The Security Council of the United Nations issued the first sanctions concerning the Iranian nuclear program in 2006, following resolution 1696. The International Atomic Energy Agency (IAEA) had previously stated in a report that Iran was not following the rules of the Safeguards Agreement on uranium enrichment. After a first warning, the UN imposed sanctions due to Iran refusing to comply with said rules.

However, some countries had already begun talks with Iranian authorities in the early 2000s when it was already clear that Iran had set up a secret nuclear program for military purposes. With the Tehran Declaration of 2003 and the Paris Agreement of 2004, Germany, the United Kingdom, and France settled the matters momentarily through diplomatic efforts and an informal framework for the negotiations called E3. These three countries are the “lead group” or the “contact group” of the EU in this issue. Russia, China, and the United States later joined the framework and took part in the negotiations until an agreement was reached in 2015.

In mid-2004, the three European countries decided to involve the EU in the process to increase the political leverage vis-a-vis Iran. They opposed the involvement of the “foreign affairs troika” (the High Representative, the Council Presidency and the Commissioner for External Relations) as it would have enlarged the weight of bureaucracy in the negotiations.

Enter Solana: The First High Representative

They opted for the inclusion of the High Representative only, a post at the time occupied by the experienced Spanish diplomat Javier Solana. Such an alternative offered a good compromise: the general interest of the EU would be safeguarded through his presence, but the process would not suffer from the inclusion of additional Member States that could risk slowing down the pace of negotiations.

In the beginning, Italy was expected to take part in the joint framework as a major commercial partner. However, Prime Minister Silvio Berlusconi expressed concerns over the country’s economic relations with Iran and kept the government out of negotiations in spite of continuous bilateral talks with the Iranian authorities. Berlusconi also had strong ties with the Bush administration and did not want to displease Washington. Italy’s participation, however, would have been strongly welcomed by the Iranian authorities.

Javier Solana had a long diplomatic career behind him. He served as NATO Secretary General and as such supervised the Allied operations in the Balkans during the war in Kosovo, distinguishing himself by containing rivalries between Slavs and Albanians in Macedonia. Due to his previous experience with nuclear proliferation, as well as briefings by the E3 after every round of negotiations, he was deemed fit for the role the countries were entrusting him with.

The inclusion of the High Representative offered the E3 greater legitimacy and also access to the EU assets, although limited before the setting up of the External Action Service (EEAS). Solana had strong Atlanticist credentials but did not follow neoconservative thought. As a result, the United States, Russia, and China saw him as a moderate figure that could be trusted. He served as a bridge between the West and the two Asian powers also thanks to the personal network of contacts and relations cultivated during his tenure at the Spanish Ministry of Foreign Affairs and NATO.

It can be argued that the inclusion of Javier Solana boosted the image of the EU abroad as a united bloc. Indeed, the E3/EU group ended up representing all member states during the negotiations. While Germany, the United Kingdom, and France remained the main players behind the main discussing points of the deal, Solana played an important role in presenting a collective European position during the talks.  Indeed, Solana embedded the figure of the High Representative in the negotiations and confirmed its importance for what concerns the representation of the EU at the international level.

Ultimately, the role of the High Representative before the inclusion of the US, China, and Russia was secondary. The E3 counted on the advice of Solana and his assistant Robert Cooper, but they did not shape the negotiations. The EU had to act as a united bloc when the number of participants increased and the HR constituted the added value needed in that situation.

Indeed, Solana often represented the E3 during the talks. For instance, he met with the chief negotiator Ali Larijani several times, representing the position of the EU as a whole. Solana had direct access to the foreign ministers of the E3 so that a common position could be agreed upon. In 2007, when negotiations stalled, he proposed a “double suspension” that would entail both, a momentary freeze of nuclear enrichment by Iran and the removal of sanctions by the P5+1.

The Lisbon Treaty and Catherine Ashton

With the ratification of the Lisbon Treaty in 2009, the High Representative became a double-hatted figure. The division of competences between Javier Solana and the Commissioner for External Relations had never been resolved before resulting in, at times, prominent conflicts and inter-institutional competition. The new reforms simplified the hierarchic structure and entailed the set up of a European diplomatic service (the EEAS). Ultimately, the High Representative also assumed the role of Vice-President of the Commission and became head of both the EEAS and the European Defence Agency (EDA).

