Friday 11 May 2018

Brave or hypocritical?

There’s something very uncomfortable about a world in which future peace depends on the Iranian Ayatollahs being more reasonable than the President of the USA.  We can but hope.  Whether one regards the deal from which Trump has walked away as good, bad or indifferent (and Trump’s principal reason for declaring it bad seems to be more to do with the fact that Obama negotiated it than with any of the detail), the underlying principle was that Iran was offered the economic carrot of a reduction in sanctions in return for agreeing to halt some aspects of its nuclear programme and permit international inspections.  The fact that Iran may have done some things which it never promised not to do isn’t really a very good reason for other signatories to stop doing the things to which they did agree.
But Trump has done more than simply removing the American carrot; he has made it clear that, whilst he and the US are reneging on their part of the deal, he still expects Iran not only to honour its part, but to do other things (or cease doing some things) as well, with an implied threat to back that up.  He has attempted to replace the carrot with a very big stick, and behave in the style of a schoolyard bully.  The European response has, thus far, been robust.  The determination of Macron, May and Merkel to seek to uphold the deal is to be welcomed.  There’s a ‘but’ to that, however: how far are they prepared to go?
In purely economic terms, the US has been doing little trade with Iran anyway since the sanctions were lifted, although there was at least one big deal in the pipeline.  An $18 billion deal to sell Boeing aircraft will now, inevitably, be cancelled and there will be an impact on jobs in the US.  Some might see that as an opportunity for Boeing’s main competitor, the European company Airbus, to fill the gap and sell extra planes on top of its existing $20 billion order from Iran.  Things are not quite that simple, though.  As Craig Murray has pointed out, there are US-made components in aircraft made by Airbus, which make the Airbus order itself fall foul of Trump’s decision.  The default position is the US expectation that the Airbus order will also be cancelled, or else the European companies involved will also be subject to US sanctions.  Trump’s re-imposition of sanctions on Iran doesn’t only affect US companies; it also applies to any non-US company which does business with both Iran and the US.
And that issue goes wider than just aircraft.  It also affects the banking system, for instance.  As this article in the New Yorker highlights, any European bank facilitating trade with Iran will leave it open to fines and sanctions in US courts.  The bully isn’t just aiming to stop US-Iran trade; he’s aiming to force his so-called allies and friends into line as well.  In that context, for the joint UK-France-Germany declaration to have any meaning at all, it requires using the strength of the massive trading bloc which the EU constitutes to resist American economic power – the EU is the only trading unit in the world in a position to do that – and take whatever steps are necessary to ensure that Europe can uphold the deal despite Trump.
It’s just as well, then, that none of those three European leaders making their bold statements is seeking to leave the EU, weaken the bloc’s economic power, and align itself ever more closely with the US economy.  That would be hypocritical, as well as silly, wouldn’t it?

1 comment:

Spirit of BME said...

I think you have to read Little Johnny Bolton`s book (I did) that was roundly ridiculed when it was published some years ago, as it suggested crazy things were happening, like North Korea was developing a nuclear bomb, China was a market manipulator that broke WTO copy rights and steal data to make a profit – which they do on a daily basis, but he omitted South Korea and Japan that have been doing it for decades. The best bit that I liked was he stated you could get rid of the top eight floors of the UN building and you would not notice the difference, but again the same could be said for many corporate HQ`s. That book is the blue print of what we now see being enacted.
Most of the “economic carrot “was giving Iran back their own money that had been suspended in western backs, but this did not work as they spent it on foreign wars and rocket development and the talented and down trodden Iranians saw nothing of it.
The airline business will be affected, but I expect a fat tax break for US aircraft manufacturing to cover the cost of these new sanctions, but Airbus will not be able to trade as Iran is demanding that the EU and others underpin any financial loss and only Germany has the cash in the EU, to do that. Little is being said about the sanctions by the Gulf states/Saudi on Qatar, but it’s important as when sanctions were in force before it was Qatar that kept their financial transactions alive and this is an important piece on the chess board.
Mutti Merkle has the problem as she is the last man standing in the EU from the original deal and if it collapses her credibility could go south and another election called and that is why the Boy Johnson and the French were on the Washington Express.