Following President Trump’s decision to withdraw the United States from the JCPOA, the response of Iran, Europe, Russia and China over the next several weeks will be closely watched. The U.S. and Europe are likely to continue discussions regarding joint action on Iran and the imposition of secondary sanctions on European companies. Whether China, Russia and, one day, Iran can be brought back to the negotiating table will depend on statements, actions and likely exogenous events over the wind down period.
The U.S. decision to withdraw from the JCPOA was immediately denounced by Iran. At the same time, the leaders of the UK, France, and Germany indicated their disappointment with Washington’s decision as well as their determination to continue abiding by the multilateral agreement. The question now is what comes next on two fronts. The first is what Iran chooses to do beyond statements. The second is what the U.S. does in terms of imposing secondary sanctions on its allies, Russia, and China as the wind-down periods come to an end. These two sets of decisions will determine whether the agreement will continue to limp along or even be renegotiated, or whether the lack of U.S. participation will indeed bring it to a complete end with a concomitant increase in instability in the greater Middle East.
Despite Iran’s strong statements, the government in Tehran is likely in a “wait and see” mode. Iranian hardliners who never liked the agreement will attempt to use Washington’s move as ammunition in internal battles and may argue for Iran formally ceasing participation as well. This could mean restarting certain nuclear activities that Iran has foresworn under the agreement. Such actions could lead other states to re-impose sanctions as well – bringing the region back to the tensionfilled times just before the JCPOA signing in July 2015. However, the delays and uncertainty about whether other states will re-impose sanctions may provide more moderate political forces in Tehran with an argument for staying the course for now. If China, Russia, and Europe continue to do business with Iran in the face of American threats of secondary sanctions, then the government in Tehran may choose to not openly abrogate the accord.
The second question is whether Washington will choose to re-impose secondary sanctions on states who continue economic relations with Iran. On Sunday, the Trump administration’s hardline National Security Advisor John Bolton, when asked whether Washington will sanction European companies for doing business with Tehran, demurred, saying that: “It’s possible, it depends on the conduct of other governments.” Bolton implied that the European governments would change their minds soon and join the U.S. in reworking the agreement rather than face U.S. secondary sanctions. While this is possible, it is also possible that individual European states and the EU might consider a blocking statute that would prohibit European companies from complying with U.S. sanctions and does not recognize U.S. court rulings related to them. Such a statute was threatened before in the 1990s, and if endorsed by the European Commission, it could be considered by European leaders at their summit on May 17. Such a move would be partially political, signaling a widening rift between Washington and its European allies.