According to the US administration, on September 20, the one-month deadline related to the snapback clause of the Joint Comprehensive Plan of Action (JCPOA) lapsed, leading to the activation of the snapback mechanism. When Washington wrote to the UN on August 20 to trigger the pre-2015 Security Council sanctions over Iran’s ‘non-compliance’ with its nuclear deal obligations, it faced opposition from four veto-yielding members including France and the UK. Russia and China have long rejected America’s strategy towards Iran and the nuclear deal.
Opposing the US initiation of the snapback mechanism, the UK, France and Germany – also known as the E3 – jointly stated that the Americans “ceased to be a participant to the JCPOA following their withdrawal from the deal on May 8, 2018.”
The trio reaffirmed its commitment to “to the JCPOA despite the significant challenges resulting from the US withdrawal.” The E3, however, stressed the need to “address the current issue of systematic Iranian non-compliance with its JCPOA obligations through dialogue between JCPOA participants, including through the Joint Commission and use of the Dispute Resolution Mechanism.”
The United States has launched a plethora of wide-ranging sanctions against Iran. Diplomatically, the White House’s demand to invoke the snapback mechanism is seen as a symbolic measure ahead of the crucial presidential elections. While US Secretary of State Mike Pompeo has added the issue of E3 betrayal to his list of talking points, a vast majority of Trump supporters do not question this narrative. Hence, the new snapback measures will predominantly be unilateral US sanctions in addition to the existing bars against Iran.
The Wedge Between the US and the E3
Understandably, the French, British, and German position has not been well-received in the United States. The trade deal Prime Minister Boris Johnson desperately wants to sign with the United States seems at risk until the US presidential election is over. For France and Germany, the transatlantic bond has been strained due to some political discrepancies with the US.
The European allies of the United States seem anything but nervous at the prospect of US retaliation for not subscribing to its Iran policy in relation to the snapback mechanism. US-EU relations are not likely to improve as President Trump is completely engaged in his re-election bid until November 3. While Iran is likely to launch its next satellite into space alongside its usual missile tests, the prospect of setting up a backdoor diplomatic channel spearheaded by Switzerland is not likely to yield any breakthroughs.
The E3 has not only opposed the United States within the Security Council by standing out of the snapback bid but have also kept the pressure on Iran against the purchase of sophisticated weapons after the arms embargo is lifted on October 18.
The E3, while rejecting the US decision to initiate the snapback mechanism, also has expressed on a number of occasions its serious concerns regarding the UN arms embargo on Iran expiring, particularly its impact on regional security. In response to the US letter sent to the Security Council to initiate the snapback, the E3 statement said, “The E3 are determined to bring adequate answers to these challenges and will continue to work with all UNSC members and stakeholders to seek a path forward that preserves space for further diplomacy.”
The Biden-Harris ticket has been non-committal on the issue of returning to the level of relations with Iran witnessed during the Obama-era but Biden has stated multiple times his intention to rejoin the JCPOA if Tehran commits to its full compliance. The E3 has sought Washington’s return to the nuclear deal while seeking Iran’s compliance in letter and spirit.
Meanwhile, the E3 or any other country doing business with the United States will have to consider Washington’s sanctioned institutions, sectors and individuals in Iran before cutting any deals or sharing technology.
Throughout the Trump presidency, the E3 has emerged as a firm bloc that has stood its ground on various policy issues in opposition to the United States while keeping its diplomatic channels active with China, Russia, Iran and the Gulf states.
Maximum Pressure vs Maximum Defiance
Iran’s oil revenues registered an increase in August and September, mainly due to back-to-back shipments to Venezuela. In return, Tehran has acquired gold, bolstering the Iranian Central Bank’s reserves significantly. The extent of the bilateral cooperation agreement between Iran and Venezuela is not fully transparent and information is emerging in bits.
Washington is gearing up to impose fresh sanctions on Iran’s financial sector, which will not only make doing business with the country more punitive but also harder for the prospective Biden administration to undo them.
The White House is set to designate the Iranian financial sector under Executive Order 13902, which Trump left out in January while applying to sanction its mining and construction industries. This step is intended to impact Iran’s remittance processors, money-changers and the informal transfer system. The impact of such sanctions are hard to assess beforehand as over the decades, Tehran has excelled in circumventing legal financial sanctions.
Though the snapback bid’s outcome is not clear yet, the structured US sanctions imposed on the financial sector alongside the plethora of existing ones will help contain Iran and restrict the prospect of formal commerce with Russia and China while isolating Tehran from Europe further. Despite its existence, the INSTEX has had limited operability so far. In the absence of the Security Council’s snapback ruling, the US step intends to diminish the prospect of the EU as well as Russia and China providing any relief to Iran.