Insider news & Analysis in Iran
Outcome Uncertain for Iran’s Efforts to Shame European Partners

By Edward Carney

Following Monday’s announcement of German sanctions on Mahan Air, the Iranian carrier that Berlin accused of helping the Islamic Republic to spy, Iran’s Foreign Ministry predictably issued a statement condemning the move and saying that it was in defiance of “mutual relations” between the two countries.

Mahan Air had previously come under sanctions from the US for allegedly helping the Iranian Revolutionary Guard Corps to smuggle weapons and personnel. The absence of equivalent measures by the US government’s European allies was widely recognized as one of many indicators of diverging priorities for the US and Europe with respect to Iran policy. But Germany’s decision to ban Mahan from its airspace may be one of a growing number of signs that European governments are pivoting in the direction of the White House’s more assertive strategy.

On the other hand, signs of this shift remain inconsistent and there is parallel evidence of the European Union digging in its heels with respect to the preservation of the 2015 Iran nuclear deal and the defiance of US sanctions that have been put into place since President Donald Trump withdrew from that agreement last May. As long European officials appear to be reaching out to their Iranian counterparts, Tehran may be justified in expecting that its public outcry over measures like the Mahan sanctions will have an effect.

So far, there is little reason to believe that Germany will revise its decision regarding the heavily scrutinized commercial airline. But there is also relatively little reason to suppose that that move will spark similar measures across Europe. To the contrary, the government of France indicated on Wednesday that it and its fellow EU member states were pressing forward with plans to implement a payment mechanism to be used in evading US sanctions during transactions between Iranian and European entities.

Reuters quoted French Foreign Minister Jean-Yves Le Drian as saying that this Special Purpose Vehicle “should be implemented in the coming days.” Le Drian also went on to specifically state that the SPV was expected to give Iran the ability to benefit from the sale of “some of its oil resources” as well as buying goods from France, Germany, and the United Kingdom – all signatories to the Joint Comprehensive Plan of Action.

Until recently, the EU had provided very few details about the SPV while struggling to find a country that was willing to host its operations. It now appears that France will personally fill that role, while Germany will provide its leadership personnel and representatives of all three nations will serve as shareholders. This may be surprising to some observers, because despite their commitment to the JCPOA, the thee countries have also been more vocal than many of their fellow EU member states in criticizing Tehran’s regional activities, ballistic missile tests, and so on.

Late last year, France and the UK joined in calling a meeting of the United Nations Security Council to discuss Iran’s apparent violations of the body’s Resolution 2231, which calls upon the Islamic Republic to avoid all work on weapons that are designed to be capable of carrying a nuclear warhead. And earlier in 2018, French President Emmanuel Macron took the rare step of exceeding American commitments to anti-Iran policies when he criticized the US president’s suggestion that he might pull forces out of Syria, effectively leaving Iranian influence over the war-torn country unchecked.

This goes to show that while most Western powers are notably anxious about Iran’s activities in the Middle East and throughout the globe, this has not translated into close alignment among their various policies. To the extent that this represents a problem for American and European policymakers, it may be addressed to some extent at a conference in the Polish capital of Warsaw, which was teased by its prospective host, US Secretary of State Mike Pompeo, during his recent tour of the Middle East.

Pompeo initially explained that the gathering would focus on Middle Eastern affairs but would give special attention to the issue of containing the Islamic Republic of Iran and convincing it to “behave like a normal country.” This also gave rise to predictable Iranian backlash, with some European officials joining in condemning Pompeo for overly narrow and antagonistic focus on one part of the region.

Newsweek reported on Wednesday that this criticism had prompted the White House to change its approach to discussing the forthcoming conference. Iran has not been mentioned by name in recent communications, although Pompeo and other officials continue to call attention to issues like “missile development and proliferation” and “threats posed by proxy groups across the region” that are unmistakably associated with the Islamic Republic.

Furthermore, the Newsweek report notes that Iran has still not been invited to take part in the conference, though its regional adversaries have been. Russia, a close ally of Iran, has declined to participate in spite of an invitation, and has questioned why Iran is not welcome at an event that is ostensibly focused on the Middle East in general. The conference’s Polish hosts reportedly responded with non-committal remarks about considering the extension of an invitation, but there is no indication that Warsaw is under pressure on this matter from parties other than Russia.

This may suggest that the Europeans are generally satisfied with a change in the tone of the White House’s rhetoric, even if the ensuing conference remains effectively focused on confronting Iranian threats. It is also conceivable that this is part of a broader effort to allay some of Tehran’s concerns while actively pursuing consensus over more assertive policies, in line with those of the US. This may go some ways toward explaining apparent overstatements that the French Foreign Ministry made about the SPV, provided that these were made intentionally.

The Reuters report on the SPV implementation noted that while EU diplomats confirmed Le Drian’s claim that the mechanism could launch in mere days, they also explained that there were serious barriers to its actual usage. Thus, the SPV may have little to no real effect until several months after its official launch. The same diplomats also indicated that current expectations for the SPV are considerably more subdued than they were when it was originally conceived. That is to say, it may only facilitate small-scale trade involving specific categories of products, like agricultural and humanitarian goods.

This stands in contrast to French statements about “some oil resources,” which the EU reportedly considered dropping from SPV operations in the wake of widespread outcry against Iranian ballistic missile tests. Apart from such public statements, there is also substantive evidence that the international community is less eager to defy US sanctions than it once appeared to be. For instance, Reuters reported on Monday that Iran had failed to find any buyers after offering its oil on the stock exchange.

According to the report, this tactic only led to the sale of 280,000 barrels in October, before US sanctions came back into force following withdrawal from the JCPOA. Afterward, Iran was only able to offload the rest of the one million barrels it had put on offer by reducing the price from 74 to 64 dollars per barrel.

Now that the US sanctions are nearly back in full effect, Iran is compelled to look toward markets other than Europe in an effort to keep its oil-dependent economy afloat. Another Reuters report indicated on Monday that Tehran was boasting about new Japanese loadings of Iranian oil, following other such loadings from China, India, and South Korea. These four countries are the largest Asian buyers of Iranian oil and have consequently received waivers for US sanctions.

However, these waivers are contingent upon the recipients taking measures to reduce their dependence on Iranian oil, and South Korea went as far as halting its Iranian oil purchases altogether for four months, before resuming them last weekend. The latest increase in purchasing activity is expected to be temporary for all parties involved, provided that Western pressure continues to escalate. The buyers responsible for the latest Japanese loadings have indicated that they may not be able to secure insurance for their transportation of Iranian oil after March, in which case they would cease imports.

As long as Western pressure does remain a factor, Iran may find itself increasingly dependent upon illicit exports. But this would almost certainly add to Western scrutiny of Iran’s behavior, and thus to further efforts to confront that behavior. Last week, the UN Security Council released an 85-page report on the situation in Yemen, which pointed out that Iran is illegally shipping fuel to the Houthi rebels to help finance their war, thereby contributing further to a humanitarian crisis that is drawing ever louder demands for international action.

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