The European Union, led by the most influential member states: Germany, France and the UK, has decided to take its own line with Iran. Disagreeing with the harsh attitude of the USA, the Europeans want to find their own ways to trade with the Islamic Republic despite US sanctions. A specially developed transaction channel called Instex (Instrument in Support of Trade Exchanges) was set up for this purpose. They thus emphasize the importance they attach to the nuclear agreement with Iran.
This political and economic “gift” has been made on the 40th anniversary of the establishment of the Islamic Republic of Iran which is definitely not a coincidence. The foundation of this new institution signals clearly that Europe has chosen its own path towards Iran, which is contrary to that of the USA, and thus regards the nuclear agreement as an important pillar of European policy in the Middle East. This may come as a surprise, since the regime in Tehran is often associated with international terror. There have also been various attacks on opposition members and opponents of the regime on European soil in the recent past. In addition, the Iranian rocket programs are sharply criticized and the rhetoric against Israel and the USA condemned by the Europeans.
Why do Europeans extend both hands to Iranians and risk tensions with the USA? Oil for food!
This special financial instrument is designed to support trade between European companies and Iran and support the nuclear agreement following last year’s US withdrawal by allowing the Islamic Republic of Iran to exchange oil for humanitarian purposes (food, medicines, medical equipment) and European industrial goods without using US dollars or going through the US financial system. However, President Trump has warned the EU not to circumvent the sanctions against Iran.
The US position on this issue is clear. The action of the three EU Member States is seen as an appeasement policy on the part of the EU towards the Islamic Republic. This should lead to further tensions between the US and the EU in the coming weeks and months. The Trump Administration is dissatisfied with the fact that the EU has chosen its own path and is not on the same track as the USA. It is difficult to understand why the European Union dare to act independently.
They should actually work with the USA to de-radicalize the spiritual and political leadership in Iran. Europe and the United States have always been called in the past “the West”. Both have experienced threats and hatred from Iran.
It is obvious that large European companies, especially those with significant business commitments in the US, will be wary of signing any contracts with Tehran in face of US sanctions. But even smaller companies will consider twice due to the current unstable situation in the Middle East.
It is doubtful that Instex can help the already troubled Iranian economy moving forward and that the Iranian population can benefit from this new opportunity. Instex is intended to keep the volume of trade between European companies and Iran at least at the level, which was reached before the nuclear agreement.
Mistrust of the USA towards Europe
The USA is watching Europe’s solo approach to Iran with suspicion, especially as the division between the USA and the Western Europeans is becoming more and more visible in Iran policy. The USA is continuously increasing the pressure on the Islamic Republic with the peak of new sanctions since mid-April 2019. Meanwhile, the European Union is trying to maintain a diplomatic channel to Tehran. Certain facts are ignored or tacitly tolerated.
The question of how far Europeans will succeed in persuading the regime in Tehran to stop its military activities in Syria, Yemen, Lebanon and Iraq and to abandon the ballistic missile projects remains open. The recent tests with long-range missiles and the verbal attacks against the USA and Israel by some generals of the Revolutionary Guards and the revolutionary leader Ali Khamenai indicate that the current regime in Iran is not willing to abandon its political and military goals in the countries mentioned.
Instex proves, that the Europeans are weak and naive. From the Iranian regime’s point of view, it looks as if they could constantly allow themselves without fearing consequences, as the EU is vehemently sticking to the agreement and keep trying to maintain economic relations. In this way the credibility and negotiating power of the European states is significantly reduced. Iran is indeed very happy to accept the birthday present.
Whether Trump’s approach is successful, cannot be concluded yet.
However, it is obvious that his negotiating power towards Iran is much stronger, as he has hardly made any concessions to date. The pressure on the republic is growing day by day. President Trump is trying to bring the government of Iran to collapse.
As long as the Iranian government is not showing any willingness to reach a peaceful agreement, the European Union should not take any independent steps. Its economic power is too small. They have to coordinate their policy with the USA in order to achieve a satisfying solution.