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Europe steps up bid to salvage Iran accord ditched by Trump

UK, France, Germany, Iran foreign ministers meet in Brussels on Tuesday for discussions

Berlin

EUROPEAN powers, alarmed by US President Donald Trump's withdrawal from the Iran nuclear accord, set out this week on an urgent search for ways to hold the deal together and avoid a further escalation of violence in the Middle East.

With German Chancellor Angela Merkel warning that faith in the international order is at stake, Germany, France and the UK are embarking on a diplomatic mission to salvage what they can of the accord, both to keep Iran on side and to shield European companies from US sanctions that threaten billions of dollars of investment.

Foreign ministers from the UK, France and Germany are due to sit down with their Iranian counterpart, Javad Zarif, in Brussels on Tuesday to discuss how to move forward. European Union leaders will then take up Iran at an informal dinner in Sofia the following day. German Economy Minister Peter Altmaier meanwhile headed to Russia on Monday to help prepare a meeting between Mrs Merkel and President Vladimir Putin set for the end of the week in Sochi.

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The flurry of activity between the European signatories of the 2015 accord with Iran reflects the lack of an alternative to the deal. It also points to a refusal to accept that Mr Trump's decision on Iran, fulfilling a campaign pledge to US voters, should be allowed to upend a global agreement negotiated over years and which international observers say is working.

"At all levels, we are underlining the importance of preserving this agreement," Yuri Ushakov, a Kremlin foreign-policy aide, told reporters in Moscow last Friday. "It has crucial significance not only for ensuring regional security, but also for stability in the world, and it's extraordinarily important in the regime of nuclear non-proliferation."

Mr Trump's announcement last week that he was withdrawing the US from the landmark Iran deal inflamed regional tensions and threw European investments from oil to aerospace into jeopardy.

According to Iran's ambassador to Britain, British Prime Minister Theresa May told Iranian President Hassan Rouhani in a call on Sunday that the three European foreign ministers will present Mr Zarif with a "package of initiatives" to protect implementation of the accord. They aim to ensure that Iran receives "the economic benefit of the deal" ambassador Hamid Baeidinejad said in a Twitter post on Monday.

France insists that while EU nations are willing to discuss issues including Iran's ballistic missile programme and its destabilising role in the Middle East, the nuclear deal must stand.

"At the moment, it's the only diplomatic proposition on the table," French Foreign Minister Jean-Yves Le Drian told Le Parisien newspaper in an interview. "There is no Plan B," he said. "Plan B is war."

An Odoxa poll published last week said that 67 per cent of the French think that Europe should ignore Mr Trump and maintain its commercial ties with Iran.

The question is whether the remaining signatories - the so-called EU-3, Russia and China - can deliver the benefits of the accord, including access to global oil markets, trade and investment, that enticed the Iranians to join the agreement.

Mr Zarif failed to win any concrete assurances to help tackle the US threat of economic sanctions during talks in Beijing on Sunday, and was due in Russia on Monday. China is the biggest buyer of Iranian oil.

In the US, National Security Adviser John Bolton raised the pressure on Europe, saying that countries and companies that continue to do business with Iran could face sanctions.

"Why would any business, why would the shareholders of any business, want to do business with the world's central banker of international terrorism?" he said on Sunday on ABC's This Week.

Mrs Merkel and French President Emmanuel Macron reached out to Iran last week to urge it stick to its commitments under the accord. Mrs May added the UK's voice to the push in her call with Mr Rouhani on Sunday.

Concern - and anger - is growing among European governments at the uncertainty facing companies with investments in Iran. Paris-based Total SA, for example, the only Western energy major investing in Iran, has pledged US$1 billion in investment in the South Pars natural gas field, and has already spent US$90 million helping to develop it.

France, as a "matter of principle", cannot accept that "the US act like the world's economic policeman", Finance Minister Minister Bruno Le Maire told reporters last Friday. He said that he spoke to US Treasury Secretary Steven Mnuchin to request exceptions for French companies, a delay in implementing sanctions, and a so-called grandfather clause for companies that invested in Iran while the treaty was in place.

"The only way to avoid pain from these sanctions is negotiating with the US, but the instruments are not easy to find," Volker Treier, deputy managing director of Germany's Association of Chambers of Commerce and Industry, said in an interview.

Mrs Merkel, speaking in the western German city of Muenster last Friday, said that Mr Trump's latest blow to transatlantic relations, on top of his withdrawal from the Paris climate accord and trade disputes, made clear that the world's multilateral institutions are "in real crisis". If "everybody simply does what they want, then that's bad news for the world", she said. BLOOMBERG