Life After Decertification

After hinting at it for the last three months, it seems likely that President Trump will decertify the Iran nuclear deal sometime in the coming week or two ahead of the October 15 deadline. As pretty much everyone who knows anything about Iran and nuclear proliferation has already pointed out, this is a terrible idea. It’s not worth the effort to rehash those arguments again here in the vain hope that Trump comes to his senses before he makes the announcement, so rather than waste time and mental energy, let’s take a look at what life might look like after decertification.

It is important to remember up front that Trump’s decertification of Iranian compliance with the deal does not actually signal U.S. withdrawal from the accord. Instead, it shifts the onus for action to the U.S. Congress, where lawmakers will have to decide whether or not to take any concrete action on Iran in light of the President’s assessment. They could, as several commentators have already pointed out, do nothing. This would essentially give Trump his temper tantrum moment without actually changing any of the facts regarding the deal. This is probably the best-case scenario.

The real questions start if the Republican-controlled Congress decides to reintroduce nuclear sanctions as a result of Trump’s decision. This would effectively end U.S. participation in the deal, but it would not necessarily mean an end to the deal itself. Iran has been signaling for several weeks that it intends to remain in the deal as long as the rest of the signatories, and especially Europe, do so as well. At that point, attention will shift to Europe. EU leaders will face a difficult choice of whether to go along with the United States and walk away from the deal or stay the course and maintain their commitment to it. If the former, they will likely have to reintroduce sanctions in line with those levied by the U.S. They will also have to cut off many of the budding business ties between European companies and Iran established following implementation of the deal. If this happens, Iran will no doubt take some sort of retaliatory action, which could include restarting development of its nuclear program, possibly with an eye towards building a bomb.

(As a footnote — I’m ignoring the idea of “renegotiation” of the deal. This is more a rhetorical fantasy for Trump than an actual potentiality. Pretty much everyone outside of Trump and his cohort has rejected it.)

The final possibility is if Europe decides to maintain its commitment to the deal despite U.S. withdrawal and the reimposition of U.S. sanctions against Iran. In this scenario, the question then becomes what the U.S. will do to Europe if it continues to pursue business and economic ties with the Iranians. Even under the present circumstances, non-nuclear related sanctions make it nearly impossible for U.S. companies to do business in Iran, so most of the economic benefits Iran is accruing under the deal are the result of new European ventures. These could be at risk if the United States decides to enforce its sanctions by punishing companies that do business with Iran by, for example, cutting them off from the U.S. financial system. Faced with an either-or choice between investment in Iran or access to U.S. finance, most European companies will probably choose the latter.

(It’s worth noting that there are also significant Asian ventures, including massive Chinese investment in Iranian industry and infrastructure, but these are less susceptible to U.S. pressure.)

Coincidentally, the fourth annual Europe-Iran Forum is taking place in Zurich right now. From initial reports, it sounds like the atmosphere is a mixture of uncertainty and optimism. European companies are eager to do business in Iran, and their respective governments are extremely supportive of those efforts, but uncertainty about what actions the United States will take in the coming weeks and months means many are hesitant about making any significant investments in the country.

For now, Iran is in a holding pattern. For as long as Trump has been a political figure, Iran has never had much of a problem blowing off his bloviating rhetoric. They have allowed him his tirades against them without much retaliatory action as long as the U.S. continued its commitment to the nuclear deal and allowed them to develop economic ties with the rest of the world.

Iranian Foreign Minister Javad Zarif gave a revealing interview to Politico this week in which he discussed the decertification debate and Iran’s future intentions. Interestingly, he described the situation as an “internal” U.S. affair, noting that the deal is actually a U.N. Security Council Resolution and is therefore not really dependent on Congressional approval. He also mocked the U.S. President, calling him out for his affinity for “alternative facts” and pointing out how Trump’s anti-Iran posture has actually helped bolster Iran’s standing in the international arena. When asked whether Iran would walk away from the deal if Trump did decide to decertify, Zarif responded, “No, no, no,” insisting that Iran would wait to see what Congress and Europe decide to do.

Whether or not he’s still smiling in a few weeks will depend on those decisions.

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