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JCPOA: How US withdrawal scripts economic instability and geopolitical flux

‘JCPOA’; how US withdrawal scripts economic instability and geopolitical flux

 The recent move of the US president Donald Trump, intended to terminate the 2015-nuclear pact with Iran, aka JCPOA, has further escalated the environment of uncertainty in the region. Besides indicating toward the upcoming instability and disturbed geopolitical equations in the region, this termination also holds many long-term economic repercussions.

After months of speculations and negotiations, on last Tuesday, Trump finally ended the US’ obligation to the Joint Comprehensive Plan of Action (JCPOA) that was decided between Iran, US, Russia, China, France, Britain, and Germany. This deal was signed by Trump’s predecessor Barack Obama in 2015.

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Russia’s gains

In terms of economic ties, Trump’s withdrawal from the Iran’s 2015 nuclear agreement has made western European energy companies, already wary of existing US sanctions against Tehran, fearful of investing in Iran’s vast energy resources.

However, this has handed an opportunity to Russian firms, who have agreed seven memorandums-of-understanding for Iranian oil or gas fields that are likely to follow Zarubezhneft’s $740-million production agreement for the Aban and West Paidar fields. Lukoil has provisionally been assigned the two major fields, Mansouri and Ab Teymour, each with 15 billion barrels.

Paul von Maltzahn — former German ambassador to Iran, Egypt and Iraq – tells TRENDS that American policy has undermined the “multilateral approach” that after 2012 halved Iran’s oil exports and froze foreign investment and then in 2015 secured the nuclear agreement.  “Russia is outwitting the US in the Middle East because it has a strategy, which America lacks,” says von Maltzahn.

“The Russians have been ruthless in pursuing their objectives, but they also have more of a long-term view,” adds von Maltzahn.

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Good deal or bad?

During the 2016 US presidential election campaign, then-candidate Trump called the JCPOA “the worst deal ever”, while his predecessor Barack Obama had considered it a major achievement. John Kerry, Obama’s Secretary of State at the time, recently called the JCPOA “the most transparent, the most accountable, the most verified, strongest nuclear agreement between the international community and a country.”

For the US to abandon the JCPOA could have global consequences, including with North Korea, which has nuclear weapons and which, unlike Iran, is not inspected by the UN’s International Atomic Energy Agency (IAEA). Kerry has suggested that the US leaving the JCPOA would lead Kim Jong Un to conclude that any agreement reached with a US president could be thrown out by his successor.

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Dangers for Middle East, wider world

Maltzahn, the German ambassador to Tehran during the European Union’s earlier round of nuclear talks with Iran in 2003-05, tells TRENDS the undermining of collective agreements carries dangers for the Middle East and the wider world. “The problem is that American policy is destroying the multilateral approach,” he explains.

“Multilateralism is quite new and it is in danger: by nature, it’s complicated and takes a long time, but it can create more stability. By contrast, ‘might’ instead of ‘right’ is volatile.”

Farideh Farhi, an Iran expert at the University of Hawaii, tells TRENDS that rising regional tensions stretch beyond governments. “We are at a stage in the Middle East where even academics and non-governmental researchers from various countries cannot get together in the Middle East and network,” she says. “They have to meet somewhere in Europe.”

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France expressed concerns

French President Emmanuel Macron called Trump to express his concerns over rising tensions in the Middle East region after US’ decision to pull out from the JCPOA accord. CBS News reported that Macron’s office said the two leaders spoke on Saturday and the French leader expressed his ‘great concern about stability’ in the region.

Besides, there were reports that a top nuclear expert has resigned from the US State Department after Trump’s announcement of withdrawing from the nuclear deal. Richard Johnson, the assistant coordinator for Iran nuclear issues at the Office of Nuclear Implementation, resigned this week.