Relations Between France and Iran in the Biden Era

The French government has welcomed the election of new US President Joe Biden, who disapproves of former President Donald Trump’s withdrawal from the Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), and has confirmed his desire to return to it. France, like the rest of Europe, is mostly pleased by Biden’s declared intent to rebuild transatlantic relations and consult European allies on Iranian matters, as well as on other regional tensions. Biden’s early steps to rejoin the Paris Agreement, the World Trade Organization and the World Health Organization confirm that he is following through on his campaign promises: that the United States is back and that it will play the multilateralism role, consulting allies and partners and ending the previous administration’s abrasive practices.

Against this backdrop, France, together with Germany and the United Kingdom—the E3 parties to the nuclear agreement—is facing several challenges with both Tehran and Washington. Paris seeks a clear understanding of Washington’s true intentions with Tehran, whilst also needing to realistically assess Iran’s posture and develop a European-wide vision for relations with Iran.

An Enduring Hawkishness

France’s current approach to Iran can be traced back to former President Nicolas Sarkozy, who introduced a new Middle East policy based on neoconservative intellectual visions shaped by a team of strategists nicknamed “The Sect” and led by the late Thérèse Delpech. Paris not only maintained its hawkish approach under François Hollande as president and Laurent Fabius as foreign minister, but it also hardened this approach during the painstaking negotiations leading to the Iran nuclear deal in 2015. At a series of tense meetings, Fabius endlessly added complexity to talks, claiming that US negotiators were naive and ready to make undue concessions to Iran while neglecting critical safeguarding details. The French felt that former US Secretary of State John Kerry and Iranian foreign minister Mohammad Javad Zarif were poised to strike a hurried, weak deal without taking France’s expert guidelines into consideration. Fabius nearly killed the negotiations.

Fabius and other members of The Sect also sympathised with Israeli Prime Minister Benjamin Netanyahu and included some Israeli priorities within French positions. Saudi Arabia has become a growing consumer of French weapons and Riyadh’s views were likewise taken into account, and Saudi pressures to prevent or slow Iran’s nuclear capacity have been considered. Some in France hoped for more pragmatic behaviour when Emmanuel Macron became president, but the new foreign affairs minister, Jean-Yves Le Drian, who previously worked as the defence minister, is the guardian of the hawkish line.

Macron occasionally distances himself from his more hawkish advisers. He opposed ousting Syrian President Bashar al-Assad by force before a political solution could be reached, and Macron has stated that he wants an end to a neocon policy. Macron showed his independent streak when he invited Zarif to the 2019 G7 Summit in Biarritz, bringing a four-point plan to Trump and genuinely attempting to arrange a phone conversation between the US president and Iranian President Hassan Rouhani on the sidelines of the UN general assembly later in the year. The conversation did not end up happening because Trump did not take the opportunity and Rouhani did not have the necessary political support. But the facilitation efforts were sincere and significant.

Short-Term Gains but Long-Term Costs?

French officials have repeatedly stated that they want to see the JCPOA survive. But their messages can appear to contradict that mission. In a phone call on Tuesday, Macron told Rouhani that Iran must make “clear gestures” to revive the nuclear deal. In an interview last month with the French weekly newspaper Journal du Dimanche, Le Drian said that tough discussions on ballistic proliferation and regional destabilisation by Iran will be necessary in the course of new negotiations. While the content of the message does not differ much from that set out by the Biden administration, the tone is more aggressive—an ultimatum rather than an offer to negotiate. Unsurprisingly, Iranian responses were harsh, but France’s top diplomats do not seem to understand—or do not want to understand—that posing diktats to a nationalist state is a big miscalculation.

Another miscalculation was made when Macron participated in an interview hosted by the Atlantic Council on February 4. Macron stated that Iran is closer to the atomic bomb now than before the 2015 agreement, that concerns about ballistic missiles, and the new negotiations should be global and inclusive—including even Saudi Arabia and Israel.

