Iran challenges Europe and China to stand up to US over nuclear deal

By taking a couple of small, carefully calibrated steps towards the exit from the 2015 nuclear deal, Iran has given Europe and China a two-month ultimatum to stand up to the US on the world stage, or risk a slide towards a new Middle East conflict.

The erosion of that multilateral agreement and the return to military posturing in the Persian Gulf, has been driven by a small number of radical players in the Trump administration, the Israeli government, and the Saudi and Emirati monarchies. In the US and Israel, this has happened in the face of resistance from the defence establishment.

Related: Iran nuclear deal: what has Tehran said and what happens next?

In the year since Donald Trump abrogated the multilateral agreement with Iran – by which Tehran accepted stringent limits on its nuclear programme in return for sanctions relief – the European, Russian and Chinese parties to the deal swore to uphold it. But they have failed so far to shield Iran from redoubled US sanctions.

Corporations feared being blacklisted in the US more than they feared losing a share in the Iranian market. European efforts to insulate its companies from sanctions have so far proved flimsy.

Tehran’s initial response to Trump’s effort to destroy the deal was strategic patience, relying on the rest of the world to keep its economy afloat.

Iran hoped that Beijing at least would defy the US and continue to buy its oil when the US ended sanctions exemptions for the last handful of Iran’s remaining customers on 2 May. So far, that has not happened. Now, Beijing is nervous about derailing delicate trade talks with Washington, and Chinese imports have dipped.

Russia has voiced support for Iran – but is not an oil customer and carries little weight in the global economy.

“For the Europeans, the Chinese and Russians, the nuclear deal has been a priority but it has not been in the top three priorities. It has been the sacrificial lamb,” said Ellie Geranmayeh, senior policy fellow at the European Council on Foreign Relations.

By raising the stakes, Iran has challenged Europe and China to wean themselves off dependence on the dollar – for both a long-term aspiration. Iran is now giving them 60 days to take significant strides or face a potentially severe new crisis in the Middle East.

The initial two steps announced by President Hassan Rouhani are at the very low end of the scale of available measures. Iran will stop exporting low enriched uranium (LEU) and heavy water – a trade which had kept its stockpiles of both under the levels set by the 2015 deal.

For the time being, these steps will have a negligible impact on the central purpose of the agreement: keeping Iran at least a year away from the capability to make a nuclear warhead.

The actual LEU stockpile had settled below the agreed 660lb limit and heavy water has no immediate use, as Iran currently has no functioning heavy water reactor or reprocessing plant necessary to make plutonium.

The US announced last week that it would begin sanctioning trade in both materials making it harder for the Iran to keep to the agreed limits. By limiting its initial steps to these two measures, Tehran has insured that the blame resides almost entirely in Washington.

Much more serious are the steps Iran is threatening to take after the 60-day deadline. Rouhani has it will lift the agreed 3.67% limit on the level of purity to which it enriches uranium. For every percentage point that figure is allowed to creep up, Iran gets exponentially closer to the capacity to produce weapons-grade uranium.

Rouhani said that if the ultimatum is not met, Iran will also end a Chinese-led initiative to redesign its heavy water reactor in Arak. If that happened, the route to producing plutonium would be open once more.

Such steps, which could bring Iran’s breakout time to below a year, would almost certainly trigger the reimposition of UN and EU sanctions, and an accelerated round of escalation. Iran has even threatened to leave the Non-Proliferation Treaty (NPT), signalling an intention to make nuclear weapons.

An NPT withdrawal, or any Iranian move to hinder the oil trade passing through the Strait of Hormuz – another Iranian threat – would bring a military confrontation significantly closer.

It is now China and Europe’s move. As a huge oil importer and party to the 2015 deal, Beijing is uniquely placed to demonstrate the agreement’s benefits to the Iranian people.

Germany, the UK and France have launched a euro-based payment system, known as Instex, intended to insulate Iranian transactions from US sanctions. It is expected to accommodate non-oil transactions, including food and humanitarian aid, but it has taken a long time to establish and is not yet online.

Although accelerating work on Instex would not do much for Iran’s economy in real terms, it would be a sign of political will to defy Trump and uphold the deal.

“The Europeans thought they would be appease Trump and ease the ‘maximum pressure’ policy on Iran. Clearly that is not working out,” said Dina Esfandiary, an Iran expert at the Belfer Centre for Science and International Affairs at Harvard University.

Meanwhile, China is rethinking its policy, Esfandiary added. “For them it will be a trade-off between highlighting their economic and political sovereignty or safeguarding trade with the US and economic growth.”