligned Hezbollah and its Shiite allies improved their positions, but fell just short of securing one-third of the seats in the parliament. The same situation in Iraq, where Iranian-backed forces came out ahead in recent elections. We should also not forget that Iran shares borders with Afghanistan, Turkey, and Pakistan and has the influence to some extent on their politics. When you have a deal with your enemy, it does not mean that he becomes your friend, but it means that you have arranged to follow certain rules that are binding for everyone.