Macron added that the nuclear agreement cannot work if regional governments are not satisfied, but his vision of potential Saudi and Israeli involvement in the future of JCPOA is ambiguous. Is the involvement limited to consulting these “partners,” or will they be invited to the negotiation table? Biden will likely consult his regional partners without inviting them to the negotiation room—Washington is under no illusions as to the impact such a move would have. Officially inviting the Saudis and Israelis to be consulted is itself an affront to Iran. Unsurprisingly, Saeed Khatibzadeh, the spokesperson of the Iranian foreign ministry, immediately rejected the idea of new participants in nuclear deal talks after Macron’s comments were publicised.

Categoric opposition from Tehran was certain, so why did Macron make such a statement? According to Al-Quds Al-Arabi, a pan-Arab newspaper, the French president is set to visit the Saudi capital of Riyadh soon and may discuss the Iranian nuclear program with King Salman and Crown Prince Mohammed bin Salman. This will certainly please the Saudis, who will appreciate receiving France’s political support, but the Iranians see this move as deliberately provocative. On 9 February, François Nicoullaud, a highly respected expert and France’s former ambassador to Iran, commented on Macron’s proposals, saying that the mediator’s job is listening to and exploring opinions from both sides and then developing a step-by-step solution in a manner that’s as neutral as possible and that’s acceptable to everyone. Al-Quds Al-Arabi reports that talks would include reinforcing bilateral cooperation, notably military. If this is true, it might indicate that Paris is seeking advantages from Biden’s intention to review US military cooperation and weapons deliveries to the Saudis. France is likely to see this as an opportunity for juicier military contracts.

France’s flirtation with Saudi Arabia undermines its bilateral relations with Iran, depriving Macron of his claimed ambition of being a major facilitator of a “demanding dialogue” between Iran and the United States. During his interview with the Atlantic Council, Macron reiterated the role he is willing to play as a mediator. The French-Saudi alignment, even if France does not agree with all of the Kingdom’s actions and policies, will convince Iran that Paris cannot mediate impartially. If Le Drian distrusts Iran, the reciprocal is also true.

Repairing Bilateral Relations

Bilateral relations are in bad shape, and polite diplomatic language cannot hide the cracks. But it is not too late for a fix. The priority now is to safeguard the possibility of an orchestrated return to the JCPOA. Zarif has suggested that Josep Borrell, the European Union’s High Representative, could “choreograph the actions that need to be taken” by the United States and Iran. Here, France might play a role by showing that as a de facto leader of the E3, it can lend visible support to such an initiative. Macron would have the opportunity to implement its “honest broker” status. Another issue might allow France to gain credibility not only with Tehran but also with other Europeans. The Instrument in Support of Trade Exchanges (INSTEX), which facilitates transactions for European trade with Iran despite limitations in direct banking channels, deserves more attention. France, joined by other Europeans, should press Biden to quietly bless the operation of INSTEX. If France, supported by other EU member states, manages to persuade Biden to make such a step, the impact on bilateral trade between France and Iran could help repair some of the lost bilateral trust.

On regional issues, France should use its influence on Saudi Arabia, Iraq, Qatar and the United Arab Emirates to encourage direct dialogue with Iran. Paris could make suggestions both on confidence-building measures and on the practical steps for a dialogue with Iran on regional concerns, such as ballistic missile proliferation, and particularly Yemen, working in coordination with the UN envoy. First, France should try sharing these views and reactions with Tehran, and later it could present new ideas on a future region-wide security system. Excluding talks on nuclear issues would be more palatable to Tehran, unless all participants, including Saudi Arabia and Israel, start negotiating on regional denuclearisation. However, this move will likely not be seen enthusiastically by all.

France can have a fresh start with Iran, but it will take time, prudence, and humility. France’s policies towards Iran must use strategic criteria when assessing the field and devising a policy. Professional advice from governmental departments and agencies as well as from external experts, including the business sector, should not be neglected, and lessons must be drawn from past mistakes.

