Secretary of State Mike Pompeo delivered a speech on Monday outlining President Trump’s new strategy to counter the Islamic Republic of Iran: Intensify the Iranian regime’s ongoing liquidity and political crisis to induce fundamental changes in behavior across a range of malign activities. In short, maximum diplomacy backed by maximum pressure.
Pompeo’s speech today was a reply to the critics of the administration’s Iran policy who have argued that Trump had no “Plan B” for the day after his May 8 decision to withdraw from the 2015 Iran nuclear agreement. That deal gave the Islamic Republic patient pathways to nuclear weapons, regional dominance and tens of billions of dollars to fund its dangerous and destructive conduct. The secretary of state’s speech also was an invitation to Europeans, caught between an Iranian rock and a Trumpian hard place, to move beyond their disagreements over Trump’s decision.
The way forward: a comprehensive approach to address what Pompeo called the “massive scope of Iranian malign behavior.”
In his remarks, Pompeo outlined 12 basic requirements for Tehran to meet in any strategic agreement, including the end to all uranium enrichment and pursuit of plutonium reprocessing, “unqualified access” to all sites for UN weapons inspectors, the termination of Iran’s nuclear-capable missile program, the return of all American and foreign hostages, and the cessation of support for terrorism and other aggressive conduct in the Middle East.
In exchange, the secretary said that Trump will go big on any deal and put “all principal components” of American sanctions on the table as well as the “re-establishment of full diplomatic and commercial relations.”
With this new strategy, the President and his secretary of state have given a green light to the financial warriors in the U.S. Treasury Department to unleash what Pompeo called the “strongest sanctions in history by the time we are done.” This pressure will only intensify as the pre-Iran deal sanctions are restored.
After Trump’s decision to withdraw from the nuclear deal, the Iranian rial-U.S. dollar exchange on the black market, where most Iranians trade their currencies, plummeted to almost 70,000 to one (on the eve of the 1979 Islamic Revolution, the exchange rate was 70 to one). Inflation has skyrocketed to over 70%, the banking sector is in crisis, and Iranians are on the streets in daily protest against the regime’s economic mismanagement, gross corruption, foreign adventurism and domestic repression.
While an American-led financial assault against Tehran is underway, European leaders are feeling politically violated by Washington. Believing they had engaged in good faith talks for months, and coming close to reaching a supplemental agreement with the U.S. that met most of Mr. Trump’s demands to fix the deal, they now see Washington poised to use secondary, or extraterritorial, sanctions to threaten their economic sovereignty. They are invoking blocking laws making it illegal for their companies to comply with U.S. sanctions and are looking to use European sovereign banks to finance trade with Iran.
But as the mullahs are threatening the Europeans with nuclear escalation if they don’t invest billions of dollars to save the regime’s economy from collapse, Trump is promising severe penalties if they do. European companies already are heading in the opposite direction with major energy, insurance and shipping firms signaling their intention to cut business ties with Tehran unless their governments can negotiate waivers from sanctions. As Pompeo warned, that is not likely.
Pompeo’s call for renewed diplomacy with the Europeans and his effort to broaden the diplomatic coalition to America’s Gulf and Asian allies may yet succeed. But the secretary of state will be challenged in uniting this fractious coalition of countries, many of whom are eager to trade with Iran and already are smarting from tariff negotiations and North Korea sanctions enforcement.
The leaders of France and Germany, however, made clear last week they have no interest in a transatlantic trade war over Iran. After Trump’s announcement to withdraw from the nuclear deal, French President Emmanuel Macron reiterated his call for a comprehensive agreement that addresses Iran’s nuclear program, missiles and destructive regional conduct. While the French president sees the JCPOA as a key pillar of such an agreement, he now has an opportunity to embrace Pompeo’s diplomatic overture, preserve the transatlantic allianc, and help Washington drive historic changes in Iranian regime behavior.
The new initiative Pompeo presented includes big demands and big concessions that go far beyond the old nuclear agreement. The diplomatic process towards such a deal could give Europe a possible way out from both Iranian and American escalation. But it also may be a non-starter for furious EU leaders who might see no advantage to signing up to American-led diplomacy with a president whom they see as unreliable and a threat to their economic and political sovereignty.
The administration has an ambitious plan with a clear objective: Force the Iranian regime to make a choice between reaching a comprehensive strategic agreement or facing unrelenting pressure that might break it. For now, the Iranian regime seems focused on driving a wedge between Europe and the U.S. and trying to isolate Washington. Western leaders should work to foil this scheme. The question is how long can the mullahs hold out before the pressure gets too high and what is Trump willing to do if they decide to swing for the nuclear fences?
Mark Dubowitz is the chief executive officer of the Foundation for Defense of Democracies. Follow Mark on Twitter @mdubowitz. Richard Goldberg is a senior adviser at the Foundation for Defense of Democracies. Follow him on Twitter @rich_goldberg. Follow the Foundation for Defense of Democracies on Twitter @FDD. FDD is a Washington-based nonpartisan research institute focusing on national security and foreign policy.