Exit from Iran Deal Trump Strikes a Deep Blow to Trans-Atlantic Ties

French President Emmanuel Macron and German Chancellor Angela Merkel in Aachen on Thursday.
Thilo Schmuelgen / REUTERS

French President Emmanuel Macron and German Chancellor Angela Merkel in Aachen on Thursday.

Part 2: The Risk to Middle East Peace and Europe's Economy


And when it comes to Iran, Bolton's belligerence is joined by his dubious support of the People's Mujahedin. The radical group was formed in the 1960s in opposition to the Shah and was considered by the EU as a terrorist organization for a time. Some of those who have left the group say it works a lot like a sect. Today, the People's Mujahedin is basically lobbying for war against Iran, spending significant amounts of money in Washington and Europe in support of regime change in Tehran. Bolton has made appearances at several events held by the group. Last year, he proclaimed at a group gathering that "we here will celebrate in Tehran" before 2019.

Bolton and Trump share a predilection for destruction. And Trump is happiest when he is destroying policies constructed by his predecessor.

The Deal and Its Effect

In 2015, when Barack Obama presented to the world the deal that he and Secretary of State John Kerry had put together, he made clear what their primary goal was: His administration wanted to prevent a war with Iran. Obama also saw the deal as an opportunity for the country to transform itself. "The path of violence and rigid ideology, a foreign policy based on threats to attack your neighbors or eradicate Israel, that's a dead end," he said. The deal opens the path to tolerance, the peaceful resolution of conflict and greater integration into the global economy, he continued.

That was the second, more idealistic part of the deal: the idea that Iran wouldn't just be prevented from building the bomb by way of economic incentives but that the country could experience a fundamental transformation as a result of rapprochement.

And such a transformation did seem possible for a time. Just two months after Obama's speech, the U.S. president shook hands with Iranian Foreign Minister Javad Zarif on the sidelines of the United Nations General Assembly, the first such gesture between a U.S. president and a senior Iranian official since the 1979 revolution. Hardliners in Iran were extremely critical of Zarif for having shaken hands with the "great Satan."

Many Republicans in the U.S. were also put off by the brief meeting between Obama and Zarif, not least those who are now celebrating Trump's planned meeting with North Korean dictator Kim Jong Un and demanding that Trump be given the Nobel Peace Prize. Many of the critics -- like Bolton -- would rather have turned to military means to stop Iran. Others wanted to at least maintain intense military pressure.

Obama didn't have the deal ratified by the U.S. Senate because he lacked the necessary two-thirds majority. And Republicans warned Iran at the time that an unratified deal was merely an agreement between governments and that the next president could easily render it null and void.

There is also an ongoing conflict in Iran between moderates and hardliners, one which has flared up again following Trump's announcement on Tuesday. President Rouhani announced that Foreign Minister Zarif would be talking with the Europeans, Russia and China. Should Iran reach the conclusion that it can reach its goals with these partners absent the United States, Tehran will continue to adhere to it, he said. Supreme Leader Ali Khamenei, however, took to Twitter with the message: "I don't trust these three EU countries either." Absent guarantees, he went on, the deal cannot continue.

Iran's Grip on the Region

The crucial question is whether the West's hopes for the deal have been fulfilled. And there is a two-part answer. First: Its main goal has been met. Iran has demonstrably put an end to its military nuclear program even if, in accordance with the deal, it would be able to restart elements of its civilian nuclear program in 2025, and even the entire program in 2040, in conjunction with inspections. These "sunset provisions" were one of the main points of criticism of the deal, but they have thus far worked as planned.

What has not happened, however, is that in opposition to the hopes of many, Iran hasn't toned down its aggressive behavior in the region. On the contrary.

In the approximately three years since the agreement was signed on July 14, 2015 in Vienna, Iran has considerably strengthened its grip on the region. Israel and Saudi Arabia had previously issued warnings about what they saw as aggressive moves by Iran. Since then, the Iranian Revolutionary Guard, which acts independently of the government and reports directly to Ayatollah Khamenei, has significantly expanded its capabilities. It is now in a position to directly threaten Israel and Saudi Arabia at their borders.

The Saudis are concerned about the Revolutionary Guard's profile in Yemen, where the Iranians are supporting the Houthi militias in the country. Those militias recently gained the capability -- likely with Iranian help -- of firing missiles at the Saudi capital and have been doing so ever since.

As for Israel, the Iranians have expanded their capabilities on several fronts. They have been supporting Hezbollah in Lebanon and Hamas in the Gaza Strip for a long time, and now Syria has been added to the list. They are close to achieving their goal of dominating a "Shiite crescent" in the region, stretching from Iraq and Syria to Lebanon.

