Europe’s choices over Iran

A response from Germany following Trump’s withdrawal from the Iran nuclear deal:

German Chancellor Angela Merkel said Thursday that Europe can no longer count on the United States to protect it, urging the continent to “take destiny into its own hands.”

“It is no longer such that the United States simply protects us, but Europe must take its destiny in its own hands. That’s the task of the future,” she said during a speech honoring French President Emmanuel Macron, according to Agence France-Presse.

This will be music to the ears of many Americans, who are wondering why the US remains committed to defending Germany from…well, who? Russia? Germans have made it quite clear they prefer Putin’s Russia to Trump’s America, and who else is there? Oh, but wait:

German defense spending will fall far short of levels demanded by President Donald Trump’s administration for years to come, Chancellor Angela Merkel’s defense minister said.

Those levels are actually NATO commitments; Trump’s demand is merely that Germany meets them. The problem Germany has is that it is dependent on the US for security (assuming it is actually required) and hates it, but they don’t hate it enough to reach in their pockets and pay for it themselves. Like a spoiled teenager who hates the rules in their parent’s house, they don’t want to move out either because that would involve hardship.

What will be interesting is the response of Germany, France, and the UK to this:

Iran’s Foreign Minister Mohammed Javad Zarif was in Moscow on Monday, as Russia tries to keep the Iran nuclear deal alive in the wake of Washington’s pullout, pushing it into rare cooperation with Europe.

Russian Foreign Minister Sergei Lavrov said he was scheduled to discuss how to try to save the nuclear deal with Zarif, the Interfax news agency reported.

Zarif’s tour also took him to Beijing at the weekend and will see him visit Brussels later in the week, as the international backers of the 2015 accord scrabble to save it.

“The final aim of these negotiations is to seek assurances that the interests of the Iranian nation will be defended,” Zarif said at a news conference with Lavrov.

Lavrov, meanwhile, said Russia and Europe had a duty to “jointly defend their legal interests” in terms of the deal.

A few months ago, Russia was accused – perhaps fairly – of conducting a chemical weapons attack on British soil, and there were expulsions of diplomats and lots of tough talk from European leaders about solidarity with Britain. Then a few weeks ago Russia’s client in Syria allegedly used poison gas against civilians and everyone went mental, with Britain and France joining the US in launching missile strikes against targets in Syria. Russia was a pariah nation run by a gangster regime, we were told, so it’s going to be very interesting whether the commercial interests of European businesses consign all this rhetoric to the dustbin. It’s going to be particularly interesting to see what Britain does, given Boris Johnson and Theresa May’s recent criticism of Russia. At least nobody is pretending it’s about nuclear security any more.

Something the media has failed to mention is the difficulty of doing business in Iran even without US sanctions in place. I can’t find the link now (Google search results are swamped by recent developments) but a few years ago one of the big Chinese companies effectively walked away from an Iranian oil and gas project having utterly failed to make any progress, citing the intransigence of the locals as the primary reason. Anyone who has read the history of Iran, particularly the bit concerning Britain’s dealings with Mohammad Mosaddegh over BP, will get a clear idea that doing business there is fraught with difficulties, not least because the Iranians are severely tough negotiators. There has been nothing preventing Chinese, Russian, or Turkish firms making hay in Iran in the absence of American and European countries for decades, but they haven’t, and for good reasons.

One of the main problems facing western companies concerns the ownership of Iranian companies. As is to be expected under such a regime, pretty much every major company is in some way owned by the government or powerful individuals connected to it. In many instances it is the The Islamic Revolutionary Guard Corps (IRGC) which controls the company. From Wiki:

IRGC first expanded into commercial activity through informal social networking of veterans and former officials. IRGC officials confiscated assets of many refugees who had fled Iran after the fall of Abolhassan Banisadr’sgovernment. It is now a vast conglomerate, controlling Iran’s missile batteries and nuclear program but also a multibillion-dollar business empire reaching almost all economic sectors. Estimates have it controlling between a tenth and around a third of Iran’s economy through a series of subsidiaries and trusts.

The Los Angeles Times estimates that IRGC has ties to over one hundred companies, with its annual revenue exceeding $12 billion in business and construction. IRGC has been awarded billions of dollars in contracts in the oil, gas and petrochemical industries, as well as major infrastructure projects.

