In Summary

Concern. Analysts say President Donald Trumps decision to pull out of nuclear agreement with Iran portrays him as a man whose commitments are hard to believe.

President Donald Trump’s withdrawal from the Iran nuclear deal is a major setback to US negotiating credibility and will complicate efforts to reach an agreement with North Korea over its own more advanced weapons programme, analysts say.
Trump is set to hold a much-anticipated and unprecedented summit with North Korean leader Kim Jong Un in the coming weeks to negotiate over Pyongyang’s arsenal, after it last year carried out by far its most powerful nuclear test to date and launched missiles capable of reaching the US mainland.

But the US president on Tuesday pulled Washington out of the 2015 accord with Iran pouring scorn on the “disastrous” agreement and describing it as an “embarrassment” to the United States -- although European signatories and the International Atomic Energy Agency (IAEA) say Iran has complied with its obligations.
Antony Blinken, who was deputy secretary of state under Barack Obama, said the White House move “makes getting to yes with North Korea that much more challenging”.
“Why would Kim ... believe any commitments President Trump makes when he arbitrarily tears up an agreement with which the other party is complying?” he asked on Twitter.

Massachusetts Institute of Technology political science professor Vipin Narang added: “Today is a stark reminder across the world: Deals are reversible and can have expiration dates, while nuclear weapons can offer lifetime insurance.”
North Korea remains technically at war after the 1950-53 Korean War ended with a ceasefire rather than an armistice, and Pyongyang has long insisted that it needs nuclear weapons to defend itself from a possible US invasion.
Two weeks ago Trump’s new national security advisor John Bolton said: “We have very much in mind the Libya model,” for the denuclearisation of North Korea.

Libyan leader Muammar Gaddafi agreed to abandon his pursuit of nuclear weapons in the early 2000s, but his government was later overthrown by rebel forces supported by Western air strikes, and he was killed.
Pyongyang regularly cites the fates of Gaddafi and Saddam Hussein in Iraq -- whose government was overthrown in a US-led invasion -- as evidence of the need for nuclear arms.

Former CIA director John Brennan said Trump’s “madness” had “undermined global confidence in US commitments, alienated our closest allies, strengthened Iranian hawks, and gave North Korea more reason to keep its nukes”.
Some were more sanguine. Pyongyang was concerned about the sustainability of a deal and sees democratic changes of government as a “structural weakness that imperils agreements by any one White House”, said Yonsei University professor John Delury.
But he added: “They’d be worried less about Trump pulling out of a deal than his successor.”

Security guarantee
The unilateral nature of Trump’s move is also likely to worry officials at the Blue House in Seoul.
The decision was made despite repeated personal pleas by European leaders and cast aside more than a decade and a half of careful diplomacy by Britain, China, France, Germany, Iran, Russia and past US administrations.
South Korean President Moon Jae-in has been widely praised for seizing the opportunity presented by the Winter Olympics to broker talks between Trump and Kim - two leaders who were at loggerheads just months before, and threatening to wage a war which would inevitably devastate the South.

But the fate of the Iran deal suggests Trump could also dismiss pleas from Seoul -- a treaty ally -- in future.
Analysts pointed to Kim’s repeated trips to China as evidence Pyongyang was looking for support from its longstanding diplomatic protector and provider of trade and aid.
Kim met President Xi Jinping this week for the second time in little more than a month, after not paying his respects to him for six years after taking power as their relationship frayed.
“North Korea has been fully aware of the risks of the US walking away from any deal whenever its government changes hands,” Koh Yu-hwan of Dongguk University told AFP.

“In order to hedge against this eventuality, Kim Jong Un met Xi Jinping twice to obtain a firmer security guarantee from China before he enters a deal with the US.”
And Pyongyang wanted wider assurances, he added.
According to China’s official Xinhua news agency, Kim told Xi that “relevant parties” should “abolish their hostile policies and remove security threats against the DPRK”.
“This means the North is seeking a global commitment to a deal with the US to prevent the US from unilaterally rolling it back,” Koh told AFP.

In 2015, Iran agreed a long-term deal on its nuclear programme with the P5+1 group of world powers - the US, UK, France, China, Russia and Germany.
It came after years of tension over Iran’s alleged efforts to develop a nuclear weapon. Iran insisted that its nuclear programme was entirely peaceful, but the international community did not believe that.
Under the accord, Iran agreed to limit its sensitive nuclear activities and allow in international inspectors in return for the lifting of crippling economic sanctions.

How could the Iran deal be salvaged?

