January 06, 2020
A decade that started with a bang
Happy New Year to all our readers.
The holiday period was dominated by news from other continents. The big development last night was Iran’s decision to withdraw from the nuclear deal. This directly affects the EU as it was the key broker of that agreement.
The announcement was not really surprising after the killing of Qassem Soleimani, but this should not detract from its significance. Iran is, of course, not on the verge of building a nuclear bomb. But the prospect of an accelerated timetable for an Iranian nuclear capacity and a renewed arms race in the Middle East is troubling. The breakdown of what is formally known as the joint comprehensive plan of action also marks the defeat of the single biggest success of EU-level diplomacy in the previous decade. It poses a huge challenge for EU foreign policy right now. Germany has reacted with the usual prevarication, prompting a critical response from Mike Pompeo, the US secretary of state. France and the UK are diplomatically more aligned with the US.
As we pointed out in the past, the EU’s weakness as a foreign policy power is entirely self-inflicted. It results from the failure to agree a stable framework for the eurozone and an explicit role of the euro as a weapon in international diplomacy, and also from the failure to develop a stronger and more independent defence policy. Starting from where we are now, the EU really has no option but to align itself with the US given the alternatives.
We agree with Angelo Panebianco in Corriere della Sera this morning that any break with the US would drive the EU into the hands of Russia. That prospect is what should inform the EU’s actions. On this specific point we also note a comment by Niall Ferguson in the Sunday Times, who argued that the conflict in the Middle East is likely to strengthen Russia’s role in the region. We note that Iran will still continue its co-operation with the Atomic Energy Agency, which we think is a smart move directed at appeasing Russia. We conclude that the EU will need to tread very carefully.
A related development which we wrote about in our final briefing of 2019 was the US/German conflict over NordStream 2. We heard that the US administration has threatened German officials with massive sanctions if Germany were to collude with Russia to circumvent the recently-passed sanctions law. This also explains Angela Merkel’s extremely cautious response to demands for EU counter-sanctions. The Russian government was considering using one of its own pipeline supply ships to fill the remaining gap in the North Sea, after the Swiss-based company Allseas pulled out under pressure from the US. But this offer has not met with much enthusiasm in Berlin. We think the project could be on hold for quite some time. This will also have significant effects on Germany’s future energy policy, given the dependence on Russian gas for the present government’s energy strategy.