Last October Donald Trump sanctioned the IRGC as a terrorist organisation, independently of the nuclear deal. Leaving aside the difficulty of executing major projects in Iran without falling foul of US sanctions on the IRGC, can you imagine having an IRGC-owned company as a partner or contractor? Would they carry out the work as per the contract? To whom would you turn if they didn’t? It’s hard enough doing business in Russia with companies run by well-connected gangsters; now imagine what it’s like contracting with the private army of the Ayatollahs.

Major European nations risk creating an enormous political and security rift with the US over this Iranian nuclear deal, all for the benefit of a handful of companies who reckon they can make money in Iran. The way they’re talking, and the way it’s being reported, you’d think the money was already in the bank. It’s not, and probably never will be. Politicians should heed this point.

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9 thoughts on “Europe’s choices over Iran

  1. I think what the EU leaders hate most is being found out. Obama’s Iran deal was intended to be ‘I give you billions in cash / you stop building your nukes’. It turned out to be ‘I give you billions in cash / you use it to build nukes in secret’. Of course it had to go.
    Those who now claim ‘this will open the door to Iran building a bomb’ haven’t been paying attention. Or, as is actually the case, deliberately looking the other way out of greed.
    So Merkel, Macron, and May all look like grasping fuckwits who until a week ago were just fine and dandy with the idea of an Iranain bomb. And the likelihood of Israel, not wanting that, having to do something practical about it.

  2. ‘German Chancellor Angela Merkel said Thursday that Europe can no longer count on the United States to protect it, urging the continent to “take destiny into its own hands.” ‘

    The Merkel plan: the best way to protect a continent from the Russians is to import large numbers of Jihadis and unproductive burdens on the economy, thereby making it much less palatable to invade.

  3. Whatever happened to the Skripals?

    On Chinese investment in Iran, China is their biggest trading partner and recipient of their oil, Xi visited them immediately after the JOCPA was released and committed to huge investment in Iran, something they have been doing ever since, all financed by Chinese banks. For example and given the current hoopla, state officials have indicated that CPEC would buy out Totals share in South Pars if the French bottle it.

    https://www.japantimes.co.jp/news/2018/05/11/business/corporate-business/chinas-cnpc-ready-take-iran-gas-project-total-leaves-sources/#.WvrN8IiFM2w

  4. @Sam Vara,

    Merkel’s comments are somewhat undermined by the state of the Bundeswehr – trying to get Europe able to defend itself is going to be a long haul even if there’s actually any real will to do so.

    The Poles and Balts are fairly serious about it, but you’d expect that given their neighbours; other nations are content to assign forces on paper to the Allied Rapid Reaction Corps (the ‘rapid’ is ironic…) but it’s often comical to see the panic when they’re asked to provide actual troops, rather than made-up numbers and a few liaison officers.

  5. I can’t remember where I read that various Iranian officials were threatening to leak the names of all those Westerners who received bribes for approving the deal, should they allow the US to withdraw and impose sanctions. If so, I don’t think there is enough popcorn in the whole world. I look forward in anticipation!

  6. @LJH,
    Saw that via Insty.
    Don’t hold your breath- the Iranians will want to retain the option of bribing people in future.

  7. Apparently, the state of the Bundewehr is worse than people realise. The link Tim provided does not give figures but this telegraph article does:

    https://www.telegraph.co.uk/news/2018/02/20/german-armed-forces-not-equipped-do-job-rules-watchdog/

    You can’t blame the Americans for objecting to shouldering the vast majority of the burden when the Germans are (to quote from the article):

    Ms von der Leyen has presided over a series of shortage scandals during her time at the defence ministry, at the same time as introducing initiatives such as creches and flexible working hours for soldiers.

    I dare say that creches and flexible working hours will have any enemy quaking in their boots. That and the massive amounts of benefits and expense caused by a few million “refugees” leeching the country dry.

  8. Tim, how are the Iranian in regards to paying oil project? It’s my understanding that IRG has this tendency of announcing a multibillion weapons project from Russia/China/France that made headline in the newspaper, and 2-3 years down the line quietly cancelling because they’re simply not paying the bill. Weapon dealers around the world sort of have gotten used to this kind of behavior.

  9. Tim, how are the Iranian in regards to paying oil project?

    I don’t know for sure, but I imagine it is woeful.

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