By Javad Heirannia

‘EU and China could take steps within WTO to protect their trade relations with Iran’

July 7, 2018

TEHRAN - Daryl Kimball, executive director of the Arms Control Association in Washington, is the opinion that “The reimposition of U.S. nuclear-related sanctions is a twofold abrogation of U.S. commitments under the JCPOA. Not only did the United States commit not to reimpose sanctions, Washington also committed not to interfere with the full realization of sanctions relief.”

He adds that “To sustain the ongoing sale of Iranian oil, the EU and China could take steps within the WTO to protect their trade relations with Iran against U.S. sanctions that violate the UN Security Council Resolution (2231) which endorses the JCPOA and calls on all states to implement their commitments under the agreement.”

“Europe Union states, as well as China and Russia, have little choice but to part ways with the Trump administration on the Iran deal because Trump has rejected reasonable proposals from leaders of the E3 countries (France, Germany, and the United Kingdom) to address his concerns and because his new “strategy” to apply pressure on Iran to change Iran’s behavior in the region and pursue a “better” nuclear deal with Iran is wholly unrealistic,” Kimball tells the Tehran Times in an exclusive interview.

Following is the full text of the interview:

Q: What is your assessment about U.S. new sanctions on Iran? Some argue that these new sanction will not effective as last sanctions that impose before JCPOA. How do you think?

A: Despite the fact that the JCPOA had been working effectively for all sides and all sides were meeting the letter of their commitments under the agreement, President Donald Trump has unilaterally decided to violate the agreement and is now putting serious pressure on Iran's economic partners to cut off trade and investment. Starting on August 6, Iran is to be barred from conducting transactions using U.S. dollars and on November 4, it will be cut off from international payment systems. U.S. sanctions on Iran's oil exports are also due to resume in several months.

Whether these are more or less effective than the pre-JCPOA sanctions is hard to know at this point. Regardless, the Trump administration’s efforts to pressure Iran and possibly sanction non-U.S. entities that continue to engage in legitimate trade with Iran represent a serious threat to the 2015 deal between Iran, the European Union, China, France, Germany, Russia, and the United States, which has now dropped out of the agreement.

Iranian President Hassan Rouhani’s visit to Switzerland and Austria is an important part of an ongoing effort to ensure European governments maintain their strong support for the 2015 nuclear agreement and continue to find creative ways to ensure that important lines of trade and investment continue despite the U.S. economic pressure.

Q: It is true that U.S. sanction after its withdrawal from JCPOA is unilaterally, but U.S. can impose its will on the other countries by imposing penalty on their corporations such as European ones and they oblige to give up Iran market. Then actually JCPOA will not fulfill Iranian goals. What is your opinion?

A: Yes, the Trump administration can reimpose extraterritorial santions on any businesses or banks that continue to do business with Iran, which puts in jeopardy the ability of European, Chinese, Russian and other countries to fulfill their obligations, as specified in the JCPOA.

The reimposition of U.S. nuclear-related sanctions is a twofold abrogation of U.S. commitments under the JCPOA. Not only did the United States commit not to reimpose sanctions, Washington also committed not to interfere with the full realization of sanctions relief. Paragraph 26 of the JCPOA clearly states that the United States “acting consistent with the respective roles of the president and Congress, will refrain from reintroducing or reimposing the sanction specified in Annex II that it has ceased applying under this JCPOA.”

The reimposition of U.S. extraterritorial sanctions will interfere with foreign companies and banks conducting legitimate business with Iran that is permitted by the JCPOA. This violates the U.S. commitment, set forth in Paragraph 26 of the JCPOA to “make best efforts in good faith… to prevent interference with the realization of the full benefit by Iran of the sanctions lifting.” In paragraph 28, the United States also committed to “refrain from any policy specifically intended to directly and adversely affect the normalization of trade and economic relations with Iran.”

If the accord is to survive the next two years of the Trump administration, EU governments and other responsible states must now try to sustain it without the United States by taking bold steps to ensure that it remains in Iran’s interest not to break out of the JCPOA’s rigorous constraints.

Europe Union states, as well as China and Russia, have little choice but to part ways with the Trump administration on the Iran deal because Trump has rejected reasonable proposals from leaders of the E3 countries (France, Germany, and the United Kingdom) to address his concerns and because his new “strategy” to apply pressure on Iran to change Iran’s behavior in the region and pursue a “better” nuclear deal with Iran is wholly unrealistic.

Q: U.S. announced that the other countries should cut importing oil from Iran until November. If Iran could not export its oil do you think will stay in the agreement?

A: The extent to which the U.S. efforts to cut off sales of Iranian oil to third countries succeeds or falls short will likely be important factor that determines the future of the JCPOA. China is the largest single importer of Iranian oil. India South Korea, and Turkey also important significant amounts. Italy is the only EU country that imports significant quantities of crude oil from Iran.

To sustain the ongoing sale of Iranian oil, the EU and China could take steps within the WTO to protect their trade relations with Iran against U.S. sanctions that violate the UN Security Council Resolution (2231) which endorses the JCPOA and calls on all states to implement their commitments under the agreement.

The EU can and Russia and China could also take actions to block the application of U.S. secondary sanctions. They could also consider setting up channels to facilitate business transactions with Iran that do not rely on the U.S. dollar. Isolating such transactions from the U.S. financial system could provide an avenue for doing business with Iran and demonstrate to Tehran that the EU is still serious about implementing the deal.

Q: According new developments about JCPOA, what is your prediction about this agreement?

A: Time is of the essence. The European Union and the other remaining members of the P4+ group that are party to the JCPOA need to present their plan for maintaining key trade and investment links with Iran very soon, and before the potential impact of U.S. secondary sanctions arrive.

Leaders in London, Paris, Berlin and Brussels all strongly support the continued implementation of the JCPOA. As EU foreign policy chief Federica Mogherini said May 8: “[a]s long as Iran continues to implement its nuclear[-]related commitments, as it is doing so far, the European Union will remain committed to the continued full and effective implementation of the nuclear deal."

We will know more about whether the JCPOA can be salvaged when we see the full details and the full effects of the European package of measures to insulate key channels of trade and investment with Iran against U.S. extraterritorial sanctions.

For its part, Iran’s leaders — those in power and those in the opposition — need to recognize that Iran’s economic performance depends on internal factors and they need to recognize that there is absolutely no economic, energy, or security benefit for Iran if it were to exceed the limits set by the JCPOA. By exceeding the limits set by the JCPOA, or by seeking a military confrontation in the Persian Gulf, Iran would shift the blame from Donald Trump’s dangerous decision to violate the JCPOA to Iran’s behavior and make it far harder for Europe and the international community to stand by Iran and the JCPOA.
 

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