Economic Justification for Iran and Europe to Preserve the JCPOA

Despite the United States' withdrawal from the JCPOA and one of the most stinging threats in the words of Donald Trump, the President of the United States, regarding 'sanctions on companies that assist Iran,' the Islamic Republic and Europe cautiously emphasize their current commitment to preserving the JCPOA. The value of contracts with European aircraft manufacturers 'IRT' and 'Airbus,' along with contracts from oil, petrochemical, automotive, and electrical sectors, amounts to tens of billions of dollars. Alongside this, the current bilateral trade and investment between Iran and Europe is also significant. According to official statistics from the European Union, the value of European goods exported to Iran last year was nearly $13 billion, of which 94% were industrial goods. These goods are typically products that Asian companies cannot match in quality and are very important for Iran. Meanwhile, the value of imports from Iran to Europe was over $12.1 billion, with about 83% being crude oil and gas condensates. In 2017, Iran exported about 200 million barrels of oil to Europe. Each refinery is designed based on the type of oil it receives, and if the type of oil changes, the design and structures of the refineries must also change. Although OPEC and some other countries led by Saudi Arabia have committed to reducing their daily oil production by 1.8 million barrels since the beginning of 2017 and continue to do so, the oil produced by most of them is different from the type of oil produced by Iran. Redesigning and changing refineries usually costs millions of dollars, and increasing Iran's oil exports to Asia is also very difficult. Meanwhile, although the share of trade with Iran in the total foreign trade of the European Union is about six-tenths of a percent, Europe has faced very low economic growth and recession for several years. Europe experienced negative economic growth in 2010 and 2012, and currently, its economic growth rate fluctuates around 2 percent. Trade with Iran could at least give a boost to some major industrial companies in Europe. About 37% of Europe's exports to Iran are industrial products related to machinery, automobiles, household appliances, and similar items. The volume of European exports to Iran halved during the sanctions and barely reached the pre-sanction export levels last year. Another important point is that before the sanctions, the trade balance between Iran and Europe was heavily in favor of Iran, but since 2012, the trade balance has been in favor of Europe and this situation continues. The volume of European exports to Iran grew by about 84% in 2017, and imports also showed a growth of over 31%. Europe hoped that this situation would continue in the coming years with the help of the JCPOA. On the other hand, although last year's statistics on foreign investments by EU member states have not been published, European companies made over $5 billion in direct investments in Iran in 2016, and Iran also invested nearly half of this amount in Europe. Besides these issues, the topic of service exports is also raised. In 2016, Europe exported about $1.5 billion in services to Iran, and with the implementation of some contracts last year, it is expected that the volume of service exports will be significantly higher than in 2016.