Photo: Wikicommons

After the Iran Protests: How Europe Can Keep Diplomacy Alive

This article was originally published by the European Council on Foreign Relations.

The Middle East is facing a wave of protests—with the latest unrest in Iran sweeping the country in November. For the moment, a swift government crackdown that reportedly left at least 208 dead has largely brought the protests to an end. An unprecedented internet shutdown during the unrest means that information and debate from inside Iran are now going viral, with observers seeking to take stock of what it could mean for the country. While much remains unclear, the episode has shaken a fragile Iranian nation, diminished the already dwindling popular support for the Rouhani administration, and further complicated European efforts to reduce tensions between the United States and Iran.

The protests were sparked after Iranians woke up to steep hikes in petrol prices of around 50 percent brought in overnight in mid-November. The Iranian state has long subsidized fuel, but Iranian officials argued that this was a necessary step to address the budget deficit (hard hit by US sanctions cutting off oil revenues) and to tackle illicit fuel-smuggling organizations. The new approach has also allowed an increase in cash transfer subsidies to Iran’s poorest.

The move predictably provoked the greatest anger among Iran’s lower earners, who are barely making ends meet. People immediately took to the streets to voice their fury at the decision, and at the political establishment more broadly. Similar to the last round of protests in Iran in late 2017 and early 2018, most of those who participated appeared to be young and from lower-income households. However, while the unrest in 2017 and 2018 stretched out over a longer period and remained largely peaceful, the latest protests were short-lived, with signs of greater coordination among those that took to the streets and hard-headed action by state authorities in response.

Some Iranian interlocutors from the policy community view the crackdown by the security apparatus as reflective of panic and anxiety in the Iranian security establishment. But others believe the Iranian state felt confident and strong in taking these actions, that it was ready to communicate its preparedness to immediately quash any serious threat, and to introduce a state of fear before protests spread further.

The aftermath of the protests presents significant challenges for the Iranian leadership. The Islamic Republic is now a pressure cooker, dealing with an unprecedented degree of harsh US sanctions that are have brought about severe economic difficulties, and a fraying of the political fabric. If economic reforms are not forthcoming to weather the storm of sanctions, tackle corruption, and provide relief to Iranian households, Iran will likely face periodic protests with ever higher levels of state repression.

For Rouhani himself, expectations were already low for the parliamentary election due in February. Now, given the brutal repression of these protests, growing numbers of those members of Iran’s middle class that previously backed the president are now likely to avoid political participation. And, over the past year, Iran’s Reformist faction, which had allied with Rouhani’s centrist presidential campaign, has conducted a fierce debate about whether to stand in the election given huge disappointment at the pace of reforms. Recent events have only intensified this debate. Hardliners are therefore expected to make significant gains in parliament and make life much tougher for Rouhani in the final year of his presidency.

Rouhani’s weakened position will make it even more difficult for him to push through any form of pro-diplomacy policy in his last year. The president has repeatedly stated that he is open to negotiations with the US given the right parameters—and he reiterated this after the end of the recent protests. Powerful figures inside Iran, such as the Supreme Leader and senior figures within the Islamic Revolutionary Guard Corps, have rejected the possibility of such negotiations, but Rouhani still has some limited ammunition. This was demonstrated by the recent detainee exchange between Iran and the US—a small but noteworthy sign of diplomatic success.

How far Rouhani can move forward will be influenced not just by internal dynamics but also by the US and Europe. The response by Iranian authorities to the protests complicates the political optics for European governments seeking to provide Iran with economic benefit to sustain the nuclear deal, which now hangs by a thread. Moreover, Washington will likely use the state repression inside Iran to double down against European engagement with Tehran, arguing that there are no moderate actors for change within the Iranian leadership.

