US tells Europe: Choose us or Iran as new trading system launches
By LOVEDAY MORRIS | The Washington Post | Published: June 28, 2019
The comments by Brian Hook came as European countries made a last-ditch effort to prevent Iran from breaching the terms of a 2015 nuclear deal, a move that could add to soaring tensions in the Persian Gulf.
Europe has been scrambling to come up with a mechanism to persuade Iran to stay within the limits of the deal, as Tehran complains that it no longer sees the economic benefit of the accord after the Trump administration pulled out of the deal and reimposed sanctions on the nation. Iran has indicated that if it does not receive some form of sanctions relief, it plans to exceed a limit of 300 kilograms (660 pounds) of low-enriched uranium that the country is allowed to possess under the nuclear agreement.
That threat added urgency to efforts by Britain, France and Germany to set up a complex barter system that would allow some trade with Iran to continue in order to keep Tehran from breaching the deal. The system is now operational, and the first transactions are being processed, senior EU diplomat Helga Schmid said after a meeting of officials from the remaining EU signatories in Vienna on Friday. She said she expected more EU countries to join.
European officials argue that maintaining the deal is crucial for regional stability. The United States has blamed Iran and its proxies for a series of recent provocations in the Persian Gulf, including attacks on petrochemical tankers in the Gulf of Oman and the downing of a U.S. surveillance drone over the Strait of Hormuz. Iran has denied involvement in the tanker attacks.
A U.S. official on Friday confirmed that the United States had concluded that a May 14 drone attack on an oil pipeline in Saudi Arabia, originally thought to have been carried out by Houthi rebels in Yemen, had in fact been launched from Iraq. Iraq is home to numerous Iran-backed militias.
An Iraqi military spokesman declined to comment. The U.S. assessment was first reported by the Wall Street Journal.
Since the recent attacks, the United States has ramped up sanctions against Iran, which it reinstated after withdrawing from the nuclear deal last year.
It is unclear if the European efforts to set up an alternative trading system to persuade Iran to stay within the deal's stockpile limits will work. The key test - of whether the barter system can actually succeed in processing a transaction - remains.
Iran's deputy foreign minister Abbas Araghchi described the development as "positive" but said there is still a "gap" with Iran's expectations under the deal, which include the ability to sell oil. Tehran will study the development and make a decision on how to proceed, he said.
The Trump administration has been critical of the program, which it sees as an attempt to evade its sanctions. Speaking to reporters in London, Hook said the United States was willing to intensify sanctions, which he said would continue until Iran becomes a "normal" state.
"We will sanction any imports of Iranian crude oil," he said, according to Reuters, adding that the United States was also looking into reports of Iranian crude going to China.
Before pulling out last year President Donald Trump had repeatedly denounced the deal reached during the Obama administration between Iran and six world powers, including the United States, calling it "rotten."
Meeting with Chancellor Angela Merkel at the G-20 summit in Osaka, Japan, Trump urged the German leader to join the United States in keeping up "maximum" pressure on Iran, the White House said.
But Europe is doubling down behind the deal. Austria, Belgium, Finland, the Netherlands, Slovenia, Spain and Sweden released a statement on Friday stressing the importance of preserving the nuclear deal. It described it as a "major contribution to stability in the region."
Iran has expressed skepticism over whether the European barter system, known as Instex, can give it sufficient economic benefit to stay in the deal but has described it as the "last chance."
If the European barter system fails to "meet Iran's demands within the framework for the nuclear deal," then Iran will "take the next steps more decisively," Iranian Foreign Ministry spokesman Abbas Mousavi told state television on Friday.
Instex is aimed at shielding from U.S. sanctions small- to medium-sized European companies that want trade with Iran. It will initially focus on essential goods not subject to the sanctions, such as humanitarian, medical and agricultural products.
A new round of U.S. sanctions, targeting Iran's supreme leader, Ayatollah Ali Khamenei, and other senior Iranian officials, was announced by Washington on Monday.
Trump has said that after the downing of the U.S. Navy drone, which Iran said it hit with a surface-to-air missile, he was prepared to order a military strike against Iran. He said he called it off at the last minute because it would have inflicted disproportionate Iranian casualties.
U.S. officials have indicated that they would like to see Iran abide by the terms of the nuclear deal even though the United States withdrew from it. "Our sanctions do not give Iran the right to accelerate its nuclear program," Hook said before a meeting in Paris on Thursday. "It can never get near a nuclear bomb."
An Iranian breach of the stockpile limit would not put it significantly closer to building a nuclear weapon, but it would strike another blow to the tattered deal. The stockpile of uranium enriched to 3.67% is suitable for use as fuel in nuclear power plants but far short of the weapons-grade level of more than 90% needed for fissile material in a nuclear bomb.
On Thursday, Iranian media reported that Foreign Minister Mohammad Javad Zarif sent a letter to European Union foreign policy chief Federica Mogherini urging European signatories to stick by their commitments under the deal, with Iran's next steps depending on that.
The Washington Post's Mustafa Salim in Baghdad contributed to this report.