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ViewpointJanuary 27 2020

Re-assessing Iran’s relationship to the world

The director of Italy’s Institute of International Affairs, Nathalie Tocci, talks to Silvia Pavoni about Middle Eastern issues amid heightened tensions between the US and Iran and the long-term outlook for oil markets.
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Nathalie Tocci

Nathalie Tocci

Q: What is the future of the Joint Comprehensive Plan of Action [JCPOA] between European countries and Iran, and of the Instrument in Support of Trade Exchanges [Instex] trade system?

A: After the assassination of Iran’s major general Qasem Soleimani, I thought that Iran would have taken a far more significant step out of the JCPOA, which limits Iran’s uranium enrichment activities and was initially reached with the US, China, Russia, France, Germany, the UK and the EU. The US [withdrew from the] accord in May 2018. [But] the Iranians reacted smartly from a strategic perspective. Their reaction to the assassination was aimed at its perpetrator, not to the nuclear deal. 

The road of the JCPOA, although extremely narrow, remains a viable option if we Europeans have the political courage to take it. 

As for Instex it is a complex mechanism that serves as a sort of parallel barter system in Iran and the EU to avoid the risk of secondary US sanctions. When we devised it in 2019 we promised more than what we could deliver within the established timelines. But technical complexity is not the whole story. Ultimately, there is a real reluctance from Europeans to commit politically to going against the US policy of maximum pressure on Iran, and this has worsened over time. 

In any event, Instex is only about humanitarian transactions, so even in the best case we’re talking about some tens of million of euros of trade: nothing exceptional, frankly. What would make a real difference is if oil trade were included in this or another similar mechanism. 

Q: What are the repercussions of heightened tensions between the US and Iran on the Middle Eastern region?

A: If one wants to look for a silver lining, recent events may have opened a space for dialogue. Iran’s response to Mr Soleimani’s assassination has highlighted its military skill. This was evident both in the attack that followed the US drone strike and also in the September attacks on Saudi Aramco oil facilities in Saudi Arabia, which Iran sees as a rival and a US ally, and which surprised international security officials in their precision. The Gulf states and others do not consider that escalation in the region is in their interest.

The other development, which has to do with the relationship between the Middle East and the West, is about the role and the presence of the US in the region. We are already witnessing a period of US disengagement, as we have seen with Mr Trump’s decision to withdraw from Syria a few months ago. Although yet to be put in practice, this, alongside the prospect of US disengagement from Iraq, opens a whole series of questions: if the Americans are not there, who is? Are Iraq’s security forces strong enough to avoid a re-emergence of Islamic State?

There may be a European role to play to support Iraqi’s security forces. Europe is already present in Iraq, not just as part of the anti-Islamic State Global Coalition at individual country level, but also at a EU level, as a non-military partner, supporting civilian security efforts such as counter radicalisation, domestic and border security activities.

Q: What about the longer term impact on oil markets?

A: I don’t see a longer-term trend in relation to the latest events. Before the Iranian response, there was a real risk to the oil market. But Iran chose to direct its retaliation solely on the country responsible for the attack on Mr Soleimani. It sent missiles to the US bases from which the drone that killed Mr Soleimani was launched, which led to no reported casualties. It did not choose the alternative routes of exiting the JCPOA or attacking US allies in the region. It could have repeated the September attack on Saudi Aramco but on a much larger scale. Iran is conveying the message that its strategic objective is that the US exit the region: it is all pointed towards the US, nothing else. In this sense, I think that the energy markets remain relatively protected.

Nathalie Tocci is the director of Italy’s Institute of International Affairs and honorary professor at the University of Tübingen. She was special adviser to former EU high representative of the union for foreign affairs and security policy, Federica Mogherini, on behalf of whom she wrote the European Global Strategy and worked on its implementation in the field of security and defence. 

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