In May 2018, the United States announced its withdrawal from the Joint Comprehensive Plan of Action, or JCPOA. The U.S. decision, while unilateral, left open the possibility that other parties would follow suit. However, the opposite occurred as the remaining signatories quickly committed to continue with implementation of the JCPOA. The decision to move forward with the JCPOA thrust the remaining six signatories into the public eye, highlighting the historical and contemporary nature of their individual relationships. As these nations work through their strategies, they must navigate an intricate array of geopolitics, economics, and domestic politics. Additionally, while the U.S. may have withdrawn from JCPOA, Washington’s presence continues to loom large over negotiations. The following essay examines how these relations have evolved in the intervening months.

JCPOA: A Complex Web of Relationships

Pundits often characterized the JCPOA as a two-sided agreement, with the P5+1 on one side and Iran on the other. However, such bundling oversimplifies the complex relationships that make up such an agreement and distorts any understanding of P4+1 JCPOA discussions.  It is critical to understand that the underlying impetus for nuclear rapprochement with Iran was different for the European powers, from the one of the U.S., China, and Russia. Though the three Western European countries’ relations (France, Germany, UK) with Iran differ in their nature and scope, the strategic impetus for nuclear rapprochement was similar: reduce reliance on Russian energy; stabilize the Middle East, thereby increasing human rights and reducing refugee movements; and improve economic trading. With Russia, there was a significant strategic divergence. The refugee crisis has not affected Russia, and human rights issues rarely factor into Moscow’s strategic goals; nor is energy diversification an issue. Rather, in Russia’s case, initial JCPOA support arose from Russia’s interest in gaining political influence throughout the region. Meanwhile, China—a geographical and cultural outsider—has long standing economic aspirations in Iran under the Belt and Road Initiative. These impetuses impact the decisions of the remaining nations as they reconstitute the JCPOA and prepare for the next round of U.S. sanctions in November.

Europe

The European powers always recognized the imperfectness of the JCPOA, but saw it as a starting point for broader negotiations on a range of issues. This explains the continued interest that Berlin, Paris, and London have in continuing with the JCPOA; however, re-defining JCPOA within a European context is easier said than done. Unlike Russia and China, Europe has a vested interest in keeping relations amicable with the U.S. Therefore, while Germany, France, and the U.K. have all signaled their willingness to continue work towards the JCPOA, they must also balance that interest against the US’s post-JCPOA actions.

The complexity of this relationship was clear throughout the summer, as various EU leaders expressed interest in maintaining JCPOA while simultaneously expressing concern over the ramifications with the U.S. In July, the head of the European Investment Bank cast doubt on whether EU businesses could invest in Iran after the reinstitution of U.S. sanctions. Such comments showed that U.S. sanction encumbered European businesses, but they also served as way to manage Iran’s expectations. Shortly after these comments, the EU updated its Blocking Statute—a statute that mitigates the impact of U.S. sanctions on EU companies doing business in Iran. Moreover, the European Commission adopted an €18 million package for Iran, the first part of a larger €50 million package, including €8 million assistance to the private sector.[1] While these steps seemingly aligned the European powers economic policies with their larger political strategy, geo-economics undercut the initiative.

Despite the EUs efforts to circumvent U.S. sanctions on Iran, over 100 European businesses have pulled out of deals in Iran. In August, Deutsche Bahn announced it was phasing out two infrastructure projects in Iran and French oil giant Total announced it stopped all plans on a major gas project. Alongside these announcements, British Airways, Air France, and KLM suspended all flights to Tehran. The moves taken by these corporations underscore the geo-economics that exist between the EU and U.S. EU legislation notwithstanding, European businesses remain concerned with the impact on their business, should they continue dealing with Tehran. Iran’s Supreme Leader Ayatollah Ali Khamenei echoed such sentiment when he stated, “It is fine to establish ties; however, you should stop having hopes in them [the EU] on the issues like JCPOA or economic matters.”[2] Such sentiments are a shrewd recognition that despite philosophical and political differences between the U.S. and the Europe over the JCPOA’s utility, the transatlantic alliance is sturdy. This sturdiness, combined with the pressure of U.S. sanctions and the limitations of EU economic policies on extraterrestrial matters leaves Iran with little choice but to look towards Russia and China for economic relief. Despite these setbacks, Europe will continue pressing forward with implementing JCPOA, because politically they see no alternative. A belligerent Iran only serves to undermine European security and global economic prosperity.

Russia

An energy behemoth executing a realpolitik foreign policy, Russia stands poised to fill any political or economic vacuum created by European hesitations.  After all, Moscow’s motivation for JCPOA had little to do with security and a lot to do with influence. However, Russia and Iran’s relationship is more volatile than with any other signatory. There is a long, entrenched history of distrust between Moscow and Tehran. Russia and Iran have shared borders and have experienced many periods of tension. Despite these tensions, hardliner Iranian politicians have pressed Mr Rouhani’s government to “expand co-operation with Russia and China to replace European companies unwilling to risk the wrath of Washington.”[3] Although this call by the hardliners appears to be gaining traction, the relationship is far from amicable.

