Analysts argue $21 million in financial support to the Islamic Republic will not alleviate country’s economic woes
The European Union’s decision to transfer millions of dollars in aid to Iran is a symbolic move intended to undermine the United States’ strategy of pressuring Tehran into re-negotiating the nuclear deal, analysts said.
Last week, the bloc announced it would provide the Islamic Republic with 18 million euros ($21 million), part of a larger package of 50 million euros the EU has earmarked for the Iranian regime over the coming months. The move follows U.S. President Donald Trump’s decision in May to withdraw from the atomic pact devised by world powers.
Foreign affairs experts believe the EU’s economic aid to Tehran sends a political message to Washington.
“Clearly, the United States has decided on a pressure campaign that involves the re-imposition of sanctions and trying to pressure Iran [into coming] back to the negotiating table to get a better nuclear deal,” Dr. Emily Landau, Senior Research Fellow at Israel’s Institute for National Security Studies, explained to The Media Line. “What we’ve seen from Europe is an attempt to undermine this pressure campaign.”
Dr. Landau noted that the sum would not have a significant impact on the Iranian economy, which was teetering on the brink even before new American sanctions took effect earlier this month. The Iranian rial, for example, has plummeted to record lows and on Sunday, Iranian Minister of Economic Affairs and Finance Masoud Karbasian was sacked amid mounting internal protests.
Dr. Esther Lopatin, Director of the Center for European Studies at the Interdisciplinary Center (IDC) in Herzliya, agrees that the aid package is mainly symbolic.
“The EU believes in soft power, which means they want to solve conflicts with diplomatic means, rather than by military means,” she elaborated to The Media Line. “The EU is in a very difficult position today and doesn’t have the luxury to go and fight against Iran,” especially since the bloc is occupied with other pressing problems like “homegrown terrorism, identity issues, and the refugee crisis.”
Dr. Lopatin predicted that so long as European leaders pursue a “Europe first” approach, they will continue to act in ways that “send a clear message” to the Trump administration.
Both the U.S. and Israel slammed last week’s aid announcement, with the White House arguing it “sends the wrong message at the wrong time, and Prime Minister Binyamin Netanyahu calling the move a “poison pill” for the Iranian people.
“In my view, this type of money will just incentivize Iran’s mullah regime to continue with their jingoism in the Middle East,” Benjamin Weinthal, a Research Fellow at the Washington-based Foundation for Defense of Democracy, contended to The Media Line. “There’s no way of ensuring this money won’t be used to sponsor terrorism.”
Though Weinthal concedes the amount disbursed is not very significant, he nevertheless described the bloc’s decision as “utterly absurd.”
“This sends a message to Iran’s struggling democracy movement at home that the EU has aligned itself with the Ayatollahs as opposed to the Iranian people,” he concluded.
The EU’s aid package comes as many European businesses are bolting from the Iranian market. Air France-KLM Group and British Airways revealed they were suspending flights to Iran, citing poor commercial results. Whereas the airlines did not cite U.S. sanctions as a reason, most analysts believe they contributed to the decision-making process.
“At the level of businesses we see the U.S. sanctions are actually working quite well,” Dr. Landau affirmed. “Companies respond to economic dictates, not to political ones.”
To counter this apparent reality, German Foreign Minister Heiko Maas advocated for the creation of an alternative to SWIFT, the global interbank payment network. However, Chancellor Angela Merkel shot the idea down, arguing that SWIFT was an invaluable tool in the fight against “terrorist financing.”
A second tranche of U.S. sanctions targeting Iran’s crucial banking and oil sectors are set to take effect in November.
“The only thing that has worked against the Iranian regime is pressure,” Dr. Landau noted. “Pressure is what brought them to the table, fear of warfare is what brought them to suspend part of their military program back in 2003. It’s not clear that this pressure will work, but we don’t have anything else.”