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Iran nuke deal collapse opens new period of uncertainties

14 May 2018 [14:05] - TODAY.AZ

By  Trend

The decision of the US President Donald Trump to withdraw from the Joint Comprehensive Plan of Action (JCPOA) with Iran will make US relationship with the European Union (EU) much more difficult, Francis Perrin, Senior Fellow at the OCP Policy Center (Rabat) and Senior Research Fellow at the French Institute for International and Strategic Affairs (IRIS, Paris), told Trend.

He believes that this decision was of course not unexpected.

Perrin recalled that President Trump had repeatedly criticized this deal, and in very harsh terms, and recent changes within the US Administration - Mike Pompeo as Secretary of State and John Bolton at the head of the National Security Council - tilted the balance towards a very strong opposition against Iran.

It is a very important decision with grave consequences as every independent and good-faith expert on this issue would agree that this agreement was working and was effectively implemented even if it is not perfect, the expert noted.

It opens a period of great uncertainties because the US is destroying a useful deal and it is not sure at all that it will be possible to replace it with a better framework, he believes.

"This is also a very hard blow for President Hassan Rouhani and its government because the nuclear deal was the cornerstone of their policies. It will be very difficult for President Rouhani to defend its positions against the hardliners within the regime. For the US, one of the main risks is a growing isolation as the other signatories of the nuclear deal do not share President Trump's opinions. It will make the US/European Union relationship much more difficult," said the expert.

Perrin believes that it will very likely have a very strong impact on Iran’s oil and gas deals with European companies.

"As of today only France’s Total has signed a big contract in Iran and it was for the development of Phase 11 of the South Pars supergiant gas and condensate field. There are about a dozen European companies which have been prequalified in order to bid for oil and gas projects in Iran and only one of them, Total, decided to go ahead. And this was before any decision was announced by the US Administration. This new US policy will clearly have a chilling effect on European energy companies," he added.

Perrin noted that it will have a bullish impact and it has already been the case before this announcement as President Trump's decision was widely anticipated. Due to the rise in world oil demand, OPEC production cuts, similar decisions from 10 non-OPEC countries and the fall in OECD oil stocks the oil market is tighter than in the recent period.

"If you add to this cocktail wars and tensions in the Middle East and the US withdrawal from the nuclear deal with all its political, economic and energy consequences, the most likely trend is upward. Saudi Arabia could of course counter this trend if it decides to increase its production and they can certainly do it. So far, they will benefit from higher prices," he said.

Regarding the possibility of a new dialogue between the US and Iran on a nuclear deal, Perrin said . in the long-term everything is possible, including good news.

"As James Bond said, "never say never again" and this is particularly true as far as politics is concerned. It can also be true with President Trump who should meet soon with Kim Jong-Un. The US President said that he was able and willing to discuss with the Iranian leaders. That being said this possibility seems very remote after the US withdrawal from the nuclear deal. There is now a very strong hostility between Washington and Tehran, the US is speaking more or less openly about regime change and it is impossible in this context for President Rohani to keep an open mind towards such an option. In the short and medium-term reconciliation is thus Mission Impossible," said the expert.

The US President Donald Trump announced that he will pull the US out of the nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA).

The US will re-impose the nuclear-related sanctions on Iran’s economy and oil exports, which were waived under the JCPOA. Whilst the sanctions are effective immediately, there is a wind-down period of 90- or 180-days to allow firms to exit any existing agreements they have with Iran. Trump has also hinted that he might impose additional sanctions on top of those which were waived.


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