On January 31, 2019, France, Germany, and the United Kingdom announced their most substantive move yet to save the 2015 Iran nuclear deal, to which they are signatories, from collapse. With the European Union’s blessing, the three states established a special channel that shields trade with Iran from U.S. sanctions. The Instrument in Support of Trade Exchanges, or INSTEX, as the channel is called, holds out the possibility that Europe can yet salvage the nuclear agreement’s core bargain: that Iran was to limit its nuclear activities in return for the normalization of economic relations. The preservation of this arrangement will depend not only on the modicum of European-Iranian trade that INSTEX might help preserve but on whether Europe can navigate a narrow path between what Iran expects and what the United States can tolerate.
President Donald Trump’s decision in May 2018 to withdraw from the nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), brought with it the return of powerful U.S. sanctions that had been frozen as part of the agreement. The new sanctions, unlike those that had preceded the JCPOA, have neither UN nor EU support. Washington put them in place unilaterally—but still to devastating effect. In recent months, dozens of international companies have left Iran, the country’s oil exports have halved, its national currency has tumbled in value, and inflation has soared. Iran’s parliamentary think tank has issued a bleak forecast, suggesting that, in the more optimistic of two scenarios, the country could expect -2.6 percent growth this year and -4.5 percent next year. The country’s president has assessed the economic situation as the direst in the four decades since the 1979 revolution.
As the White House tries to rally broader international support for its “maximum pressure” campaign, one stubborn fact bedevils its efforts: over the past two years, the International Atomic Energy Agency (IAEA) and the UN secretary-general, and, last week, the U.S. Director of National Intelligence, have consistently
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