BRUSSELS — A year after the United States pulled out of the Iran nuclear agreement, the pact is at severe risk of collapse and the European Union is caught in the middle, struggling to keep supply lines open to the Islamic Republic’s wilting economy under the threat of U.S. sanctions.
With few real options left, their trust in the Trump administration running low, and fears rising that conflict could break out, major powers Germany, France and Britain have been reduced to repeating calls for restraint as pressure builds and Iran threatens to walk away from the painstakingly drafted 2015 deal.
In an effort to keep Iran’s economy afloat and save an agreement they believe has stopped Iran from developing a nuclear weapon, the Europeans are turning to diplomacy to try to encourage other countries to buy more Iranian oil. They also have set up a barter-type system to evade possible U.S. sanctions.
“We have to do everything to solve the conflict situation with Iran in a peaceful manner,” German Chancellor Angela Merkel said Tuesday. “We will do everything to impress on all sides, but especially to make clear to Iran, that this serious situation mustn’t be aggravated.”
The pact, which ensures that Tehran’s nuclear program be restricted to civilian uses in exchange for economic assistance, was signed by Iran, the U.S., Russia, China, France Germany and Britain. President Donald Trump pulled Washington out of the deal in May 2018.
“We are relying on Iran continuing to abide by it,” Merkel said. “If that isn’t the case, that will of course have consequences.”
But her tougher tone does little to hide the fact that there’s not a lot that Europe can do.
Under pressure from U.S. sanctions once held in check by the deal, the value of Iran’s currency has plummeted by about 60 percent in the last year. Inflation is up 37 percent and the cost of food and medicine has soared 40 percent to 60 percent, according to EU figures.
The Europeans believe the growing economic pressure on President Hassan Rouhani may well have prompted Iran’s announcement that it will exceed the uranium stockpile limit set by deal in the next 10 days — a time frame that seems unlikely but which cannot be excluded.
To get around possible U.S. sanctions, the Europeans have come up with a complicated barter-type system to skirt direct financial transactions with Iran. The workaround is dubbed INSTEX.