With Catherine Ashton replacing the Spanish diplomat, the role of the High Representative in the negotiations changed slightly. Ashton did not possess the diplomatic skills of her predecessor but could count on the so-called “Iran people” working for the External Action Service. These officials briefed the High Representative before every round of negotiations so that she would have all the information needed at her disposal. Moreover, despite her different background, Lady Ashton had already dealt with issues concerning nuclear proliferation during her work for the Campaign for Nuclear Disarmament in the early Eighties.

Interestingly, Ashton had an excellent relationship with US Secretary of State John Kerry, who put much faith in her skills and considered her a fundamental asset for transatlantic relations on the issue. Indeed, the P5+1 decided to appoint her chief negotiator of the group after a decisive diplomatic move. When negotiations appeared on the verge of collapse, Ashton came up with the idea to include Mohammed Javad Zarif, Iran’s foreign minister, in the talks. Zarif had studied in the US in his youth and appeared more pro-West than other Iranian negotiators.

According to Alexander Graf Lambsdorff, a former member of the Committee on Foreign Affairs of the European Parliament, Ashton was “discrete and perceptive, but also tenacious. That makes her an ideal negotiator”. Therefore we can argue that, at a certain point, the role of the High Representative went beyond representation and became active in part of the negotiations.

The High Representative in the Mogherini Years

Following the 2014 European elections, the European Council appointed the Italian politician Federica Mogherini as High Representative. Mogherini continued the work of her predecessors and, like Lady Ashton, heavily relied on EU officials in the EEAS. The staff, especially Helga Schmid, the EU expert in charge of the nuclear dossier, helped coordinate the final rounds of negotiations in 2014 and 2015 and provided her with relevant insights.

Mogherini controlled the agenda and the time for plenary and bilateral meetings between delegations and had contacts with other parties such as Israel, Saudi Arabia, and US allies from Asia. Furthermore, Mogherini had a role in the wording of all versions of the deal. Helga Schmid closely collaborated with the US lead negotiator Undersecretary of State Wendy Sherman and both worked on the conflict resolution mechanism without consulting the European national negotiators first.

The institutional reforms set up under the Lisbon Treaty certainly helped the EU in forming a foreign policy apparatus that could finally provide the Union with the telephone number Henry Kissinger was looking for some decades earlier. The negotiations with the Iranian authorities gave the High Representative a chance to test the newly adopted reforms. While the Iranian delegation was skeptic over the actual power of the High Representatives, the EU acquired an enhanced significance in the eyes of the other powers by ditspatching its diplomats.

Unfortunately, though, these institutional reforms had limits. The Common Foreign and Security Policy still suffers to this day from the intergovernmental nature of the European Union. Initiatives by the High Representative only become the policy of the EU if the Council agrees under a qualified majority vote.

Initially, the communication between the E3 and other Member States ran exclusively through national officials. The foreign ministers or minor officials of the E3 informed their peers on the progression of the negotiations during the General Affairs and External Relations Council (GAERC) and the Political and Security Committee (PSC). When the High Representative stepped in, the HR was entrusted with said task.

The E3 and the HR decided not to involve other European institutions such as the Commission and the Council Presidency. While the Presidency was successfully kept out, it became difficult for the High Representative to retain the confidence of the Commission. First, the Lisbon Treaty made the HR vice-president of the Commission. Second, at the beginning of the nuclear talks, the Commission was negotiating a Trade and Cooperation Agreement with Iran. The Commission did not separate the two dimensions as they used the TCA as leverage.

It’s interesting to inquire into the relationship between the E3 and the High Representative and to understand how the overall EU foreign policy changed throughout the last years. In 2016, for instance, the European Union adopted the European Union Global Strategy, replacing the European Security Strategy laid out by Solana in 2003. Drawn up under the authority of the High Representative Federica Mogherini, the Strategy gives great importance to her role and the European diplomatic corps.

The document states that lead groups, now considered a useful framework to carry out foreign policy actions, can “implement agreed positions of the Council upon invitation by the HR”. This differs from the action plan automatically adopted when negotiations with Iran started in 2003, where the E3 acted independently of the High Representative. This recent approach, of course, does not attract the sympathy of big member states, which are extremely protective of their sovereignty when it comes to foreign policy.

During the negotiations and afterward, newspapers and academics writing about the nuclear negotiations started speaking of the EU and the E3 interchangeably. This element does definitely play in favour of the European Union and the Common Foreign and Security Policy, which embraced the “lead groups” formula in other occasions; for instance, the contact group for the Balkans (which included the US and Russia) and the Normandy Format framed by France and Germany after the Russian invasion of Crimea in 2014.

