Authored by Christopher Wood via Grizzle.com,
Amid current news headlines about North Korea and related nuclear issues, it is important not to ignore the potential schism that could occur in the G7 world as a consequence of the practical fallout from Donald Trump’s decision on May 8 to exit the 2015 Iran nuclear deal.
WHAT WILL HAPPEN TO EUROPEAN INVESTMENTS IN IRAN?
One practical issue is what is going to happen to European investments in Iran. The most high profile example is French energy company Total’s investment in a giant Iran gasfield. Total said this month it would pull out of Iran and its development of the giant South Pars gasfield unless it is specifically protected from US penalties and related sanctions (see Financial Times article “Total threat to pull out of Iran dents EU hopes of saving accord”, May 17, 2018).
Obviously, some form of compromise may be negotiated. But if Washington takes a hard line, such as claiming US jurisdiction as regards dollar transfers between two sovereign countries as was the case in 2014 with the US$9 billion fine levied on French bank BNP, then a confrontation is seemingly inevitable and, as a result, a growing questioning of the US hegemony implied by the US dollar paper standard, a concern which has long been shared by both China and Russia.
QUESTIONING THE US’ ROLE AS THE “ECONOMIC POLICEMAN OF THE PLANET”
In this respect, the most interesting reaction to the Iran issue since Donald Trump made his announcement on May 8 was that of the French finance minister Bruno Le Maire when he said on May 9 that it was not acceptable for the US to be the “economic policeman of the planet”.
In this respect, France is the European country to watch since it has a history of being willing to stand up to Washington in the post-1945 world. That cannot really be said of Germany and certainly not of Britain.
POMPEO WARNS IRAN OF ESCALATING SANCTIONS
Staying on the subject of Iran, US Secretary of State and former CIA boss Mike Pompeo made an ultra-aggressive speech on Monday threatening Iran with escalating sanctions. In his first major foreign policy address as Secretary of State, Pompeo stated:
Sanctions are going back in full effect and new ones are coming… This sting of sanctions will be painful if the regime does not change its course… These will indeed end up being the strongest sanctions in history when we are complete.
The above rhetoric hardly suggests a willingness to compromise with the European position. The significance of all of the above is that Europe and the US remain on a collision course.
IRAN’S EXPORTS BOOMING SINCE SANCTIONS ENDED
The importance of Europe for Iran can be seen in the fact that Iran’s exports to Europe have surged almost ninefold since the end of sanctions...