When the Iran deal was signed, Iran's ally in Syria, President Bashar Assad, was close to defeat. Since then, his troops have been able to turn the tide with help from Russia, Lebanon's Hezbollah, the Iranian Revolutionary Guard and militias supported by Iran. Assad now appears to be close to victory.

There is a kind of mutually beneficial pact between Damascus and Tehran: The Syrians need Iran's money and fighters; the Iranians want Syria's geographical location. From there, they are in a position to send Shiite militias made up of Afghans, Pakistanis and Iraqis to the Israeli border, send armed drones towards Israel, as it apparently did in February, or fire off rockets.

Iran has stopped its nuclear program. But it has continued to develop those capabilities that are not prohibited by the deal. It has become more intensively involved in regional wars. And it is continuing to pursue its missile program: Today, Iran's missiles are thought to be capable of reaching as far as Central Europe. The missile program was left out of the agreement, but Iran's military might and willingness to expand remains cause for concern.

"Iran's missile program is part of an arms race in the Middle East that the United States helped start" once the nuclear deal was signed, says Vali Nasr, an Iran expert with the Brookings Institution. "The issue that everybody forgets is that, when the nuclear deal was signed, the United States sold over $100 billion worth of new weapons to Saudi Arabia, United Arab Emirates, Bahrain, another $40 billion to Israel. The Iranians gave up their most important strategic asset, and instead, the U.S. actually strengthened the conventional military capability of its neighbors."

Iranian Disappointment

Mehdi Khajehpour's office is located on the fifth floor of a building on Tehran's Sa'adat Abad Boulevard. It is elegantly furnished, with classical glass and leather furniture. His company, Petro Sanat Sapra, sells equipment and tools for oil production. Since last night, he and his friends have been discussing what Trump's refusal to extend the suspension of the sanctions for another four months means in concrete terms. "This guy doesn't understand at all what this deal represents," he says.

The 34-year-old is wearing a sand-colored cotton suit, white shirt and speaks perfect English and even has a bit of German from time spent at the University of Würzburg a couple of years ago.

Khajehpour is part of the new generation of Iranian entrepreneurs. He regularly travels to Europe and he and his wife have managed to become reasonably prosperous. Their apartment is decorated in a European style, their eight-year-old daughter attends ballet classes and painting courses in the afternoons. And in the evenings, the Khajehpours like to invite friends over, young couples like them, who have had some hope about their future in the last three years.

Like many members of this younger generation, Khajehpour keeps out of politics. He cannot identify with the hardliners, but he also complains about the bad management of the current government. He and his wife have great hopes for President Hassan Rouhani's course aimed at opening up the country to the world and in addition to economic improvements, he has noticed that political discourse in the country has become more liberal.

People like him, Obama had presumably imagined, were to be the future of Iran. Now the disappointment is great.

"Trump is strengthening the radicals by once again creating difficult conditions for moderates," says Khjajehpour. He is pinning his hopes on the Europeans. "If they go, life will become very difficult."

The grim economic situation stems from corruption, populist policies and the sanctions -- and despite the deal, things haven't improved. At the end of last year, it prompted country-wide protests, and there was anger about the bankruptcy of several financial institutions that were tied to the elites, the Revolutionary Guard and religious forces. Some people lost their entire savings. The Iranian rial kept dropping to new record lows.

The country's precarious economic situation is one reason Trump believes he can force it to its knees. But Trump's strategy is risky. He wants to do in Iran what he has done in North Korea: Apply maximum pressure to force his opponents to give in. Former U.S. diplomat Zalmay Khalilzad explains how this is meant to work. Khalilzad is a neo-conservative who pushed for the invasion of both Afghanistan and Iraq. Both missions were failures.

Battling for Supremacy

Khalilzad says Iran should be hit at its "Achilles' heel": its economy. He says Trump should use tough sanctions to try to get Iran to relent. He says that would turn religious leaders against the current government and infuriate those who have thus far supported Rouhani. Ultimately, it could mean the collapse of the current government and pave the way for negotiations with the real rulers, the Revolutionary Guard.

Ultimately, Khalilzad says, the goal should be that of finding a far-reaching solution that includes all aspects of the Iran issue, including the ranges of the country's missiles as well as negotiations with the three biggest players in the region -- Saudi Arabia, Iran and Turkey -- all of whom are battling for supremacy in what Khalilzad says is the "most unregulated region of the world." Agreements and rules must be established, Khalilzad says, though even he doesn't believe such a thing could happen quickly.

