The Iran Nuclear Deal: Europe to the Rescue?

Whether or not President Trump unilaterally withdraws from the Iran nuclear deal on 12 May, Europe will face an uphill battle to save it. If sanctions are applied immediately, or threatened every 120 days, that will undermine one of the fundamental tenets of the agreement. Businesses will be unwilling to risk investing in an economy under the threat of sanctions. This will mean Iran will be denied the benefits to which it is entitled to under the agreement and will have little incentive to continue complying with its nuclear obligations. In fact, current statements from Tehran indicate that Iran might walk away from the deal entirely. Europe is making last-ditch efforts to meet Trump’s challenge but it needs a backup plan to salvage the nuclear deal if the U.S. withdraws or carries out its part of the bargain half-heartedly. This policy brief identifies a series of European options that will protect the JCPOA from both a U.S. withdrawal and continued uncertainty. It argues that a package of positive incentives aimed at persuading the Iranian leadership of the benefits of compliance with the JCPOA outweigh the potential costs of noncompliance and retaliation.