Europe struggles to keep nuclear deal alive amid Iranian threats

As another deadline in the life of the Iran nuclear deal approaches, the United States seems content to sit back and declare victory, the Iranians are increasingly being backed into a corner — and it seems up to the Europeans to try to save the agreement from falling apart.

Iranian President Hassan Rouhani said his nation would on Sunday exceed the uranium enrichment limit established under the 2015 agreement.

This is Tehran's response to the U.S.'s withdrawal from the deal. Known as the Joint Comprehensive Plan of Action, it is former U.S. president Barack Obama's signature foreign policy achievement that puts limits on Iran's nuclear program — to stop the country from producing a nuclear bomb — in exchange for relief from crippling economic sanctions. 

Describing it as a "disaster" and the "worst deal ever," President Donald Trump pulled the U.S. out of the agreement negotiated with world powers, including Russia and China, in May 2018.

There is a clear sense the three European signatories to the agreement, France, Germany and the United Kingdom (known as the E3), are working behind the scenes to salvage it, but their efforts may not pay off.

A policy of maximum pressure

The main issue for Iran is oil — specifically, how much it needs to sell in order to keep its economy afloat. Some experts estimate Iran is exporting as little as 200,000 barrels per day, not the 600,000 barrels needed to see economic gains.

While the U.S. has imposed sanctions on Iran, it remains legal for companies or countries to buy or transport Iranian oil and petrochemical products. But the Trump administration, with its policy of "maximum pressure," is trying to stop international companies from buying Iran's oil, using the threat of freezing corporate assets or barring them from dealing with U.S. banks.

"I think from an American perspective there is the perception that the maximum pressure campaign is winning," said Aniseh Bassiri Tabrizi, a Middle East analyst at the Royal United Services Institute for Defence and Security Studies in London. "But I think the perception is that it's winning in breaking the Iranian economy. It's not really succeeding in anything else."

Europe tries for some relief

So, enter the Europeans, who are trying to give a boost to the Iranian economy using a financial mechanism known as the Instrument in Support of Trade Exchanges, or INSTEX. It allows nations to trade with Iran through a barter system that avoids using the American dollar, which thereby avoids the U.S. financial system — and sanctions.

For now, the INSTEX system will have a humanitarian focus, allowing for the trade of food and medicine, which are not subject to U.S. sanctions.

But the European efforts to circumvent the punitive measures put in place by Washington will likely not bring the kind of economic relief Iran needs, according to regional analysts and Iranian officials. 

"This mechanism without money is like a very beautiful car which has run out of fuel," said Majid Takht-Ravanchi, Iran's ambassador to the United Nations.

That leaves Iran making the case that it has been in compliance with the Iran nuclear deal without reaping any of the expected rewards, mainly sanctions relief. And that is what's behind Iran's announcement earlier this year that it would begin to curb its compliance with the agreement.

On Monday, the International Atomic Energy Agency confirmed Iran had crossed the limit set in 2015 by enriching more than 300 kilograms of uranium.

President Rouhani has vowed that as of Sunday Iran will increase enrichment as much as it wants.

That brought a familiar and aggressive response from Trump, who tweeted: "Be careful with the threats, Iran. They can come back to bite you like nobody has been bitten before!"

But the Europeans are prepared to give Iran the benefit of the doubt — for now. 

"They're partly frustrated, and partly it's theatrics," a senior British government official said this week of Iran's threats about defying the nuclear deal.

'High-risk brinkmanship'

In Paris, London and Berlin, there is genuine concern at what the official called Iran's "high-risk brinkmanship" in recent weeks: the downing of an American drone last month and allegations it attacked several tankers in the region.

Still, the British official said he sees "no signs of the Iranians wanting to pivot back to a full-scale [nuclear] program."

The efforts of the E3 to keep the Iran deal alive have put the U.K. in an awkward position. On one hand, Britain is one of the countries most aggressively working to preserve the agreement with Iran. But, historically, the two nations have often clashed over Iran's foreign policy. 

Currently, London and Tehran are at odds over the fate of Nazanin Zaghari-Ratcliffe, a British-Iranian woman jailed in Iran on accusations of spying.

An Iranian official on Friday threatened to seize a British oil tanker in response to the seizure of an Iranian ship in Gibraltar earlier in the week. The ship was alleged to have broken sanctions related to Syria.

In the months following the U.S. announcement that it was abandoning the nuclear deal, Tehran was optimistic the E3 could keep the agreement alive. Now, the hope has faded.

"There were expectations in Tehran that Europe would be able to do more," said Bassiri Tabrizi, the London-based Iran analyst, in an interview with CBC News. 

"I think there is also a lot of disappointment about the concrete ability of the E3 to stand up to the U.S."