This is similar to what Trump and Bolton are picturing, and they want to force the Europeans to participate. This broader solution, however, is wishful thinking, because at the moment the U.S. are almost alone in their plan. Only Israel and Saudi Arabia support it, while the other signatories of the agreement -- China, Russia, the EU -- won't participate.

The Europeans believe that this kind of power play will result in the opposite of what Trump claims to want: The hardliners in Iran will once again gain the upper hand, the country will once again begin to enrich Uranium -- and ultimately, a war to stop Iran's nuclear program will become unavoidable. Several Europeans are now hoping that Russia, of all countries, will keep the hardliners in Tehran from escalating the situation, because the Syrian regime is strongly dependent on the Russians. The visit of Israeli Prime Minister Benjamin Netanyahu to Moscow on Wednesday will likely also put pressure on Vladimir Putin to exert influence on the Iranians.

On the medium-term, the danger is a large war in the Middle East, but the short-term one is an escalation between Israel and Iran in Syria.

What makes the termination of the agreement with Iran so dangerous right now is the country's other military initiative: that of developing a shadow army of Shiite militias that the Revolutionary Guard has been recruiting from Iraq, Afghanistan and Pakistan for the last several years and has deployed in Syria and elsewhere. The push began with Hezbollah in Lebanon in the early 1980s to create a completely loyal, forceful bridgehead, has since grown into a monstrous apparatus with over 100,000 fighters.

It is a weapon that, in many ways, embodies the exact opposite of the nuclear program: It is not meant merely as a deterrent, but as a conquering force. It is often barely visible, and not controllable from the outside. In Syria, for example, the militias often fight with constantly varying compositions.

Israel's security apparatus, which was divided about the Iranian nuclear deal, is united in their alarm at the situation in southern Syria. Trump's brusque exit from the nuclear agreement might be seen in Israel as carte blanche for more aggressive attacks against the Iranians and their conglomerate of troops.

The Consequences for the Economy

From the start, the Germans, French and British had little hope they would be able to convince Trump to stick to the deal. This makes it even more surprising how poorly prepared they now are for the U.S.'s exit.

Most immediately, Trump's decision will affect European companies that invested in Iran at the end of the sanctions. The day after Trump's announcement, EU diplomats first tried to obtain some clarity about who might be affected by the sanctions. For this, they mostly had to depend on information U.S. officials are giving in briefings to American journalists in Washington.

What seems to be clear is that European companies now have between 90 and 180 days to wind down their activities in Iran. "We are giving companies an opportunity to get out," says Trump's Security Advisor Bolton. How generous. New deals, however, will not be allowed. Otherwise, European companies and banks will face penalties in the U.S. It seems to be the Americans' clear goal to bring Iran to its knees economically, and the collateral damage to Europe is seemingly irrelevant. This would mean that the already disappointingly small economic benefit Iran is enjoying from the deal would shrink further.

By re-imposing sanctions, Trump is hitting the Europeans and Iran where it hurts. Since the deal was signed, EU imports from Iran have increased by a factor of nearly nine, and exports to Iran have risen by almost 70 percent, starting from a relatively low level -- but with trade trends going in the right direction.

The EU can't do much about this. On Monday, the foreign ministers of the UK, France and Germany plan to meet with their Iranian counterpart, but it is largely symbolic. A group visit to Iran, which is also under discussion in diplomatic circles, would likewise have little direct impact.

European Budget Commissioner Günther Oettinger can imagine offering assistance to European companies that are affected by U.S. sanctions. "If we stick to the Iran deal, and we should, then we should try to protect to the degree possible European companies who do business with Iran and who might be affected by U.S. sanctions," Oettinger told DER SPIEGEL. France has said similar things. But how?

Next week, EU heads of state and government plan on discussing the issue the evening before their Western Balkans Summit in Sofia. Unfortunately, it remains unclear how the affected businesses can be helped.

At the German Ministry of Economics, officials are seeking to play down the situation. "Only a small portion of German companies who have invested in Iran also do business in the U.S.," says one spokesperson. The transitional periods also mean that endangered companies with Iran connections could also pull back. The French government has also pointed to this fact.

Some in the European Commission are looking into whether the EU Globalization Adjustment could be used, but there isn't enough money available for it. There has also been discussion as to whether European companies could be threatened with penalties via so-called "blocking statutes" for obeying U.S. sanctions against Iran. The measures were initially established in 1996 to counter U.S. sanctions against Iran, Libya and Cuba.

But the German government believes such a solution is far-fetched. The U.S. would see any measure by the EU to protect its investments as aggressive. In a phone conversation with German Finance Minister Olaf Scholz, U.S. Treasury Secretary Steven Mnuchin made it clear that all companies staying in Iran would be penalized.

