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27 August 2015

Europe won't bow to an anti-Iran-deal US Congress

Ellie Geranmayeh

Ellie Geranmayeh

Ellie Geranmayeh 
is a Middle East and North Africa policy fellow at the European Council on Foreign Relations. 

As the US Congress debates the deal struck between Iran and six world powers to curb Tehran’s nuclear program, many of those who oppose the agreement expect Europeans to fall into line if Washington rejects it. Some US senators, claiming unrealistically that a better deal is possible, think they will be able to persuade or coerce European allies into renegotiating. Their assumption is unlikely to hold, though, and could have damaging repercussions for trans-Atlantic relations. At this stage it would be challenging for the US legislature to reverse the political momentum clearly underway between Europe and Iran.

That’s because after years of intensive nuclear negotiations, an overwhelming number of experts and policymakers in Europe believe that the deal struck in July is as good as it gets. Europe’s most advanced nuclear states, France and Great Britain, have determined that it meets their tough technical standards on non-proliferation. By obsessing over a fantasy alternative, instead of focusing on implementing the deal, members of Congress risk undermining Western unity on Iran and future US-European cooperation over sanctions.

The Iran deal has been unanimously endorsed by the European Union’s 28 member states. Exchanges over the past month between Iran and Germany, France, Great Britain, Italy, and EU High Representative Federica Mogherini have clearly outlined a roadmap for deepening political and economic relations. By reopening its embassy in Tehran on Sunday, the British government sent a strong signal that diplomatic ties with Iran were improving regardless of what moves the US Congress makes.  

Europeans are now looking beyond a nuclear-centric vision of Iran to focus on how they can use the opening up to engage Iranian President Hassan Rouhani’s administration. Both Iran and Europe are eager to reignite their once-prosperous trade relations, and Europeans would also like to work with Iran to more constructively de-escalate conflicts in the Middle East. This kind of progress can’t be easily undone, and if it is, European policy makers may blame Washington rather than Tehran for prematurely derailing an agreement that was given virtually global acceptance. 

Europeans have learned to take statements by US members of Congress with a grain of salt, particularly on polarizing issues like Iran. But they don’t expect to come under direct fire from senators, as they did when New York Democratic Sen. Chuck Schumer threatened an economic war with America’s long-term trans-Atlantic allies. Schumer’s illogical position is that Congress should sanction both Iran and Europeans to bring them back to the negotiating table. Speaking at an August event, he said that secondary sanctions against European businesses would provide the United States with “a good weapon … which would say to HSBC, a big British bank … 'If you deal at all with Iran, you can't deal anywhere with the United States and we're a much bigger market.'" Schumer has come under criticism from some fellow Democrats for siding with the GOP on this issue, but he is not alone in his arguments, which are echoed in debates over whether a new Iran deal is possible and how to use sanctions in the future.

Some US senators are choosing to ignore the extensive cooperation between the United States and Europe that culminated in the web of oil and banking sanctions targeting Iran’s nuclear program. The most substantive sanctions, imposed unilaterally by the United States in 2011 and Europe in 2012, broadly mirrored one another. Europe and Obama were able to reach a tacit understanding on US secondary sanctions against European companies, since in most instances European law would have treated the behavior penalized under US law similarly.

As US Treasury Secretary Jacob J. Lew writes, Europe’s buy-in and willingness to make “costly sacrifices” helped Congress strengthen and implement the sanctions framework against Iran. Given European businesses’ large volume of trade with Iran before 2012, it was Europe, not the United States, that took a financial hit. If members of Congress were to now actively threaten Europeans with harsher secondary sanctions to make them renegotiate a deal the US president signed off on, they should expect pushback.

Europeans are also concerned about how China and Russia will react if the West backtracks. It is unlikely that either would return to negotiations based on new parameters dictated by the US Congress. In fact, a US withdrawal from the deal would be likely to accelerate Russian and Chinese efforts to launch the China International Payment System (CIPS) as a means to de-dollarize cross-border transactions. Despite the current downturn in the Chinese economy, in the long-term, as US Secretary of State John Kerry has warned, this could reduce the role of the US dollar as the world’s reserve currency, pitting it against the Chinese yuan. Such a weakening would diminish the utility of sanctions as a foreign policy tool for the West. Europe would also lose some faith in the global US-led financial infrastructure, driving the private sector to hedge its business bets between the United States and China.

If the US Congress spoils the Iran deal, a difficult debate will take place among Europeans as to their options. Europe could succumb to economic pressure, align itself with Congress and renege on the deal. But at a time when European relations with Tehran have warmed, and in a situation where Congress has obstructed the deal without giving it a chance to succeed, Europeans are likely to sympathize with Iran and forcefully stand against the US legislature.

If the US Congress wrecks the deal, Europeans will need to provide Iran with a package that offers economic easing from EU sanctions on the condition that Iran curtails its nuclear program. They will also need to protect their companies from US secondary sanctions by exerting the type of political pressure used to resist the Clinton administration’s extra-territorial sanctions on Libya and Iran in the 1990s. And whether Europe aligns itself with an anti-deal US Congress or not, it will incur costs and have to prepare to deal with the consequences of another military confrontation in the Middle East.

As Obama correctly noted, if Congress rejects the Iran deal it is inconceivable that America’s partners in Europe would then say “we’ll just do what [Arkansas Republican Sen.] Tom Cotton has to say with respect to our geopolitical interests.” US members of Congress opposed to the deal must be alert that their threats against Europe, and insistence on reaching a fantasy deal, are troubling many of their allies. This risks undermining trans-Atlantic unity and ultimately Western leverage, while inadvertently strengthening China and Russia. It’s understandable that Congress may see itself as omnipotent on domestic issues, but it would be dangerous for it to take a similar stance with world powers regarding matters of global security.