Edward G. Stafford
May 11 2018

U.S. withdrawal from Iran deal to heighten tension with Turkey

U.S. President Donald Trump’s May 8 announcement of the U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA) aka, the Iran nuclear agreement will almost certainly increase tension between the United States and Turkey. Both sides should take steps to ensure smooth management of the re-imposition of sanctions so it does not lead to a complete disruption of relations between the two NATO allies.

Trump said tough economic sanctions on Iran would be forthcoming, presumably in an effort to compel the Iranian government to forge a new agreement that would address issues of Tehran’s sponsorship of terrorism and ballistic missile development. Trump has declared many times that the exclusion of these issues from the JCPOA made it a bad deal contrary to U.S. national security interests.  

“In a few moments, I will sign a presidential memorandum to begin reinstating U.S. nuclear sanctions on the Iranian regime.  We will be instituting the highest level of economic sanction.  Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States,” Trump said.

This last line is the key phrase for a discussion of the impact of Trump’s decision on U.S.-Turkish relations, which will likely exacerbate rather than ameliorate the current tense relations tension between the two NATO allies.  

Relevant Background: In January this year, Mehmet Hakan Attila was found guilty of conspiracy and fraud related to a scheme to evade U.S. sanctions against Iran.  The former deputy general manager of Halkbank was convicted largely on the testimony of Turkish-Iranian gold trader Reza Zarrab.  

This case, which originated before the JCPOA came into force, illustrates the long arm of U.S. prosecutors in their efforts to enforce U.S. sanctions law.  (It is noteworthy that Attila and Zarrab were arrested during visits to the United States, not extradited from another nation.) While Attila’s case must not be seen as predictive of what will transpire once U.S. institutes “the highest level of economic sanctions”, it makes clear that those who violate U.S. sanctions against Iran put themselves in legal peril. It will also require those wishing to use the U.S. financial system or to do business in U.S. goods and services to ensure scrupulous compliance with U.S. sanction regimes. Given the need for most businesses with international activity to access the U.S. financial system, scrupulous compliance may have a chilling effect on trade with and investment in Iran even if the direct impact on Iran is not as severe as many assume.

The executive order Trump signed directs the secretaries of state and the Treasury to re-impose the lifted sanctions expeditiously and in all cases within 180 days. U.S. National Security Advisor John Bolton has said the sanctions are coming into place immediately but with “wind-down” periods of 90 to 180 days. The sanctions in place lifted by the July 2015 signing of the JCPOA were quite extensive and only included waivers and exceptions as part of the strategy to keep allies and friendly nations that engaged in vital trade with Iran, especially for oil and natural gas, supportive of U.S. efforts to bring Iran into a nuclear agreement. Turkey and Japan were prominent among those countries.

The Trump administration may not be as willing as the Obama administration to grant exceptions and waivers. Instead, Secretary of State Mike Pompeo and National Security Advisor Bolton may advise Trump that allies and friendly nations must be forced to choose between trade with the United States or with Iran in the hope of thoroughly stifling the Iranian economy to bring about popular pressure on the Iranian government to re-negotiate a nuclear agreement.

Given the stated continued support for the JCPOA by the E3 (France, Germany and Britain) and Russia and China, little enthusiasm for adhering to forthcoming U.S. sanctions against Iran can be expected from nations that have extensive trading relations with Iran or rely on Iran for essential commodities such as oil and natural gas. 

Unfortunately for Turkey, predicting what Trump will do is very difficult.  That unpredictability, coupled with Trump’s tendency to lash out at those he sees as unsupportive or disagreeable, calls for Turkish leaders to respond to the re-imposition of sanctions in carefully measured tones and behind the scenes discussions.

What next?

It is difficult to imagine a scenario in which Trump’s decision will not heighten tension between the United States and Turkey.  

Turkey imports natural gas and petroleum from Iran and cannot quickly shift to other sources, though one supposes Russia would be willing to sell Turkey gas and petroleum if Turkey decided it was in its best interests to comply with U.S. sanctions. But, there are other trade links between Iran and Turkey, and a broad interpretation of “helps Iran in its quest for nuclear weapons” could lead to classifying any commercial transaction between Turkey and Iran as a violation of the extensive U.S. economic sanctions being re-imposed.  

Turkey might hope for waivers and exceptions, but Trump has shown that he expects loyalty and support from allies, though at times, he has acknowledged that national leaders must look out for their respective national interests as he does for U.S. interests, as he did when Macron visited.  

This raises the possibility that if Turkey can convince Trump that it will support his efforts as best it can, but needs a little wiggle room so its economy is not harmed, waivers or concessions might be arranged. That said, hoping that the unpredictable Trump will moderate sanctions out of goodwill for a particular leader cannot serve as the sole strategy for Turkey.  It must explore concerted action with the E3 and others to avoid the damage of sanctions without engendering ill will from Trump – no easy task – while avoiding the appearance of favouring Russia or China in the argument over sanctions.

Many advisors to Trump and members of Congress remain deeply suspicious of Turkish President Recep Tayyip Erdoğan’s cosy relations with Putin; any hint that the two were making common cause against Trump’s strategy for dealing with Iran would not be welcome either at the White House or on Capitol Hill.

The trickiest element of handling the impact of the sanctions is that Erdoğan, joined by many Turks, will consider the enforcement of U.S. sanctions as an affront to Turkish sovereign dignity, an attempt by the U.S. to impose its laws and regulations on Turkey’s conduct of trade policy and foreign relations, and will note the Attila case as evidence of this – an assessment shared by many other nations and their national leaders.

Can the almost inevitable increased tension be smoothed over? Only if both countries decide not to use the soon-to-arise disagreements over sanctions for public posturing or campaign rhetoric.  

The United States and Turkey should hold discussions about the implementation of sanctions away from the cameras. Given the election season in Turkey, this might be difficult – whipping up opposition to foreign rules and regulations plays well with the Turkish electorate.  

On the U.S. side, provocative statements about friends and allies having to choose between the United States and Iran must be put aside so that reasonable accommodation of Turkish trade and political relations with Iran can be made in the common interest of both nations in preventing Tehran from developing nuclear weapons.

If the United States chooses to portray Turkey as working against U.S. interests instead of being as supportive as possible, or if Turkey’s leaders portray U.S. actions as unfriendly neo-colonialism to garner electoral support, the already strained relation might buckle with dire consequences for both NATO allies.