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Europe’s New Gamble: Dispute Resolution and the Iran Nuclear Deal

Triggering the Iran nuclear deal's dispute mechanism is an assertive move by the E3, but it is also a gamble that could save or sink the agreement.

Analysis | Middle East

France, Germany, and the United Kingdom (the E3) initiated a new and uncertain phase in the Iran nuclear deal this week by triggering its Dispute Resolution Mechanism (DRM). They did so in response to Iran’s expansion of its nuclear programme, following the reimposition of crippling US sanctions on the country. This is an assertive move by the E3, but it is also a gamble that could save or sink the agreement. The E3 will have to manage the process very carefully if they intend not to “add a nuclear proliferation crisis to the current escalation threatening the whole region”, as they stated in their announcement on the decision.

This is the first time the E3 has used the mechanism. When they were negotiating the agreement, Europeans likely never imagined that they would be in a situation in which the United States had withdrawn from the deal, formally known as the Joint Comprehensive Plan of Action (JCPOA). The DRM was intended to confront “Iranian cheating” on the JCPOA rather than the current context, in which Iran has ceased to comply with its obligations in response to US sanctions.

The DRM presents the E3 with risks and opportunities. The first risk is that they have now begun a countdown that could end in the deal’s collapse, if the issue comes before the UN Security Council.

The JCPOA will enter a chapter of high-level dispute resolution coordinated by the newly appointed EU high representative for foreign affairs and security policy, Josep Borrell. Once the parties to the JCPOA convene (as they must within 15 days of the E3 announcement), they can agree to extend the timeline for talks on multiple occasions before the process moves on to its next stage. Given the complexity of the issues involved, the initial talks are unlikely to resolve the dispute. If the parties cannot agree on an extension, or the E3 decide that further talks will not resolve the dispute, the JCPOA allows them to take the matter before the UN Security Council in as little as 35 days’ time. This would result in the snap-back of UN sanctions on Iran, unless the Security Council passed a resolution to lift the measures.

Currently, there seems to be little appetite in European capitals to escalate the matter to the UN Security Council, given that the E3 announcement made no reference to this step. Moreover, Russia and China are opposed to such an approach and would likely complicate the UN process.

The second risk is linked to the US. While the E3 may have gained some political capital in Washington by taking a tough stance on Iran, this will not last. The US administration will not be satisfied by European countries’ efforts until they withdraw from the JCPOA and join its maximum pressure campaign.

Although the E3 have explicitly rejected this US policy, Washington will maintain pressure on them to change course (and has seemingly targeted the UK as the weakest link in this). Worryingly, opponents of the JCPOA continue to assert that the US has grounds for pursuing the DRM at the UN Security Council. The E3 likely have a degree of confidence that Washington is not interested in doing so, given that it is no longer a party to the JCPOA and did not seek to do so before it withdrew from the deal.

Another risk is that, in an effort to exert pressure on Iran to fulfil its JCPOA commitments, Europe could face blowback from Tehran. Tehran’s immediate reaction to the E3’s decision was that it expected the process to focus on how to provide Iran with economic relief. However, given that the E3 has reached a stalemate in its efforts to boost trade with Iran following the snap-back of US sanctions, such relief is extremely unlikely to be forthcoming without American support. If Tehran feels increasingly cornered by Europe, or if there is further military escalation with Washington, Iran may expand its nuclear programme once more.

Tehran’s latest announcement on the JCPOA elicited a quiet sigh of relief from European capitals. There was concern that the United States’ assassination of General Qassem Soleimani, leader of Iran’s Quds Force, would prompt Tehran to take draconian steps on the nuclear issue, such as those to restrict international monitoring of its nuclear programme. However, Iranian officials have repeatedly asserted that, if the DRM process leads to the snap-back of UN sanctions, Iran will withdraw from both the JCPOA and the Nuclear Non-Proliferation Treaty. Worryingly, Iran’s president, Hassan Rouhani, stated that, if the current instability continues in the region, not only American but also “European soldiers could be in danger”. Such developments would present Europe with a major security dilemma.

More optimistically, the DRM could create new diplomatic openings if the E3 intend to use it this way. By acting tough on Tehran – and given that military clashes between the US and Iran have escalated in Iraq – E3 leaders may now find it easier to persuade President Donald Trump that Washington needs to show some flexibility on sanctions if it is to avert war. The E3 can make a more robust case to Trump if it coordinates this effort with China and Russia. A tangible economic package put forward in the DRM process could at least persuade Iran to freeze its nuclear activities that breach the JCPOA’s limits.

The E3 have long sought to bring Tehran and Washington to the negotiation table – and it is possible that the DRM process will add new political momentum to the effort. Yet the prospects of this have been significantly reduced by Soleimani’s killing.

The DRM process could also buy the E3 time to keep the JCPOA on life support until the US presidential election in November. However, it is unclear how long the DRM process can continue. This is especially true given that the process could be impacted on by further escalation in the Middle East, Iranian nuclear activity, and unexpected events – such as those of 8 January, when Iran appears to have inadvertently shot down a Ukrainian commercial aircraft, resulting in the tragic deaths of 176 people.

If the E3 can preserve the JCPOA’s outer shell until November, the agreement could provide an important foundation for the inevitable negotiations between Iranian officials and whichever US president is in office. This is true even if, in the meantime, the deal has been increasingly hollowed out from the inside. However, there are significant risks associated with triggering the DRM at this stage. By launching the process, the E3 will have greater responsibility for the forthcoming chain of events and must intensify their efforts to prevent the collapse of the JCPOA framework.

This article was republished with permission from the European Council on Foreign Relations

German Chancellor Angela Merkel and French President Emmanuel Macron, photo by Frederic Legrand (COMEO /
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