Loss of incentive to make money on Iranian market may push EU join US sanctions

In an interview with IRNA last week, Iranian Foreign Minister Mohammad Javad Zarif said that reaching a 25-year deal on strategic cooperation with China was only an idea proposed by Iran.

A proposal has been put forward for a 25-year plan that still needs to be negotiated and drafted, the minister added.

In late August, Zarif paid a visit to China to explore possibilities for expansion of strategic relations between the two nations in talks with senior Chinese officials. Though Zarif rejected reports that Tehran and Beijing have entered the mentioned agreement, even a formal proposal can stir up nervousness and jealousy from some international players.

It is well known that Europe has always been the main and traditional trade and economic partner of Iran, and vice versa. For many years Europeans have seen themselves unrivaled in the Iranian market.

The US and Iran have never been of strategic importance to each other in terms of trade. Russia, due to Iran’s historical mistrust towards it and a weaker technological capability compared to Europe (“Lada” vs. “Peugeot”), has also never been of great interest to Iran.

The largest European manufacturers have many years of experience and trade relations with the Islamic Republic. Prior to the signing of the 2015 nuclear agreement, their business in Iran was present in almost all major sectors of the Iranian economy – oil and gas, car sector, aviation, petrochemicals, etc.

Hope for the return of its big businesses to Iran (after the lifting of the current US sanctions sometime in the future) is a strong motivating factor for the EU, which makes European leaders, albeit formally, to seek points of convergence between the tough positions of Tehran as a large and coveted market, and Washington as an existential ally.

Unlike the EU, China doesn’t face such a dilemma. Moreover, backing Iran is of crucial interest to Beijing. The long-lasted conflict with Iran takes a lot of the US efforts and resources that, if the conflict is resolved, could be directed against China as the first and main competitor of the US in the world.

Some $400 billion worth of investments, even for the period of 25 years, is an awful lot of money. The potential U-turn of the Iranian economy towards China would mean the loss of a strong economic incentive for Europeans to make good money on Iranian market, and thus may encourage them to join the US sanctions, under any pretext.

Some ground for this is now being built.

The US President’s remark passed during his latest UN speech that the nuclear deal with Iran “has very little time remaining” has not gone unnoticed.

British PM Boris Johnson has recently called the 2015 nuclear accord with Iran a “bad deal” which became quite surprising for many. His remarks shows not only a change in UK’s rhetoric, but might be perceived as the beginning of Great Britain’s practical turn from JCPOA.

Meanwhile, leaders of Great Britain, France and Germany issued a joint statement on September 23, accusing Iran of a direct involvement in the attack on Saudi Arabia though there was no convincing proof for that.

Along with that, in their statement, the EU leaders sided with the US position that Iran should accept negotiations on a long-term framework for its nuclear program as well as on its missiles development program and other regional issues.

I can’t say there is a strong association between Iran’s proposal to leave gates of its economy wide open to China and the increasingly tough stand of the EU leaders towards Tehran.

But a sudden and clear shift of Europe’s position towards the US makes one look for more prosaic reasons for this, in contrast to the pretext of Tehran’s “bad behavior” and “violation of JCPOA commitments.”