The European Union and the Rescue of the JCPOA: From Asking to Being Unable

The United States' withdrawal from the Joint Comprehensive Plan of Action (JCPOA) last May has not only brought about significant changes in Iran's political, economic, and diplomatic landscape but also weighs heavily on international relations, especially between the two sides of the Atlantic. In this context, it is the European Union that has taken on the main role in preserving the 'JCPOA minus the US,' with its three member powers (the UK, Germany, and France) that signed the nuclear agreement with the Islamic Republic of Iran making the most efforts in this regard. About six months after the White House turned its back on the 'JCPOA,' many spokespersons from various political factions in the Islamic Republic do not hide their disappointment and sometimes anger at the failure of the European Union to fulfill its promises regarding the rescue of the 'JCPOA,' and some even question the sincerity of Europeans in defending the survival of this agreement. In contrast, a large part of international economic circles have no doubt that EU institutions are genuinely trying to save the 'JCPOA,' but are deprived of the necessary capabilities to achieve this goal. The conflict between Europe and the US is not a 'game.' Given the EU's failures in defending the 'JCPOA,' some circles in the Islamic Republic say that the struggles between Europe and the US over the survival or demise of this agreement are a 'game' or perhaps a conspiracy that the two poles of the 'West' (the US and Europe) have launched against Iran. It has reached the point where even Abbas Araghchi, the political deputy of the Foreign Minister and one of the main negotiators of the 'JCPOA,' instead of firmly opposing those who raise the 'conspiracy theory,' cautiously states that 'we cannot easily dismiss this logic and must consider it alongside other possibilities.' The reality is that the 'European Union,' especially its main axis, which includes France and Germany, viewed Donald Trump's exit from the 'JCPOA' as a severe blow to the longstanding relations between the US and Europe and considered it another step towards weakening the unity of the Western camp. The European Union - or at least its main institutions and powers - interprets the 'JCPOA' and its role in a completely different way than the US, and this is one of the manifestations of the decline of the international relations system that emerged after World War II. Regarding the reasons for the Europeans' commitment to preserving the 'JCPOA,' three factors can be emphasized: a) Senior officials of major European institutions, including Donald Tusk (President of the European Council), Jean-Claude Juncker (President of the European Commission), and Federica Mogherini (who effectively serves as the EU's foreign minister), emphasize the durability of the 'JCPOA,' consider it one of the most important achievements of multilateral international diplomacy, and condemn the US's exit from this agreement. b) From the EU's perspective, preserving the 'JCPOA' not only aligns with the interests of this economic bloc but also prevents the proliferation of nuclear weapons in the world and prevents further escalation of tensions in the Middle East. From this viewpoint, the return of sanctions and severing Iran's ties with the international economic community could lead to the downfall of the Islamic Republic and create a new center of turmoil in the Middle East, jeopardizing Europe's security by creating a new wave of migrants. c) In several national parliaments and a significant portion of public opinion and influential European media, US pressure on European banks and production units to prevent their trade with Iran has faced negative reactions and is even considered a blatant violation of the national sovereignty of European countries. Nevertheless, it should not be assumed that all EU member states think alike regarding the White House's policy on Iran or the 'JCPOA.' Overall, the public image of the Islamic Republic in European public opinion is extremely negative, and defending the 'JCPOA' does not mean turning a blind eye to the nature of Tehran's theocratic regime and its negative impact on international peace and security. Europeans acknowledge that issues such as ballistic missiles or the Islamic Republic's role in the Middle East must be confronted with Iran, but there is no reason to end the life of the 'JCPOA.' In short, the main decision-making institutions and powers in the European Union consider the survival of the 'JCPOA' to be in line with their interests, and their defense of this agreement is, contrary to what supporters of the 'conspiracy theory' in Tehran claim, not a 'game.' Inability Despite being committed to the survival of the 'JCPOA,' the European Union has so far been unable to take practical steps to confront the US and save the Vienna agreement. Here, we recall once again the six main initiatives of this union in the face of the first wave (August 6) and the second wave (November 4) of the return of US sanctions: 1) Requesting permission and exemptions from the US for European companies that want to continue trade and cooperation with Iran. The US has rejected all these requests. 