Iran
and the EU: Is a New Trade Agreement Possible?
Special
The European Union has begun to negotiate a trade and cooperation agreement with the Islamic Republic of Iran. Whether it will ever materialize will depend upon how strong-willed the EU is in linking the future of the trade component to a number of political benchmarks which impinge upon Iran in the areas of human rights, weapons development, the Arab-Israeli conflict and terrorism. Iranians ,publicly argue this linkage is inadmissible and will not be acceptable. The EU insists that without "progress", as defined by the EU on these political questions, the trade agreement will never be implemented.
Part of the difficulty in establishing linkages is the complicated way the European Union works. The EU High Representative for Foreign Relations, Javier Solana, has been given a mandate to ensure that discussions with Iran include the non-trade items. However, the actual trade negotiations will be carried out by the office of the EU Commissioner for External Relations, Chris Patten. Thus, there is a disconnect between the responsibilities and therefore the mandatory linkages in the EU approach. This leads to concern that, while the Europeans argue they will use the trade component of the overall agreement as leverage to assure better Iranian behavior, on the political and military front, there is presently no automatic guarantee based on legal documents that this will happen. In other words, the trade agreement, from a legal perspective, will stand on its own. EU officials have assured their American counterparts that a political agenda is critical to the overall package. They insist there will be de facto, if not de jure, linkage, and that they are under pressure from many in the European Parliament and in national governments to make sure this is the case.
The danger, as the Americans see it, is that the trade agreement could prove to be very lucrative for European companies since the Iranian market is large and Iran, thanks to its oil exports, has a favorable balance of payments with the EU and therefore the hard currency to pay for European products and services. Once the financial benefits of the agreement become a reality, there will be inevitable pressures to resist any linkage between politics and economic transactions. In this sense, it will be similar to the case of U.S. economic ties with China which are very important and have not been allowed to be disrupted on account of China’s human rights or military records. It is true that in a specific case, i.e. China’s nuclear dealings with Iran, the United States did link Chinese decisions to cancel agreements with Iran as a necessary condition for getting U.S. nuclear technology. But this is an isolated case and there is little likelihood the Europeans would provide Iran with dual use technology that could directly help the Iranian nuclear weapons program.
From an Iranian perspective, they have every interest in delinking economic dealings with the EU from the sensitive political issues they know the Europeans will raise. Furthermore, they want to emphasize the economic components while hinting not too subtly this is a "take it or leave it" proposition and that if Europe does not want their business they will take it elsewhere, most likely to East Asia. How Europe handles the negotiations will be a true test of its skills and willingness to play a more assertive role in the Middle East. The United States has a great interest in working closely with the EU to assure that the political issues are kept on the front burner and that the Iranians are required, on every occasion, to understand that the linkages are real and that it is the EU which is vastly larger, richer and more powerful than Iran that can walk away and take its trade elsewhere.
What will happen in the next few months will set the tone for these negotiations and will either be a step forward in trans-Atlantic cooperation to put pressure on countries such as Iran to change their ways or evidence of further trans-Atlantic drift with Europe going its own way, irrespective of America wishes.