That leaves small and mid-size companies who don't do business with the U.S., but that will hardly suffice for Iran. Though the country can at least keep selling oil to Russia, China and India.

Europe, What Now?

Ultimately, the question becomes whether Europe can see this crisis as a wake-up call, as the start of a new common foreign policy, and whether they will continue to endure Trump's humiliations or position itself as a diplomatic counterforce.

Wolfgang Ischinger, the German diplomat, says the crisis of confidence with the U.S. could be turned into a positive. "It is another dramatic wake-up call for the European Union to finally get a grip on itself. For the European project, I cannot imagine a better motivation than this shock from Trump." Ischinger is critical of how Europe has behaved in the past months: "We should have been better prepared."

On Thursday afternoon in Aachen, Emmanuel Macron did ultimately comment on Iran, though not in the Aachen Coronation Hall, but at RWTH, the city's university. He was there to speak with students and answer their questions. Macron said it is never good for international superpowers not to abide by the laws they created themselves. "Every escalation must be avoided. We are staying in the nuclear deal and ask of Iran that it also remain in the deal."

Macron's strategy seems complex: he wants to convince the Iranians not to exit the agreement while seeking rapprochement with the Americans who want to talk about a broader deal. "From the perspective of the U.S., we must first of all get rid of the things they believe their previous government did wrong. That is their perspective, that's just how it is," he said.

It sounded as if Europe was still stuck in the starting blocks.

By Matthias Gebauer, Julia Amalia Heyer, Susanne Koelbl, Peter Müller, Christoph Reuter, Mathieu von Rohr, Raniah Salloum, Christoph Scheuermann, Jörg Schindler, Christoph Schult and Gerald Traufetter

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gerhard38 05/11/2018
1. Maybe the World finally realizes and believes
that treaties with "Trumpistan" are not worth the paper they are printed on. Trump, his helpers like that Jerk John Bolton and others as well as his stupid followers may right now enjoy their stupid move to withdraw from the Iran deal but actions like that will come back and bite them in the butt. Where will then be allies and friends? Anyway, Trump who considers himself to be the smartest worldwide has only proven again to the world how dumb he is.
jim_horgan 05/11/2018
2.
I have read part of this article but must comment prior to finishing. The author refers to the JCoPA as a treaty and refers to the UN with such inference. The leaders and people of the EU surely were aware at the time of signing that the deal did not have a majority of approval in the US and proof is Pres Obama never presented it to the US Senate for ratification as a treaty (as per the US Constitution). The same is true for the Paris Climate Accord. Everyone in the EU should realize the US is very independent minded and relying on signature of a few leaders (Obama and Kerry) is not a good policy. It is a very precarious situation the EU leaders are negligent to recognize. I will finish reading now (but Americans detest the big finger given by Der Spiegel on its cover).
jim_horgan 05/11/2018
3.
I have read part of this article but must comment prior to finishing. The author refers to the JCoPA as a treaty and refers to the UN with such inference. The leaders and people of the EU surely were aware at the time of signing that the deal did not have a majority of approval in the US and proof is Pres Obama never presented it to the US Senate for ratification as a treaty (as per the US Constitution). The same is true for the Paris Climate Accord. Everyone in the EU should realize the US is very independent minded and relying on signature of a few leaders (Obama and Kerry) is not a good policy. It is a very precarious situation the EU leaders are negligent not to recognize. I will finish reading now (but Americans detest the big finger given by Der Spiegel on its cover).
caltexboy 05/12/2018
4. Iran deal
Interesting that Iran never signed the agreement. This was an Obama executive order in the USA. The reason it was not a treaty was that it never would have passed Congress. Iran is a bad actor. It is spreading death and destruction from Northern Syria to Yemen. Obama shipped billions of dollars on pallets to Iran. No one in the USA has any clue how he had the authority to do this. Germany is seeding its own destruction by permitting foreigners of different faiths and social beliefs (Sharia) to infiltrate this great nation. Germany needs to pay their 2% of GNP to NATO and give the US a break. Trump is a great man (half German BTW) and is no warmonger. Let's see what happens in North Korea a month from now.
Lee King 05/12/2018
5. World
He is unorthodox true but Look what is happening in North Korea. Trump is trying to move things unlike the past presidents. He appears to be succeeding. Er ist unorthodox, aber schau, was in Nordkorea passiert. Trump versucht Dinge anders als die letzten Präsidenten zu bewegen. Er scheint erfolgreich zu sein.
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