'The worst deal ever negotiated", president-elect Donald Trump called it. Mike Pompeo, chosen by Mr Trump to head the CIA, tweeted: "I look forward to rolling back this disastrous deal". The incoming administration has the nuclear accord with Iran in its crosshairs – putting a million barrels per day of oil exports in jeopardy again.
The agreement between Iran, the US and other leading nations came into operation at the start of this year. Iranian oil production has bounced back and the country has begun opening up its energy industry to international investment. The nuclear deal, and consequent economic revival, have been the core achievements of Hassan Rouhani, the president, who himself faces a presidential election in May.
The accord’s opponents in Washington have been happy to use it as a weapon against president Barack Obama, confusing two separate issues to complain that it has encouraged Iran’s regional adventurism.
But tearing up the deal is not so easy. Its “snapback” provision allows sanctions to be reimposed should a majority of the joint commission supervising the deal find that Iran is not complying. This commission comprises the five UN Security Council permanent members – the US, Russia, China, the UK and France – plus Iran, Germany and the EU. So without the support of the European members, it is essentially impossible for the US to revive UN sanctions.
The US could, of course, act unilaterally, depending on its dominance of the global financial system to scare off financial institutions and companies from doing business in Iran, and coercing countries to stop buying Iranian crude. Those tactics helped to construct a very effective sanctions regime that cut Iran’s oil exports to less than half of normal levels during 2013-15.
But a more hostile international environment, worries over Mr Trump’s loose cannon approach to diplomacy and a more confrontational and chaotic team than Mr Obama’s dedicated diplomats, make it a hard trick to repeat.
The Europeans, Chinese and Russians all want to do business in Iran. On the very day of the US election, French supermajor Total cleverly partnered with China National Petroleum Corporation to sign a preliminary agreement for Phase 11 of the giant South Pars gasfield. As it did with the 1990s vintage of the US embargo, the EU would offer shelter for its companies, even forbidding them from complying with sanctions. Iran can be expected to hurry to sign more contracts before Mr Trump enters the White House, to line up more diplomatic cover.
Russia is, of course, still under US and EU sanctions imposed over its annexation of Crimea. China is increasing its independence from the American financial system, with the establishment of the Asian Infrastructure Investment Bank and a free-trade zone with South-East Asia, replacing the moribund US-led Trans-Pacific Partnership. So both countries would gain from undermining the American ability to weaponise extraterritorial sanctions.
As a halfway step, the US might be tempted to be less cooperative in delivering on its side of the deal, quietly dissuading banks from dealing with Tehran, pushing back hard against minor technical Iranian infractions of the deal and enforcing sanctions on non-nuclear issues such as human rights and ballistic missile development. This would discredit Mr Rouhani’s pragmatic approach and empower regime hardliners.
The aim would be to goad Iran into violating or renouncing the agreement, and restarting its nuclear enrichment. Ultimately that might be a casus belli for US military action, further destabilising the region and placing Mr Trump in opposition to Vladimir Putin, the Russian president, for whom he has expressed admiration.
Tearing up the deal would reverse oil oversupply, make Opec’s task of production cuts easier and bring some relief to Mr Trump’s supporters in the Texan oil patch. But fractious diplomacy and the dangers of further Middle East conflict point the other way. Campaign trail soundbites are no substitute for realistic policies.
Robin Mills is the chief executive of Qamar Energy, and author of The Myth of the Oil Crisis.
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