US Sanctions Against Iran and their Consequences for European Allies (2/2)

US Sanctions Against Iran and It Consequences on European Allies

European allies scrambles to save the Iran nuclear deal, we explore the growing rift between the Trump administration and its European allies with syndicated columnist,  James Dorsey

Story Transcript

SHARMINI PERIES: Welcome back to my conversation with James Dorsey about U.S. pulling out of that Iran nuclear agreement. James Dorsey is a senior fellow at S. Rajaratnam School of International Studies at Singapore’s Nanyang Technological University, and he’s also a syndicated columnist and the author of the blog The Turbulent World of Middle East Soccer. Good to have you back, James.

 

JAMES DORSEY: Pleasure to be with you.

 

SHARMINI PERIES: All right, James, in the first segment you mentioned that pulling out of this agreement is more than trying to contain Iran’s nuclear program. That it is also about Iran’s ballistic missile program and containing its military capacity, period. A program that Israel wants contained altogether. Can you elaborate on that?

 

JAMES DORSEY: Let me just emphasize that it’s not just the desire of Israel, but it’s also the desire of Saudi Arabia and the United Arab Emirates. Essentially what this is about is containing Iran. To contain Iran the Israelis and the Saudis feel that you have to do two things: you have to deliberate if not dismantle their ballistic missiles program, and you have to reduce their regional role. Now, the problem with that is that the Iranian defense strategy is centered on medium and short-range ballistic missiles. The Iranian airforce, as is the Iranian military in general, has been hampered by the sanctions over many years. So there, they are using U.S. F4s, U.S.-built F15s, and often have to cannibalize to keep those things in the air. Their naval force is primarily fast small craft, the seacrafts, that can be very disruptive, but they don’t have a really full fledged Navy. So their whole defense strategy is built on missiles.

 

They will not and cannot surrender their missile program without essentially emasculating their military defense capabilities. By the same token, in many ways you could argue that Israeli and Iranian defense strategy have one thing in common: they both don’t want to fight their battles on their own territory. They want to fight their battles across borders. Israel does that with airstrikes against targets, most recently as we’ve seen against Iranian targets in Syria. Iran does that by supporting either a regime like that of Syrian President Bashar al Assad, or proxy groups like Hezbollah, or supports the Houthi rebels in Yemen, with which it has a more opportunistic relationship. For the Iranians to discuss their role in the Middle East they would have to be a, you would have to have a willingness to discuss the role of all parties, all of whom support all kinds of groups across the region.

 

SHARMINI PERIES: James, the second point we discussed in segment one is the issue of sanctions, that withdrawing from this agreement means reimposing the sanctions that was in place for quite a while against Iran. But what does this mean, and what does the secondary set of sanctions mean? Because Trump said in addition to lifting the financial sanctions against Iran they will also have companies and countries that help Iran develop a nuclear technology, or technology or nuclear weapons program will also be sanctioned. So what does this mean?

 

JAMES DORSEY: Designed to force Iran to the negotiating table. But not only force it to come to the table, because it already is at the table, but to impose a situation in which it doesn’t have all that much leverage to negotiate. The theory being the sanctions are so crippling that it has no choice but to cut a deal. That really hasn’t worked up, up until now. Think of sanctions against Cuba. That took half a century, and ultimately sanctions did not force Cuba to the negotiating table.

 

Now, the way the sanctions work is that they target key sectors of the Iranian economy, and key mechanisms on which the Iranian economy works. So in practice those are two things. One is Iran’s access to the international financial system, and the other is its oil exports. Iran doesn’t export oil to the United States, of course. So to make that work, the United States is implementing what are called secondary sanctions. Secondary sanctions meaning that they will sanction any non-American company that does business with Iran. And that’s particularly sensitive to major European companies that may be doing business with Iran but have substantial business in the United States. So with other words, their business in the United States will be affected if they are being sanctioned for doing business with Iran.

 

And the key to all of this, and that’s the key to the future of the nuclear agreement, whether or not the Europeans are willing to stand up and say, we do not accept those sanctions. We are committed to this agreement, and to ensure that this agreement remains viable we will sanction American companies in retaliation for any sanctions imposed on European companies.

