Europe under significant pressure from both US and Iran
However, Iran has left some space for the diplomatic solution, issuing another 60-day deadline, which, according to Iranian officials will be the last chance for saving 2015 nuclear deal.
The International Atomic Energy Agency (IAEA) confirmed that Iran has already breached the 300 kilogrammes of low-enriched uranium allowed under 2015 international nuclear accord, but experts point out that it would take at least 1,500 kg of uranium enriched at around 90 percent for one nuclear weapon.
Nevertheless, the US and Israel fiercely criticised Tehran and called the international community to press hard on Iran.
Iranian foreign ministry spokesman Abbas Mousavi, on the other hand stated that Iran is still open to negotiations with its European partners and expressed the hope they would "take steps forward" toward implementing their commitments.
Ultimatum won't produce any results
While Iran has not withdrawn from the deal, Iranian officials warned other remaining parties of the deal that it will do so through a multi-phased approach.
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In the beginning of May, Iran's President Hassan Rouhani announced that his country would stop complying with parts of the Joint Comprehensive Plan of Action (JCPOA) unless the signatories of the deal deliver some meaningful supports, primarily on the economic field and protect Iran's energetic and banking sectors from the US sanctions.
Iran's decision to act and increase the pressure through the new 60-day deadline has added a new complexity in its relations with countries that remained in the deal while putting them in very uncomfortable situation, especially Europeans, from which Iran expected the most.
The European Union, together with Germany, France, and the United Kingdom (known as the E3), have formally rejected Iran's ultimatum, stating that their response will be based on Iran's compliance to the JCPOA, while reiterating their commitment to the 2015 Iran nuclear deal.
Przemyslaw Osiewicz, from the Middle East Institute in Washington DC and an associate professor at Poland based Adam Mickiewicz University in Poznan, told The New Arab that Iranian authorities should understand that once they change their attitude towards the enrichment of uranium, they will put their European partners in a very difficult position.
In his opinion, the EU and its member states will not offer anything new to Iran unless Tehran complies with the provisions of the JCPOA.
So, if Iranians intend to achieve anything beneficial, they have to be more patient and try to negotiate with the EU rather than put it on the spot like this.
Ali Fathollah-Nejad, visiting fellow at the Brookings Doha Center told The New Arab that, "The Iranian strategy of gradually reducing its JCPOA commitments, primarily designed to increase its leverage for the event of negotiations with the US, risks alienating Europe."
In other words, "Iran's ultimatum will likely fail to produce the kind of results Tehran wants to see."
The miscalculation may be fatal
EU and other international factors have bet on a scenario where Iran would remain fully committed to the nuclear agreement until the US elections next year, hoping that Trump would not win the second mandate in the White House.
The new administration would then hopefully be more willing to find a compromise and re-enter the deal.
While this scenario makes sense it also neglects the domestic reality in Iran – notably the rising power of Iranian hardliners who were always sceptic about the deal with the Americans, as well as the heavy economic situation that the Iranian population is facing.
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Hit by a new round of sanctions, it seems that Iran has lost the patience and has been trying to pressurise Europe and other parties of JCPOA to deliver some meaningful progress on the economic front.
US sanctions are obviously suffocating Iranian economy and with very few or no alternatives left, Iran plays on the card – and one that many have feared – of reactivating its nuclear programmes.
This, of course, may have fatal consequences for stability in the region and may lead to an open war between the US and its allies in the Gulf on one side, and Iran and its proxies on the other.
Salvaging the deal
While Iran and Europe have both expressed their sincere will to save the nuclear deal, the recent course of events has caused boiling tensions which are threatening to kill the JCPOA.
After a series of incidents in Persian Gulf and Gibraltar, many have expressed fears that the fate of the deal is becoming ever more uncertain.
However, Osiewicz does not think that the JCPOA is dead and buried, despite recent developments. According to him the signatories put a lot of effort to reach that diplomatic compromise in 2015.
Even if Iran undertakes any radical actions, the EU signatories will carefully analyse the situation.
While it is debatable whether Europe has done everything in its power to save and implement the deal – especially after the US unilaterally walked out from it – it is fair to say that JCPOA has been one of the greatest EU foreign policy achievements. But it seems that to save it will be a much greater challenge.
According to Osiewicz, "It is unlikely that the EU will support the US sanctions on Iran as these sanctions are simply harmful to the European economy and interests in Iran."
Nonetheless, Brussels may exert some pressure on Iranian authorities in order to stop such negative developments.
He also noted that the blackmail is the worst available option as It does not makes the situation worse.
Although Europeans condemned the US for breaking the deal and reinstating the sanctions, they also failed to deliver the promises given to Iran.
The EU has been very slow in setting up a trading mechanism that would provide European businesses guarantees that they can trade with Iran without being harmed by US sanctions.
Only at the beginning of July, the EU announced the long-awaited INSTEX scheme, which would facilitate EU-Iran trade in humanitarian goods not under US sanctions.
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Although this could be a step forward, Abbas Araghchi, Iran's deputy foreign minister still believes that Europe was not doing enough, as from Iran's perspective INSTEX would be useful only if "Europeans buy oil from Iran, or consider credit lines for this mechanism."
But Ali Fathollah-Nejad pointed that, "Given the increasing compliance net of US sanctions and the recent warnings from the US. Treasury, important European companies will remain reluctant to join INSTEX."
Ever since Trump entered the office, the fate of transatlantic relations have been at stake, with numerous frictions and open disagreements, including Iran, surfacing on an almost daily basis.
Nonetheless, it is also hard to imagine that Europe will openly challenge the US administration for the sake of Iran.
It seems that Iran is very well aware of this and grows no illusion about who is a more important partner for Europe.
Chairman of the Iranian Parliament's Nuclear Committee, Mojtaba Zonnour said that the volume of Iran's "Economic transactions with Europe at best is $20 billion in a year, whereas the volume of economic transactions between Europe and the US is something between $900-1,000 billion. Of course, Europe would not sacrifice $1,000 billion for $20 billion."
But although Iran's options are quite limited, Europe should seriously consider the Iranian warnings. The current economic pressure and ever harder economic conditions in Iran highly contribute to Iran's deteriorating ability to deal with refugee flows and terrorist threats, that under new circumstances may make their way from and through Iran to Europe more easily.
Ali Fathollah-Nejad observes that "these Iranian threats of letting through refugee flows and drug trafficking towards Europe are tailored to address some of Europe's core concerns, which to an important part are a result of rising right-wing populism in the continent.”
Therefore, Europe will likely keep trying to find a solution to salvage the deal.
A negative outcome will also significantly harm the non-proliferation efforts worldwide and surely lead to a nuclear race in the Middle East and beyond, potentially risking a devastating military conflict throughout the region.
Many authors suggest that this would be the end of multilateral diplomacy.
Stasa Salacanin is a freelance journalist who has written extensively on Middle Eastern affairs, trade and political relations, Syria and Yemen, terrorism and defence.