2) Providing the necessary grounds for the 'European Investment Bank' to finance European companies' activities in relation to Iran and fill the gap left by large private European banks that are unwilling to cooperate with Iran. Werner Hoyer, the President of the 'European Investment Bank,' opposed this, arguing that any cooperation with Iran could jeopardize this bank's relations with the US financial market. 3) Opening special accounts for Iran in the central banks of EU member countries to facilitate transactions with the Central Bank and financial institutions of Iran. The central banks of European countries have rejected this solution because they do not want to jeopardize their relations with the US and especially their dollar reserves. 4) Filing a complaint against the US in the 'Dispute Settlement Body' of the World Trade Organization, accusing the world's leading economic power of creating barriers to free trade between countries by imposing its domestic laws on others. This initiative was abandoned, as the World Trade Organization has been severely weakened, and under these circumstances, its 'Dispute Settlement Body' is not in a position to arbitrate this major disagreement between Europeans and Americans. 5) Reviving the law known as 'blocking' or 'anti-blocking,' which was enacted in 1996 mainly in relation to the sanctions on Cuba. The EU's aim in enacting this law was to protect European companies willing to trade with Cuba from US economic penalties and to compensate for their potential losses. This time, in relation to the US's exit from the 'JCPOA,' Europeans decided to use the same law as a defensive shield regarding Iran. The enactment of this law in the 1990s and thereafter yielded no results, and this time, it does not seem that reviving it will have any impact on the behavior of European companies regarding Iran. 6) Finally, the decision to create a mechanism called the Special Purpose Vehicle, which has been translated into Persian as 'سازوکار ویژه' or 'EU financial channel.' Its goal is to enable European companies to trade with the Islamic Republic without using the usual channels of international financial transactions to avoid US economic sanctions. Ambiguities of the 'Special Purpose Vehicle' Following the failure of the first five initiatives, the EU proposed the 'Special Purpose Vehicle' last September to allow Iran to bypass US sanctions and continue part of its trade primarily with the EU and then with other willing countries (possibly China, Russia, India, etc.). The 'Special Purpose Vehicle' relies on an 'accounting platform.' When Iran exports goods to a European country, the revenue from this export is recorded in favor of Iran on this platform. This asset is then used to finance the exports of another European country to Iran. In fact, the intended platform acts as a 'clearinghouse' and eliminates direct financial transactions between Iran and European companies, thus blocking US sanctions. However, in practice, the 'Special Purpose Vehicle' raises several fundamental ambiguities, and its effectiveness for Iran faces serious doubts: a) Which country will host this mechanism and especially its 'accounting platform'? Austria was the first country to receive the proposal to host this entity, as several international organizations are based in this country, and especially the 'JCPOA' was signed in Vienna. However, Viennese officials rejected this proposal, as they do not want to jeopardize their relations with the US. Belgium and Luxembourg also rejected the hosting proposal. Recently, according to some Western media, including the 'Wall Street Journal,' Germany and France have jointly taken on this mission. If the entities related to the 'Special Purpose Vehicle' are based in France, Germany will manage it, and vice versa. The goal is for these two powerful European countries to partner in this endeavor so that the US cannot sanction them. b) When will the 'Special Purpose Vehicle' become operational? Previously, it was supposed to be operational simultaneously with the beginning of the second wave of sanctions (November 4). Now, it is being discussed for early next year, and senior EU officials are evading specifying an exact date for the start of this mechanism. c) Initially, the 'Special Purpose Vehicle' was supposed to be used for trading all Iranian goods, especially oil, which is Iran's most vital export. Currently, based on some reports (including from Reuters), oil will be excluded from the goods covered by this mechanism. If this happens, the entire 'Special Purpose Vehicle' will be called into question, as Iran would have little maneuvering room in international trade by exporting carpets and pistachios. Given all these limitations, there is a possibility that this time, too, the mountain will give birth to a mouse, and the 'Special Purpose Vehicle' will only open the way for small and medium-sized European companies willing to trade with Iran, primarily for the export of food and medicine.