Unless the mullahs ride
to the rescue of Donald Trump, the implications of the Administration’s
decision to renounce the Iran Nuclear pact will soon confront European leaders
with a stark choice: to accept humiliation or to defy the United States. Britain, France and Germany have already
indicated their willingness to remain bound by the pact. Russia and China don’t need to give any such
indication, since there is no reason to suspect they have ever had any
inclination to withdraw.
If the mullahs allow
Rouhani to try keeping the pact alive as between Iran and the five
aforementioned powers, then the European leaders can either announce their
willingness to cooperate with him or declare their inability to resist American
dictation by ordering their nationals to observe all of America’s restrictions
on dealings with Iran.
The former course would
be practical in only one way, and that would be through the implementation of
an “all for one and one for all/reciprocal sanctions” policy by Britain,
France, Germany, Russia and China. If
(1.) an American secondary sanction against a national of one country is
treated as a sanction against all nationals of all five countries (and any
customs union that one or more of the five can persuade to collaborate – e.g.,
the E.U.); and (2.) the five respond to any such sanction with an immediate,
reciprocal sanction against all U.S. nationals, then even the current
Administration would presumably think long and hard before trying to impose sanctions
on a non-U.S. national for dealing with Iran.
If the remaining five
announced the policies described above, and meant it, then for the U.S. to try
to force a foreign company to observe U.S. restrictions on dealings with Iran
could quickly lead to the isolation of the United States and the division of the
world economy between the U.S. and its collaborators (for instance, Canada and
Mexico would probably have to side with the U.S., against their better
judgments -- Japan being the great wildcard here) and the rest of the world.
This “World War III of Trade” would be disastrous for the world economy
and even if it led to a negotiated peace (between the two sides just
identified) that peace, even under the most optimistic (from the U.S.’ perspective)
assumptions, would almost certainly include the displacement of the dollar as
the international currency of account. (Lucky for us, though, China probably doesn't want to wage this war -- yet.)
That, in turn, would
likely make it impractical for the U.S. to keep running its budget in
deficit. This might lead to the downfall
of the One Percent here, or the submergence of the 99, but either way a period of
still sharper division and still more fulsome rancor within the American polity
would be inevitable. (This
prognostication could safely be made without regard to the Iran deal, withdrawal
from the same and any international political-economic ramifications thereof,
but the division of the world economy into U.S. and non-U.S. hemispheres and
the consequent displacement of the dollar would “shrink the pie” and thus increase
the intensity of this contest by at least an order of magnitude.)
Now, the great pact of the
Four plus One (the nuclear-power signatories, apart from the U.S., plus Germany)
to mutually resist U.S. coercion in the matter of Iran sanctions which I have
described is not likely to come about.
It would be Europe’s declaration of independence from the U.S., but the Europeans
are likely to recognize the coronation of Putin that it would imply. But what if Putin, recognizing his great
chance, offers convincing promises of good behavior?
“Europe” has no leaders (because
it doesn’t exist and thanks to Brexit never will), and British, French and
German businessmen will have no problem truckling under to the political dictation
of the United States, especially since few have any burning interest in Iranian
opportunities. The individual
governments are likely to announce ineffectual policies of seeking to “muddle
through” any secondary sanctions difficulties.
The Chinese will have the sense not to try to bring about the Great
Bifurcation of the world economy without solid European cooperation, and it’s not
clear that they would want to bring it about now, anyway. Putin will recognize that Russian action without
the cooperation of the rest of the Four plus One would merely demonstrate
Russia’s economic insignificance. That
would leave each of the five to deal with its humiliation as best it may.
Recognizing that
(formally) unilateral U.S. sanctions are therefore likely to be highly
effective, the mullahs most likely will not give Rouhani the chance to try to
keep the pact, sans U.S., alive. In
fact, Rouhani could be lucky if they give him a chance to leave the country. But if Rouhani should be allowed to pursue “the
deal without the U.S.” and there should be signs of a flurry of diplomatic
activity among the Four plus One – then watch out. The World War III of Trade could
be about to be declared. The smart money
would “go to cash” – but what kind of cash?
Dollars, euros, yen or yuan? Without
knowing the winner, gold might be the safest bet.
When it comes to leaving
itself a graceful way to back down, the Trump Administration is about as skillful
as the Iranian theocracy. (On the other hand, Trump’s “base” will not know or
believe that he has backed down unless Fox News tells them so. Once again the
world’s fate may be in the hands of Rupert and sons.) But the British and Europeans are good at
backing down. So look for the Iranian
nuclear project to resume, and let’s see what Bolton does.