Despite these pressures, European governments can still strike the right balance on Iran. Amid the protests, the EU called for “maximum restraint” from Iran. And the newly appointed EU high representative, in a stern statement, called for “credible investigations” into the events. European governments can also consider calling for a special session at the United Nations Human Rights Council to press for impartial investigations into the use of force in the recent protests in both Iran and Iraq.

In parallel, Europe should still move forward with processing the first transactions through the Instrument in Support of Trade Exchanges (INSTEX). This should be rooted in a duty of care towards the Iranian people, namely that Europe acknowledges the severe economic pressures placed on Iranians following the reimposition of US sanctions. Europeans must remain focused on facilitating quicker and cheaper access to humanitarian goods for the Iranian people. If this can simultaneously help prevent a further unravelling of the nuclear deal, this would be no bad outcome.

Greater internal pressure combined with increased weakness for Rouhani will likely push Iran towards a more confrontational stance, and diminish Rouhani’s ability to pursue political solutions. The US and Iran have already twice recently come dangerously close to military conflict, following Iran’s downing of the US drone in June and attacks against Saudi Arabia’s Aramco oil facility in September. US intelligence officials reportedly believe that Iran has increased its stockpile of short-range missiles inside Iraq, and military officials have warned of potential impending attacks by Iran. If the country continues to be suffocated economically by US sanctions, it will continue its withdrawal from the nuclear deal and up the ante in the region.

In the meantime, it is imperative that Emmanuel Macron pursue his initiative to reduce tensions between Tehran and Washington. Senior US officials have vowed to continue the “maximum pressure” campaign, and its proponents are likely to view the recent protests as proof that the policy is working. But Europeans should make clear that the policy has so far backfired in terms of softening Iran’s posture on the nuclear and regional files and only succeeded at pushing the country into a greater state of securitization and internal oppression. Macron should seek to quickly use the positive, and most likely short-lived, political momentum from the US-Iran detainee exchange to impress on both sides that diplomacy can deliver concrete outcomes, and that it is much the preferred option to another cycle of escalation.

Photo: IRNA

Europe’s Trade With Iran Is Worth Saving

Can trade between Europe and Iran be saved? French President Emmanuel Macron’s $17 billion Hail Mary pass came up short. Instex, the so-called “special purpose vehicle” to evade American sanctions, is stuck in the doldrums. Most European companies are steering clear of business with Iran. European imports of Iranian oil have dropped to zero.

As the Trump administration’s “maximum pressure” sanctions campaign rolls on, it might seem like Europe not only lacks the means to defend its trade with the Islamic Republic, but also that there’s little left to defend. 

But a closer look at the trade data tells a different story. European technology is deeply embedded in Iran’s economy, particularly in the country’s large industrial sector, which employs around one in every three Iranian workers. (By comparison, the oil sector employs around one in every 200.) The export of European parts, machinery, and transport equipment—captured under Chapter 7 of the Standard International Trade Classification system—is arguably a more important indicator of Europe-Iran trade relations than Europe’s purchases of Iranian oil.

The value of European SITC 7 exports to Iran has halved since the Trump administration reimposed secondary sanctions in November 2018. Looking to European Union totals, the average monthly export value was $970 million in the 12 months prior to the reimposition of sanctions, falling to an average of $433 million in the subsequent 10 months for which data is available. Iran’s industrial sector is largely dominated by state-owned enterprises, most of which are included in the U.S. Treasury Department’s sanctions list and therefore off limits for European firms that want to maintain commercial links with the U.S.

But even with these significant barriers, Europe continues to export billions of dollars of parts, machinery, and transport equipment to Iran. Exports to private companies are not proscribed under U.S. sanctions where sector-wide sanctions, such as those on Iran’s energy sector, are not in place. This means that so long as European firms are able to find a bank willing to accept payment for exports—an increasingly difficult task—trade can take place.

This trade is worth defending and European officials should not be disheartened by their recent struggles to sustain bilateral trade in the face of American sanctions. The persistence of this trade also makes clear that Iran, cannot simply give up on Europe, despite the political rhetoric of Supreme Leader Ali Khamenei.

