Will the EU-3 Countries Stand-up to their JCPOA Related Commitments?

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The Joint Commission of the Joint Comprehensive Plan of Action (JCPOA) – commonly known as the Iran deal, met in Vienna on June 28, 2019 to discuss the implications of the U.S. sanctions and Iran’s threat to give up its commitments under the nuclear deal. The Joint Commission meeting was attended by the three European signatories (France, United Kingdom and Germany), besides China and Russia.

The statement issued after the meeting declared that the “JCPOA remains a key element of the global nuclear non-proliferation architecture, endorsed unanimously by UN Security Council Resolution 2231.” The European signatories of the JCPOA also declared that they consider the preservation of the Iran deal “to be essential for the regional stability and security.” The participants of the meeting also recalled “the key importance of continued full and effective implementation of the agreement by all sides.”

Urging the U.S. to lift the sanctions as per the original deal, the three European signatories of the JCPOA announced that they have operationalized INSTEX (Instrument in Support of Trade Exchanges), which will be available to all EU members states for trading with Iran and avoid the U.S. sanctions.

The INSTEX allows exchange of goods without requiring direct transfer of money between Iran and the EU companies, or any other country that would want to trade with Iran. The EU and several other countries who view the JCPOA as an important accomplishment towards the nonproliferation efforts are hoping that this ‘special purpose vehicle’ in the form of INSTEX would prove their commitment towards the JCPOA, while encouraging Iran to continue abiding by its part of the deal.

The Joint Commission also “noted good progress, among others, on the modernization of the Arak research reactor, and the stable isotope production project as part of the conversion of the Fordow facility, as foreseen in the JCPOA.” The meeting participants also “welcomed progress made by the co-chairs China and the United Kingdom, including the signature of the contract between China and Iran on transient analysis” and “reaffirmed the commitment to fully support these nuclear projects, including the timely completion of the modernization of the Arak Research Reactor and the supply of necessary equipment.”

The statement by the Joint Commission has also underlined the key role played by the IAEA, which is the only neutral entity in charge of the monitoring of the Iran nuclear deal and the implementation of Iran’s commitments under the UN Security Council Resolution 2231 that helps verify the peaceful nature of the Iranian nuclear programme.

The new developments are likely to perturb the Trump Administration that has been building pressure on Iran with a hope that it could be forced to retaliate by abandoning the nuclear deal, which could then be used at the UN Security Council to build a justification for more sanctions, or possibly a military action against Iran. The Iranian government has so far resisted the temptation to abrogate the JCPOA despite the growing calls by the hardliners from within to give up on the nuclear agreement.

INSTEX, for the time being would engage in trade covering the humanitarian goods including food, pharmaceuticals and medicine supplies but could be expanded and may include other goods in the future. The new mechanism that helps coordinate import and export payments to avoid cash transactions by the banks involves three major European economic powers and could emerge as a major challenge for the U.S. monopoly over global financial trade regulated by dollars.

The recent move by the EU-3 may offer some breather to the Iranian regime but is not likely to end its economic difficulties. Most companies would like to maintain caution and avoid engaging in regular trade with Iran for fear of U.S. sanctions. The statement by the Joint Commission, therefore, seems more symbolic and exposes the limitation of the JCPOA signatories, who otherwise have the responsibility to honour their part of the bargain, even if the U.S. refuses to be part of the Iran deal.

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