We can use the agenda-setting categories laid out by Princen (2011) to better understand the impact of the High Representative on the Iran deal and the previous negotiations. The categories are 1) Mobilizing Support, 2) Arousing Interest, 3) Building Capacity, and 4) Claiming Authority. The first two can be described by the strategy of “gaining attention”, while the latter two can be attributed to the strategy of “building credibility”. As the High Representative was invited by the E3, the first two categories fall short of importance in this case. Indeed, it was Germany, France, and the UK that mobilized the support for the HR and the EEAS, not vice versa. Moreover, the determination of the Iranian government to continue enriching uranium lead to an interest in urgent action.

However, once embedded in the framework of the negotiations the European Union, represented by its EEAS diplomats and the HR, gained visibility and became accepted as a full actor thanks to the organizational capacities at its disposal. As for “claiming authority”, the HR succeeded in doing so by relying on the expertise and reliability first provided by Javier Solana and then by the diplomats engaged with the nuclear dossier on Iran working for the External Action Service.

Conclusion

The EU has a long tradition of support for non-proliferation policies. Therefore, its dedication and interest in the negotiations with Iran should not come as a surprise. This case study offers an excellent opportunity to test the effectiveness of the EU’s foreign policy, especially as carried out by the High Representative. Indeed, all three HRs appointed to the post until now have dealt with the negotiations. Moreover, the effects of the Lisbon Treaty reforms can be observed through the new approach adopted starting from the tenure of Catherine Ashton in 2009 and the new capabilities provided by the External Action Service.

At the same time, there has also been a continuity in the way the EU representatives and negotiators carried out their duties. Based on the data available, the High Representative’s participation was not decisive, as the parties would have agreed to a deal even without the contribution of Solana, Ashton, and Mogherini. However, their presence helped enhance the stature of the EU on the world stage and made more difficult for the E3 to break ranks. Despite their limited significance, Solana and Ashton made smart diplomatic moves. Their network of contacts also helped the US and Europe present a united front to the Iranian delegation. During Trump’s presidency, this unity has been damaged by a diverging policy approach towards Iran.

An earlier version of this article was originally written for the University of Leiden. 

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In pursuing this course, Trump was satisfying a popular demand for unilateral decisions, as well as widespread dissatisfaction with the terms of the deal at home. As with many other policy fields in which Washington is currently trying to go its own way, however, it soon discovered that things are not so simple. The new sanction regime introduced by the United States punishes more than just American companies: it threatens European firms as well. The EU, which is trying to keep the nuclear deal alive, has not taken kindly to this economic confrontation. This has given the Iran sanctions row a whole new dimension: Europe and the United States built the structures of international finance together. Under the weight of this standoff, they now risk to unravel.

Preventing Nuclear Proliferation

The Joint Comprehensive Plan of Action is an agreement of historic proportions: it bears the signature of the five permanent members of the U.N. Security Council (the United States, Russia, China, the United Kingdom, and France) as well as Germany, the European Union, and Iran. In spite of its grand nature and the lofty names behind it, however, the deal was always uneasy.

The transatlantic combination of European soft and American hard power delivered results, but it also exposed the growing divisions between Washington and Brussels. Trump’s pull-out reopened a fissure that many thought had finally been closed. This fault line runs inside America’s security environment – where the Iran deal was in equal parts berated and praised – and across the Atlantic.

However, the American government has more reasons than just domestic appeasement to pursue this course of action. The reinstatement of the Iran sanctions framework is part of a larger strategy, one that Washington labels “maximum pressure“. This strategy seeks to force Iran to halt its development of ballistic missiles, cease support for militant groups in the Middle East, and end its violations on human rights. Trump has been swift to warn Europeans about grave economic consequences, should they wish to circumvent the cordon of Iran sanctions.

Unfortunately, rather than de-escalate the confrontation, this has widened the rift between the two sides of the Atlantic. The European Union remains committed to save the deal. As the two allies grow further apart, the United States’ capability to exert financial pressure on Iran has weakened.

Weaponised Interdependence

The United States have been incredibly effective at using their financial muscle as a way to exert pressure on other countries. Pressure is applied not only directly, for example through restrictions on access to the American market – but also indirectly. The sanctions placed on Iran are a prime example of the latter. Non-US firms doing business with Iran are penalised not just with exclusion from the American market, but from international finance as well.

Moreover, this system of “secondary” sanctions can exclude not just firms, but also entire countries, from access to financial markets. As has been recently argued, this strategy has allowed the United States to effectively multiply its economic might.

