Trump may be about to call Europe’s bluff on Iran. Europe isn’t bluffing.

Publication Type: 
Other Writing
Publication Date: 
February 25, 2019

Last Friday, the editorial board of Bloomberg Opinion condemned Europe’s new INSTEX arrangement, a so-called Special Purpose Vehicle set up to allow European companies to engage in humanitarian trade with Iran, despite the renewal of U.S. sanctions against the Islamic Republic. This arrangement — which was set up by Germany, France and the United Kingdom — has made the United States very unhappy. Vice President Pence has described it as “an effort to break American sanctions against Iran’s murderous regime” that would “strengthen Iran, weaken the E.U., and create still more distance between Europe and the United States."

Bloomberg Opinion argues that Europe is bluffing, and that “U.S. officials would be right to insist that the SPV be shut down — if necessary, by threatening sanctions against any person, bank or company associated with its creation.” It is possible that this editorial reflects the thinking of some Trump officials. Sigal Mandelker, undersecretary for terrorism and financial intelligence at the Treasury Department, recently wrote an op-edopposing Europe’s actions, concluding that “those that engage in activities that run afoul of U.S. sanctions risk severe consequences, including losing access to the U.S. financial system and the ability to do business with the United States.” It is unclear whether Mandelker is implicitly threatening European officials, or just businesses that used INSTEX in ways potentially at odds with U.S. sanctions law.

European and U.S. relations with Iran are the topic of heated political disagreements, which political science can’t resolve. What research can do is to better identify what is happening and what is at stake. Abraham Newman and I have been engaged in research on the broader politics that have led up to this dispute; our article is forthcoming in International Security. Our research suggests that the Bloomberg editorial is based on a mistaken understanding of the issues, and that its policy recommendations would have a far broader impact than the writers suggests.

Read the full piece at The Washington Post