While Russian cooperation appears forthcoming, Moscow’s larger strategic ambitions in the Middle East complicate matters. Of late, Moscow has been reaching out to a broad audience—an audience not always on friendly terms—to establish a stronger foothold in the Middle East. This is clear in Moscow’s pursuit of stronger ties with Saudi Arabia—a position that poises Russia to profit from decreased Iranian oil supplies. News of Russian-Saudi dialogue drew the ire of Tehran with Iran’s OPEC governor, suggesting that Russia and Saudi Arabia are pursuing hostage-taking strategies on the oil market under the pretense of balancing the market supply and demand. Further complicating matters, Russia’s economic footprint in Syria is rising, in part, because of Iran’s dwindling role; itself a byproduct of U.S. sanctions.

Contentions notwithstanding, Moscow and Tehran are pragmatic actors. Aside from reaffirming their commitment to the JCPOA, Moscow signaled their readiness to invest $50 billion (USD) in Iran’s oil and gas industry. Such deals underscore the strategic importance that Moscow places on the Middle East. But those deals also illustrate Moscow’s fixation with finding and exploiting fissures in the transatlantic alliance; something Iran no doubt welcomes. Meanwhile, Iranian officials are depicting a strengthened Russian-Iranian relationship that results from U.S. actions. Although the two country’s relationship appears to improve alongside the decrease in U.S. and European involvement, the relationship remains asymmetric due to Iran’s reliance on Russian investment. An Iran without U.S. and European influence fits into Moscow’s strategic goals, even if it risks destabilizing Iran.

China

More than any other signatory, China stands to derive long-term pay-offs from the U.S. withdrawal. In addition, China is best positioned—economically and politically—to provide Tehran a reprieve from U.S. sanctions. Since 2016 when China and Iran elevated their bilateral relationship to a comprehensive strategic partnership, Beijing has navigated between Security Council resolutions and the desire to partner with Iran. The balancing act succeeded as China accounted for a third of Iranian oil exports in 2017, while Iran was a significant importer of Chinese goods. China accomplished this without stoking significant animosity from Tehran or Washington, which underscores Beijing’s increasing political acumen.

Beijing appreciates playing the roles of spoiler to the U.S. and savior to Iran as both roles increase Beijing’s clout in the Middle East. China desires a peaceful Middle East if only for the economic stability that peace brings. China stands to derive significant economic benefits from renewed ties with Iran as Beijing’s Belt and Road Initiative continues to expand throughout the region. And much like Russia, Chinese businesses receive economic backing from the government and are more likely to continue doing business in Iran despite the pressure of U.S. sanctions. Chinese leadership has continually supported the JCPOA and vocally denounced the U.S. decision to withdrawal. At the 73rd UN General Assembly, China’s Foreign Minister decried U.S. imposition of sanctions and reiterated that the JCPOA, while imperfect, was a milestone of multilateralism.

Notwithstanding Chinese leaderships avowed desires to support the JCPOA and Iran, geo-economic interests are a complex matter. In September, China’s Sinopec Corp halved their loadings of crude oil from Iran after intense pressure from the U.S. Despite this capitulation, it is unclear exactly how China plans to deal with the U.S. when it comes to the oil sanctions. Regardless of the decision, the impact will significantly impact Iran. While these mixed messages echo the JCPOA negotiations in Europe where economics and politics wrangle for preeminence, there is one clear distinction: China’s interest in the Middle East comes with significant strings attached. It concerns many that a recalibrated Sino-Iranian relationship is not mutually beneficial. According to RAND analyst Arianna Tabatabai there is concern, in seeing “the return of a quasi-monopoly of key sectors of the Iranian economy by the Chinese.”[4] China’s economic footprint in other struggling countries shows that it warrants concern. Unlike Russia and the European powers, China maintains the ability to execute such a strategy. Therefore, while China provides the best opportunity for Iran to survive U.S. sanctions, it comes with a price that Iran may not be willing to pay.

JCPOA: Looking forward

As geopolitics, economics, and, domestic politics continue to intersect and evolve, so will the relationships between Iran, China, Russia, Germany, France, and Britain.  With additional U.S. sanctions expected to take effect on 5 November, the pressure on these relationships will only increase. If a reconstituted JCPOA is to succeed, all parties will have to cooperate in order to balance the economics against the politics. Much like the original agreement, the decisions made in the coming months will reverberate outside the Middle East and define Iranian geopolitics for decades to come.

David M. Andre

MA in Security Studies
Naval Postgraduate School, California


Notes

 

[1] European Commission adopts support package for Iran, with a focus on the private sector. European Commission. (2018, August, 23). Retrieved from http://europa.eu/rapid/press-release_IP-18-5103_en.htm?locale=en

[2] Iran Should Stop Cherishing Hopes in Talks With Europe on JCPOA – Supreme Leader. Sputnik News. (2018, August 29). Retrieved from https://sputniknews.com/world/201808291067569121-iran-jcpoa-talks/

[3] Russia ready to invest $50bn in Iran’s energy industry. Financial Times. (2018, Jul 20). Retrieved from https://www.ft.com/content/db4c44c8-869b-11e8-96dd-fa565ec55929

[4] Iran Pivots toward China as U.S. Sanctions Bite. Associated Press. (2018, September 12). Retrieved from https://www.haaretz.com/israel-news/security-aviation/iran-pivots-toward-china-as-u-s-sanctions-bite-1.6466781