There is a common misconception that the multilateral sanctions campaign which ran from March 2008 to January 2016, and which included EU sanctions, forced Iran to turn away Europe in favor China. While Iran’s trade with China grew considerably in this period—Chinese exports of parts, machinery, and transport equipment grew from $2.9 billion in 2007 to $7.8 billion in 2015—similar growth can be seen in most industrializing countries of the world. After all, the sanctions period corresponded with the emergence of China as a major exporter of high-value manufactured goods.

However, European exports to Iran rebounded immediately after sanctions were lifted. The relative proportion of Chinese-to-European exports in the SITC 7 category fell from 2.58 in 2015 to 1.13 last year. Despite China’s newfound dominance, Europe was able to win back much of its share of Iran’s imports of parts, machinery, and transport equipment.

Why? Because of a kind of path dependency. When Iranian industry went through its last major phase of modernization, in the early 2000s, European firms took the lead in establishing factories and transferring technology. French engineers got Iran’s automotive sector in gear, German engineers got locomotive manufacturing on track, and Italian engineers got the food industry cooking.

To keep those assembly lines running, Iran needs European inputs. Even if Chinese firms have become major suppliers, they have not yet been able to wean Iranian industry away from dependency on Europe. In large part, this is because the previous round of sanctions was at its peak intensity for only 20 months—from January 2012 to November 2013, when the nuclear negotiations resulted in some initial sanctions relief, including the suspension of sanctions on the automotive sector.

As a result, Iran’s industrial sector has never felt it had to fully eliminate its reliance on European parts and technology. It takes years to set up factories and supply chains; it will take years for sanctions to undo the path dependencies established through historical trade ties.

Even if the overall value of European trade with Iran has fallen in both absolute and relative terms, Europe retains a crucial and assured role in the future of the Iranian economy. Iranian politicians—however disappointed with European efforts to withstand U.S. sanctions—cannot simply cast aside relations with the West. This gives Europe unique leverage.

As Iran announces further reductions of its commitments under the nuclear deal, some in Europe will call for the reimposition of EU sanctions, which would devastate industrial trade with Iran. Iranian authorities no longer believe that the U.S. can impose meaningful economic pressure on Iran—but Europe can.

This makes Europe a more consequential party to any negotiations than is widely appreciated. Whereas the U.S. reimposed sanctions and then sought talks, Europe ought to take a different approach. Rather than making the future of the nuclear deal beholden to a $17 billion credit line or the innovations of Instex, Europe should put its regular trade with Iran at the center of its diplomacy. The practical need for parts, machinery, and transport equipment can inspire pragmatism at a time of rising tensions.

Photo: MAPNA

With Bolton Gone, Iran Must Seize Opportunity for De-Escalation

The news that Trump has fired John Bolton—though the former national security advisor insists he resigned—will be well received in Tehran. Iranian foreign minister Javad Zarif had taken to branding Bolton as a member of the “B-Team”—alongside Israel’s Bibi Netanyahu, Saudi Arabia’s Mohammad bin Salman, and the UAE’s Mohammad bin Zayed—as a group that had been gunning for war in the Middle East. Iranian officials saw Bolton as a spoiler for diplomacy, a perception borne out by reporting on his role shaping and sharpening the Trump administration’s Iran policy over the last year. 

Bolton’s ouster represents a real opportunity for the Trump administration to walk back from maximum pressure as more pragmatic officials outside the NSC find the space to assert their views once more. Despite the active roles played by the State Department’s Iran envoy, Brian Hook, and the Treasury Department’s undersecretary for terrorism and financial intelligence, Sigal Mandelker, in pushing forward the administration’s uncompromising messaging on Iran, the maximum pressure policy developed because Bolton was able to leverage his unique access to the president. Over the last year, Bolton repeatedly used this access to push the administration’s policy towards the extreme. 

