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Consequences of the US Withdrawal From the Iranian Nuclear Deal

Consequences of the US Withdrawal From the Iranian Nuclear Deal
Europe’s split with the US over the Iran nuclear deal appears to be based on good political and economic reasons. The EU will probably continue to try to save the deal despite the fact that this will very likely incur the wrath of America in the form of sanctions. How serious is the situation, and what might the consequences be?

Adam Garrie, director of the online magazine Eurasia Future joins the program.

How serious is the situation?, — is the first question Adam answers:  "It is very serious, because the EU is seriously upset with the US and the US is incredibly displeased with the fact that the EU is even daring to do something other than follow the ‘company line' from Washington." A number of other issues apart from Iran have surfaced, including the Nord Stream II project, the new pipeline that will bring gas to Germany that the Germans and other Europeans are investing into along with Russia, sanctions and also terrorism. High-level meetings have taken place between President Putin and Chancellor Merkel recently in Sochi where these topics may have been discussed.  Adam says that there is a certain amount of pressure within the White House from a faction that is represented by John Bolton, which thinks that following the Tel Aviv geopolitical line, is more important that working and developing economic ties with other allies. Adam also points out that the US is trying hard to sell Europe incredibly overpriced LNG, which makes no sense. "Nord Stream II allows comparatively inexpensive Russian gas to be delivered by pipeline overland whereas LNG has to be shipped in a boat from the other side of the Atlantic."

On the subject of sanctions, Adam says that sanctions are "essentially the geopolitical equivalent of what a local mafia does. A local mafia runs all the businesses and tells a local shopkeeper: ‘you can't order your meats from Don over there you have to order them from Loui over here because he's my brother.'… Now we are seeing the possibility that Europe, the closest allies to the US is being threatened with sanctions. They may work, European leaders may be upset because they feel that they are not being treated like allies, but the question is: Do they have the resources available to back up their rhetoric with action? Turkey for example did. Turkey was threatened with US sanctions because of its intended purchase of the Russian S-400 missile defense system. The US also threatened to withhold delivery of the F35 jet. Ankara refused to back down in the negotiations, and showed that Turkey has a diverse range of partnerships throughout the world — Russia, China, Iran and with other countries in the Arab world, Sudan in Africa, with countries in S.E. Asia, and the US backed down….The EU is much bigger than Turkey but it doesn't have that kind of geopolitical leverage because they have alienated the potential partners that they would have needed to create that. They've sanctioned, insulted and challenged Russia, and they've closed markets to Russia in such a way that both Beijing and Moscow aren't exactly keen on doing anything for Europe because there's no free lunch in geopolitics…"

In the second part of the program the discussions opens up to the future of the West itself. Klaus Brinkbäumer wrote in Der Spiegel noted on May the 11th: "The West as we once knew it no longer exists. Our relationship to the United States cannot currently be called a friendship and can hardly be referred to as a partnership…"

Adam comments: "It's not that the West is dying, what Klaus means in my opinion is that the neoliberal alliance is dead, and in that I very much agree with him. For decades it has been ruled that certain things are done in a certain way, and nobody should dare challenge that….Trump has actually exposed the risk in terms of substance. Trump is not willing to compromise on trading practices or foreign policy."

Host John Harrison points out that if the EU decides to introduce a ‘blocking action' against the American decision, they will actually do it. Adam comments: "It was Henry Kissinger who said that the reason that the US wants a European Union is so that ‘when I call Europe I know who to call.' It was the US which has been advocating for decades for a more unified Europe… Now we see the EU considering forcing its own companies to continue trading with Iran and potentially others in spite of threats of US sanctions and along with this we have seen the EU switch to trading with Iran in Euros which has made the US unhappy.  …If dollar dominance goes then the US dollar goes, because right now the only thing that is propping up the American economy is global confidence in the dollar. The dollar is being eroded by the inevitable — the rise of the Chinese Yuan including the petro yuan in the energy trade, and the dollar is going to be in a very tenuous position. I don't see the Euro replacing the dollar as the world's reserve currency, if anything it would be the Chinese currency, but what we could see in this transitional period is multiple major currencies which will all have a reserve status, so instead of the dollar being King we will have a council of other currencies…"

"We have to ask ourselves is the EU actually willing to risk being sanctioned by the United States?… It comes down to whether the economic realities in Europe merge with the political realty… The EU cannot afford to lose the US as a market but at the same time, the US can't afford to lose the EU, so it comes down to a question of who is willing to make the first move."

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