There are two key factors that give the United States this unparalleled ability to exert pressure on other countries through secondary sanctions. The first is the dollar clearing system: most financial transactions of some significance are conducted in dollars. The second is SWIFT – an international banking transfer system. Without access to SWIFT, obtaining information about international financial transactions becomes next to impossible, even for banks.

Europe has played a significant supporting role in both of these developments. The UK in particular has assisted in the international prominence of the dollar by providing eurodollars to the financial market for the entirety of the Cold War. The SWIFT system is based in Belgium, although it’s heavily influenced by the United States. During the Cold War, both sides of the Atlantic generally saw eye to eye on the subject.

The birth of the EU has changed the equation somewhat. The Union is the only polity other than the United States with the sheer size, regulatory tools, and economic clout to influence international finance to some degree. Nevertheless, American and European policies on the subject remained well coordinated: it was their joint action that allowed for an effective isolation of Iran in the first place, and their joint push that made the deal possible.

Iran Sanctions: The European Alternative

The American pull-out from the Iran deal upended years of policy coordination. Trump’s administration has gambled on its ability to keep influencing the international system even without European support. Indeed, that the same tools can be used to force European countries in line if they persist in their efforts to save the Iran nuclear deal.

This assumption is not completely groundless. Under American pressure – and against European wishes – SWIFT has effectively been forced to isolate Iran from access to the world market once more. Additionally, the dollar clearing system isn’t going anywhere soon. This allows the United States to threaten European banks with punitive measures if they facilitate Iran’s access to the world market. Considering the weakened state of European banks in the wake of the Great Recession, this is no idle threat.

These actions have severely tested the EU’s naturally atlanticist inclinations, and it is no coincidence that calls for an independent EU approach on Iran have intensified. These have come not just from Brussels, but from Member States like Germany and France as well.

On the back of this support, the EU is tentatively setting up a Special Purpose Vehicle which would allow payments to Iran, bypassing SWIFT and the dollar clearing system. This SPV will initially only allow transactions that involve access to food, medicine, and other humanitarian purchases. The Americans, however, are worried that the system could expand in the future, becoming a rival to SWIFT. The Europeans themselves have acknowledged this possibility, with the German government detailing prospects of future expansion.

The move has been met with strident opposition from the Trump administration. The decision to co-host a conference on the Iranian threat with Poland is no coincidence, as Washington looks to the more atlanticist European Member States to undermine the EU’s strategy from within. This, however, may not be enough to stem the threat of a SWIFT replacement.

As the American Treasury had already warned under Obama, the risk of overreach is real. Aggressive maneuvers could deprive the United States of its leverage on the international financial market. Antagonising the United States’ main ally in the continued support of this financial architecture is a high-risk strategy. If the SPV develops into a full-fledged alternative to SWIFT, it will offer international actors at least one potential avenue of bypassing secondary American sanctions.

Playing For High Stakes

These are but the opening moves in a standoff where the stakes are high. The creation of an alternative financial structure that bypasses American influence would fatally undermine the US’ ability to exert financial pressure worldwide. Conversely, however distrustful the EU is of Trump’s motives, it is still highly dependent on the United States for military security, and as has recently become apparent, its intelligence services are inadequate and critically reliant on American intelligence.

The European banking system is also considerably weaker than the American one, and largely entangled with it. This helps explain Brussels’ caution with the SPV. By keeping it limited to humanitarian transactions, the EU is giving itself a fallback option should the worst come to pass, without fully breaking away from transatlantic finance in the immediate.

When combined with other transatlantic divergences – such as the views on Nord Stream 2 or Trump’s friendliness towards Russia – the standoff over Iran sanctions adds even more uncertainty to an unstable environment. Either way, the outcome is likely to be consequential for the future of the transatlantic alliance, as well as international finance.

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Federica Mogherini has stated that the European Union is closely following the ongoing demonstrations in Iran, the increase of violence and the unacceptable loss of human lives. 

For the EU, human rights have always been a core issue in our relationship with Iran. Peaceful demonstration and freedom of expression are fundamental rights that apply to every country, and Iran is no exception.  

In the last days, we have been in touch with the Iranian authorities. In the spirit of frankness and respect that is at the basis of our relationship, we expect all concerned to refrain from violence. Iran must guarantee the right of expression, especially in light of the statements made by the Iranian Government. 

The European Union will continue to monitor the situation.

Full, direct statement by the European Council available here. Declaration by the High Representative Federica Mogherini on behalf of the EU on the situation in Iran. 

Curious about what is going on in Iran and the potential impact on the European Union? Find out more here. The EU and the USA are headed for a fight over Iran sanctions, one that may cost Washington its financial hegemony. 

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