04 September 2019

 

Full Report

Predictions

  • French efforts to engage Tehran via G7 summit will bolster Rouhani administration but will fail to promote further dialogue with US
  • Iran will further scale back nuclear deal commitments in coming days to pressure EU nations to increase efforts to ease economic hardship of US sanctions
  • Continued US attempts to establish maritime protection force will ensure tensions in Gulf and risk of harassment to commercial shipping remain elevated

Analysis

Foreign Minister Zarif met France’s President Macron on the sidelines of the G7 summit in Biarritz, France, on 24 August. Zarif had been invited as part of French efforts to ease regional tensions between Iran and the US, but did not hold talks with US officials during his visit. In a related development, Macron announced the beginnings of what has become a French proposal to make available USD 15 billion in credit lines, backed by oil sales, to Iran in return for full adherence to the 2015 nuclear deal. On 26 August President Trump said he was “open” to negotiations with Tehran, while President Rouhani made a similar public statement expressing a willingness to engage in talks. However, the following day Rouhani reiterated that such negotiations could only take place on condition the US lifted its sanctions on Iran. Separately on 29 August, Zarif stated that the British-flagged Stena Impero was seized by Iran because the UK “committed sea crimes by taking our ship”, understood to mean the seizure of the British-flagged vessel was in retaliation for the impounding of the Grace-1 off the coast of Gibraltar in July.

Washington imposed sanctions on Zarif in July (see our 15 August Report) as part of its ongoing campaign of “maximum pressure” on Iran, intended to force Tehran to renegotiate the 2015 Joint Comprehensive Plan of Action (JCPOA), from which the US unilaterally withdrew last year. European signatories to the deal have sought to maintain Iranian participation by pledging to ease the economic pressure of US sanctions, but have so far failed to do so. The French invitation to Zarif to attend the G7 summit will have been intended to demonstrate the EU’s continued commitment to engagement in spite of Washington’s efforts to isolate Iran, while simultaneously intended to strengthen the administration of President Rouhani, along with Zarif, who helped negotiate the JCPOA, in the face of domestic criticism by hardliners.

 

 

 

 

 

 

 

 

 

 

 

Although Macron described his discussions with Zarif as “constructive”, his efforts are unlikely to significantly ease tensions in the face of Washington’s continued campaign against Tehran. The proposed credit arrangement would require at least tacit approval from Washington if banks are to be willing to lend without fear of incurring US sanctions, and there are few indications that this will be forthcoming. Rouhani’s comment that he remains willing to talk to Washington will have been intended to acknowledge the efforts of France and other European signatories to the JCPOA, while his statement, issued just hours later, demanding the lifting of sanctions will have been aimed at appeasing domestic hardliners who are opposed to engagement with the West. The President likely deliberately timed the contradictory statements to emphasise how the influence of hardliners, which has increased as a result of US sanctions, has constrained his ability to engage diplomatically, and so underline the need for the lifting of sanctions if there is to be further dialogue. Separately, Zarif’s comments over the Stena Impero – made since the release of the Grace-1 on 15 August – mark a break with Tehran’s earlier insistence the vessel was seized because it breached international shipping laws, suggesting talks over its release are progressing.

Without Washington’s acquiescence, European efforts to ease economic pressure on Iran caused by US sanctions will remain limited and international tensions will therefore remain elevated. Tehran will continue to scale back its commitments to the JCPOA in an effort to put further pressure on the deal’s remaining signatories. Indeed, Tehran is set to announce further incremental breaches on 6 September, likely this will be an announcement of plans to increase the levels of stockpiled enriched uranium, or the resumption of operations at Iran’s advanced nuclear centrifuge. France’s effort to promote dialogue will have successfully bolstered Macron’s image at the G7, but will have little practical effect – however there will be another chance for dialogue on the sidelines of the UN General Assembly summit in New York next month, should US officials choose to meet Iranian delegates. Meanwhile, the announcements on 19 and 21 August respectively that Bahrain and Australia will make limited commitments to the proposed US and British maritime protection force will continue to elevate tensions in the Gulf, increasing the risk of harassment to shipping by naval elements of Iran’s Revolutionary Guard.

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