 

SHARMINI PERIES: All right, James. The third point I want to take up is the fact that this agreement has been signed onto by more than the U.S. When we talk about P5 plus 1 it is all the five members, permanent members of the U.N. Security Council, as well as Germany, and the EU, which includes China and Russia. So how is all this going to play out on the geopolitical stage now?

 

JAMES DORSEY: Well, I think that essentially the Russians already have U.S. sanctions imposed on them, and their relationship with the United States is not particularly good. So the Russians and the Chinese are most likely going to ignore the sanctions, and are going to continue to do business with Iran. The really decisive factor here are the Europeans, because the Europeans have, obviously, in principle good relations with the United States. And they have major economic and commercial exposure to the United States. So when the Europeans say, we are committed to this agreement, we disagree with the U.S. withdrawal from the agreement, and we are going to do what it takes to ensure that this agreement remains in place, the question is are they really willing to put their money where their mouth is, and indeed create the legal infrastructure that shields European companies doing business with Iran from American sanctions.

 

SHARMINI PERIES: All right, James, a couple of key things here in terms of the other parties involved in this agreement. Now, Rouhani, as you know, said that they will honor the agreement in spite of the withdrawal from the United States. What does this do to U.S.-European relations? Because we know for sure that Macron tried to convince Donald Trump not to withdraw from the agreement. Merkel came to Washington the day following Macron’s visit trying to convince President Trump otherwise. Yet he’s gone ahead with this. What does this do to relations with the European allies, UK, Germany, and France?

 

JAMES DORSEY: I think on the broadest level this goes beyond Europe. It raises questions about the reliability of the United States. So with other words, the United States signs an agreement, and then when you have a change of government in the United States, or a change of heart, unilaterally decides to walk away from it. So the question is U.S. credibility, and can you rely on making an agreement with the, with the United States? Now, that’s an argument that works both ways. With other words, absolutely, what is the value of American commitment? On the other hand, it may be the tool that convinces the North Koreans that the Americans are willing to go to whatever extreme to get what they want, and therefore maybe we should be doing business with them.

 

It certainly strains relations with the Europeans. And the real question now is that if the Europeans were to take serious action to protect their companies from potential U.S. sanctions, they would be doing that against the background and the backdrop of an administration that has come to office that has expressed doubt about the value of European relationships, including the value of NATO, from the very first day. So with other words, if this would be the first real confrontation, as opposed to the Europeans as they have done with all the visits to Washington and all kinds of other discussions in terms of trying to convince the Trump administration to stick by the way we are doing this. If the Europeans stand up for their companies, this would be the real first rift and confrontation. And the question is, what does that do to your transatlantic relations in an environment in which the United States already has expressed doubts about those relations.

 

SHARMINI PERIES: All right, James, Bradley Burston, who is the Haaretz English language editor, issued a very funny statement. He said that, that this withdrawal from the agreement will mean regime change, dot dot dot. And then he said regime change in the United States and in Israel. What do you make of that?

 

JAMES DORSEY: Well, let’s put it this way. Obviously you have in the United States, as well as in Israel, administrations that are, that seek to impose their will, no matter what, other parties. And that policy is unlikely to change at this point. And one of the issues I think they will pursue is not so much regime change in their own countries as much more regime change in Iran.

 

The likelihood at this point that you’re going to see a change in government, either in the United States or in Jerusalem, I think is relatively low. For one, the United States does not have an election for another two and a half years, another presidential election. And the only thing that tentatively could change that, of course, is if the various investigations regarding President Trump were to come to any real result, with other words, the impeachment of the president.

 

The same is in some ways true for Israel. Prime Minister Benjamin Netanyahu is under investigation for various corruption charges, and those investigations could result in charges against him. But we’re talking about lengthy legal processes that have to play out. We’re not talking about any political change in terms of an election, or a fall of the government for whatever reason, in the very near future.

 

SHARMINI PERIES: James Dorsey, I thank you so much for joining us and staying up late for us all the way from Singapore. Thank you so much.

 

JAMES DORSEY: My pleasure to be with you. Thank you for having me.

 

SHARMINI PERIES: And thank you for joining us here on the Real News Network.