In March, Bolton and Pompeo were at loggerheads as to whether the Trump administration should revoke waivers permitting eight countries to continue to purchase Iranian oil on the condition that revenues were paid into tightly controlled escrow accounts. Bolton eventually prevailed. The revocation of the oil waivers in May led to insecurity in the Persian Gulf as Iran threatened the passage of maritime traffic through the Strait of Hormuz in retaliation for the restrictions on their oil exports. 

In April, the Trump administration designated the Islamic Revolutionary Guard Corps (IRGC), part of Iran’s armed forces, a “Foreign Terrorist Organization,” in a move that had been debated by administration officials since late 2017, when the U.S.  imposed a similar if less severe designation on the IRGC. Once again, Bolton was the key voice in favor of the move, despite the warnings of military and intelligence leaders that such a designation could make American troops in Iraq and Syria targets for retaliation. 

In July, Bolton’s NSC advocated the revocation of the waivers which permit civil nuclear cooperation projects critical for the implementation of the JPCOA. European officials feared that the revocation of the waivers would effectively kill the nuclear deal. Trump eventually sided with Treasury Sectretary Steve Mnuchin who argued in favor of renewal, allowing the JCPOA to limp along. 

Later that month, the Trump administration took the unprecedented step of sanctioning Zarif, despite reports earlier in the month that objections from Mnuchin and Pompeo had staved the move, strongly advocated by Bolton, to designate Iran’s foreign minister. The eventual designation caused an outcry in Iran, uniting figures across the political spectrum in condemnation of the U.S.. 

At each step Bolton doggedly pursued maximum pressure, pushing aside the concerns expressed the secretary of state, secretary of treasury, military leaders and intelligence officials alike. While Trump’s antagonism towards the Iran nuclear deal predates his appointment of Bolton, the transformation of the Trump administration’s Iran policy into one of “economic war” was nonetheless dependent on Bolton’s ideological fixations and mastery of the interagency process, qualities of which he has bragged. 

Earlier this summer, several U.S. officials relayed to me their concern that the Trump administration’s Iran policy increasingly consisted of steps that created political costs for the United States—straining relationships with allies in Europe while deepening rifts with adversaries like China—while adding little meaningful economic pressure on Iran. The departure of Bolton may come as a relief to many of the career officials in the State and Treasury Departments who felt a growing incoherence—and their own irrelevance—in the administration’s policy. 

It is certainly possible that President Trump will name another hawk to the role—there is no shortage of national security professionals in Washington wary of Iranian power—but it is highly unlikely that the replacement will have such a strong fixation on maximum pressure for its own sake. It is also unlikely that the new national security advisor will be as effective as John Bolton in working the bureaucratic machine of the White House. 

In the hours following Bolton’s departure, Mnuchin insisted that the administration will maintain its maximum pressure campaign on Iran. But the need for that insistence is itself reflective of the opportunity now presented for the administration to slowly rollback aspects of its maximum pressure campaign and for Iran to offer the Trump administration a credible path to de-escalation.  

With Bolton out, the prospects of direct talks between the US and Iran on the sidelines of the United Nations General Assembly later this month have certainly improved—Trump repeated his interest in meeting Iranian president Hassan Rouhani the same day he fired Bolton. But even if that remains a bridge too far for the Rouhani administration, who may consider it too risky to negotiate Trump in a moment of flux, there are more practical gains to be had. The simple restoration of the oil waivers, perhaps in accordance with the proposal advanced by French president Emmanuel Macron, could see Iran cease the resumption of uranium enrichment activities as part of its reduced compliance with the JCPOA.  

Iran’s political predicament and economic pains are not John Bolton’s fault. But Bolton consistently pushed U.S. policy in directions that were perceived by Iranians as “war by other means.” Over the last few months, Iran has responded in kind. Bolton’s departure therefore is a useful reminder that while conflict may have structural roots—it is only as inevitable as the selection of a warmonger as national security advisor.

Photo: Wikicommons