Why should the European Union reconnect with Iran?

The Islamic Republic of Iran has been on the European Union’s political agenda for more than a decade[1]. European businesses, however, had begun developing business relationships there before the country became a hot topic for security and political staff. Far from being monolithic, Iran is a most complex environment for anyone – including businesses – to evolve in. The agreement reached in 2015 on the Iranian nuclear program[2]  had opened doors for a progressive “normalisation” with the rest of the world. Although Iranians had probably nurtured too high hopes about the outcome of the JCPOA[3] in the first place, the latter was not given the time needed to reach its full effect before the United States withdrew unilaterally.

What however appears obvious is that European reengagement – which had been very quick at political, trade, cultural, scientific levels in the wake of the JCPOA signing – has been swift to unravel since May 2018 as once again[4], the US uses domestic legislation to achieve extraterritorial effects at the cost of the EU’s (and others’) interests.

The hamstringing of EU interests by external actors has gone unabated: the US challenging the EU GDPR[5] with the Cloud Act[6], their intention to proceed with protectionist policies targeting European goods and services, Mr. Trump obviously warming up to the Russian president as the latter’s efforts to weaken the EU go on, etc. However questionable the motives and effects are, the United States follows its own course and interests – as all political entities do –. That course of action runs contrary to the EU’s interests. German Chancellor Merkel plainly spelled the crux of the matter after the May 2018 G7 summit in Canada: Europeans must “take their destiny into their own hands”. However incongruous it may sound, Iran may be providing the EU with the opportunity to build its own resilience in a very tangible yet comprehensive way.

1. Designing an Iran policy would strengthen EU internal cohesion

By coming up with a coherent policy toward Iran, the EU will need to assess its inner contradictions. The EU institutions as well as the Member States will have to address connected topics such as European companies’ dependence on the US domestic legislation, its energy policy as it moves farther away from dependence upon Gazprom, and Europe’s economy and industrial base. Progressively solving each of these tensions using Iran as a “training ground” of sorts could help the EU mature and reach the level of independence needed to improve the resilience of its and territory and Europeans.

Dealing politically with Iran involves each of the 27 EU Member States as it clearly falls under the Common Foreign and Security Policy. The High Representative/Vice President of the Commission coordinates the common positions as Chair of the Foreign Affairs Council. As chief of the European External Action Service (EEAS), she’s got the tool to genuinely develop and coordinate a common policy toward Iran.

As the US sanctions show, EU-Iran relations can be impacted by 3rd party legislation as well as by the overwhelming influence exerted by a country on the structure of international trade[7]. International trade negotiations are the sole remit of the European Commission as is competition regulation. The Commission also plays a significant role in research and development, innovation, regional development thanks to the programs it funds although it shares that set of competence with the Member States[8]. Those impacted by sanctions, however, are not the Commission or any institutions or States: companies are. These companies have legitimate interests in pursuing trade and business with their Iranian counterparts notwithstanding US interests.

I have written on small and medium size European businesses that have developed business relations with Iran by remaining away from any US levers of influence. This is likely the way to go in the short term pending more refined solutions allowing major European companies to resume doing business with Iran without suffering from US retaliation.

2. Accessing Iran, diversifying strategic options, developing resilience

Iranian and Russian relations are complex and dynamic. Each follows its own path and interests and co-operation can happen when these meet. They do not systematically coincide, though, and Iranians remain wary of any “great power” game, a historical legacy at time when Iran was being assailed by European powers including Russia. Iranians expect tangible acts from partners, whether eastern of western. Iran probably realizes that promises such as the one reportedly made by Russia during the Supreme Leader’s foreign affairs advisor during his trip to Moscow are not tenable.

European Union and Russian interests do not coincide. The EU maintains a train of restrictive measures against specific Russian assets and individuals. Although some Europeans seem to display a more lenient view on Russian influence and activities, these measures have consistently been renewed every six months by the Council of the EU. As unanimity in the Council is needed for these renewals, even the member States who feel better disposed toward Russian influence consider the latter to be ambiguous enough to maintain the sanctions regime. The Union’s territory and European citizens are under continuous disinformation campaign by Russia.

Developing sustained trade and technical co-operation with Iran is one way to bring all Europeans together however diverging their views may be on other subjects. Elaborating a consistent policy for political, trade, technical, cultural relations is a starting point for the design of a common, multi-layered policy[9] that would align words and diplomacy with practical considerations and interests. Not only would such a policy open the doors to Iranian markets, it would also further strengthen the EU’s resilience by diversifying its strategic options. By reconnecting with Iran, the EU may elevate itself both inward and outward.

 

[1] The EU began its formal involvement in the curbing of the Iranian nuclear program in 2004.

[2] The agreement was named “Joint Comprehensive Plan of Action”. It was signed on July 14, 2015, by Iran, the five members of the United Nations Security Council (United States, the People’s Republic of China, France, the United Kingdom, the Federation of Russia – the P5), Germany and the European Union. On May 8, 2018, the President of the United States decided not only to withdraw from the JCPOA but also ordered the Treasury to reinstate economic sanctions against Iran.

[3] Especially when it came to the timescale of its effects. People in the streets and businesses had seemingly expected the tangible effects of the lifting of the nuclear-related sanctions to materialize almost immediately.

[4] The US began designing economic sanctions with the specific aim of extraterritorial effects in the 1990s.

[5] General Data Protection Regulation

[6] The Clarifying Lawful Overseas Use of Data (CLOUD) Act became law on March 23, 2018. It extends the jurisdiction of US law over the internet as it allows federal law enforcement agencies to compel U.S.-based technology companies via warrant or subpoena to provide requested data stored on servers regardless of whether the data are stored in the U.S. or on foreign soil.

[7] One example is the status of the US dollar. As it is the default currency for oil trade, Iran is severely limited in its dealing to trade its crude oil and therefore to generate revenue both for the state and the local hydrocarbon industry.

[8] See articles 3, 4 and 6 of the Treaty on the Functioning of the European Union for, respectively, the exclusive, shared and complementary competence of the EU.

[9] For a list of possible co-operation fields between the EU and Iran, see : http://europa.eu/rapid/press-release_MEMO-16-1368_en.htm

Matthieu VITEAU

Matthieu Viteau is a traveler at heart and a proud citizen of the European Union. From his extended stays in Europe, Northern America, Central Asia and the Asia-Pacific has grown the conviction of the necessity to see reality as a set of dynamic and complex environments. Various assignments in demanding and sensitive settings made him aware of the importance of empathy and perceptions in management practices and decision making processes. He's been successfully mingling analytical and intuitive methodologies to advise both military and civilian decision makers when they must make timely and accurate decisions. Matthieu is a graduate of the Institute of Political Science (IEP Rennes) and holds a post-graduate degree in strategy from the ESLSCA business school. He was also awarded certifications in competitive intelligence (Institute for Competitive Intelligence), crisis management and Common Foreign and Security Policy (European College for Security and Defence). Among the organisations he worked for are European small and medium businesses, two start-up companies (computer-assisted decision making and sustainable development), the French Ministries of Foreign Affairs and Defence, the OSCE and NATO. Currently a consultant in strategy, he seeks to transition into less managing and more enabling industries such as finance, sustainable development and policy designing.


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