European powers and China say they will work to preserve the Iran nuclear deal, but with the world’s most powerful country reimposing sanctions, what can they do to save the accord?
The EU says it will stick to the deal as long as Iran keeps to its commitments, and the coming days and weeks will be crucial in persuading Tehran to stay on board.

Britain, France and Germany -- the three European signatories to the deal collectively known as the E3 -- have launched a diplomatic push to reassure Iran of their commitment to the deal.
French President Emmanuel Macron spoke to his Iranian counterpart Hassan Rouhani on Wednesday, and the pair agreed to work toward “the continued implementation of the nuclear deal”.
Foreign ministers from the European trio are to meet representatives of Tehran on Monday and the Iran deal will also feature at an EU summit in Sofia next week.

European powers will also speak to China and Russia, the deal’s other signatories, to coordinate their response, although an EU diplomat said it would be wrong to characterise it as an attempt to “isolate” Washington.
But while these political gestures are important, Iran has demanded concrete assurances that trade will be protected.
“We have to talks about incentives for Iran to stay in the agreement. This means that we need to find means to absorb the economic shock of reimposing sanctions by the US,” an EU diplomat told AFP.

London, Berlin and Paris have kept details of their strategy under wraps, but a report by the International Crisis Group (ICG) think tank outlined steps that could reassure businesses working with Iran and help moderate Iranian leaders persuade hardliners to stick with the deal.

EU states could use their state investment agencies to cover risks such as sanctions that companies could face in trading with Iran, ICG suggested, while the E3 could launch a joint effort to support Iranian infrastructure projects through their development agencies.

Another option, and one spoken of by European officials in recent weeks, would be to make Iran eligible for loans from the European Investment Bank (EIB) -- thereby giving Tehran access to international finance in euros to sidestep US sanctions on dollar transactions.
“You can try to do business in other currencies like the euro, but you need banks that are active in this field,” an EU diplomat said.
“For banks who do business in the US, this is not easy. That’s why we think about the EIB.”
But former French foreign minister Hubert Vedrine warned that bypassing dollar transactions would be “very, very difficult in the real world”.

The ‘blocking statute’
There has been talk in Brussels that the EU could counter US sanctions by adapting a 1996 regulation originally created to get around Washington’s trade embargo on Cuba.

This so-called “blocking statute” prohibits EU companies and courts from complying with specific foreign sanctions laws and says no foreign court judgments based on these laws have any effect in the EU.
But the row with the US over the Cuba embargo was settled politically, so the effectiveness of the blocking regulation has never been put to the test.

An EU source acknowledged that the “political symbolic effect is potentially bigger than the economic effect”.
“If a company is active on the large American market and small Iranian market, then it does not benefit much from the fact that its European and Iranian business is protected but not its activities in the US,” the source said.

‘Chilling effect’
Washington has granted a six-month grace period for businesses to wind down operations in Iran before reimposing sanctions, but at this early stage there is already scepticism about the effectiveness of any countermeasures that the EU and its allies might take.

The foreign policy chief of German Chancellor Angela Merkel’s party, Norbert Roettgen, said businesses would simply not want to run the risk of falling foul of the US.

“Whoever invests in Iran will be hard hit by US sanctions, and that cost can’t be offset,” he told Der Spiegel magazine. “So the affected companies will probably very quickly roll back their investments or pull out of the country altogether.”
Even before Trump’s announcement, EU officials admitted they were already seeing “a chilling effect on business operators”.
But Mark Fitzpatrick, executive director for the International Institute for Strategic Studies, argued that efforts to pursue an alternative deal without the US could lead to a shake-up of the global power dynamic.
“Some countries, they’re just going to ignore the United States’ threat. China isn’t going to kowtow to the United States on this, and so the Europeans might see how China fares in resisting US pressure on Iran,” he said.

Iran’s possible responses to Trump’s nuclear decision

Iran finds itself in a tricky balancing act as it weighs a response to US President Donald Trump’s decision to pull out of a landmark nuclear deal.
“They need to find a response that keeps the Europeans on their side but also shows they can’t just be pushed around,” said a Western diplomat in Tehran. “That seems pretty difficult”
For now, President Hassan Rouhani has said he will hold talks with the other parties to the 2015 agreement -- Britain, France, Germany, China and Russia.

He has said there will only be a “short period” in which to assess whether Iran’s interests can still be preserved in concert with the remaining parties.
Some analysts say Iran could retaliate by causing trouble for US interests across the Middle East, where the Islamic Republic has widespread influence and large proxy forces.

“Iran will push back, to show that it cannot be bullied,” said Mark Fitzpatrick, of the International Institute for Strategic Studies. “Iran’s main response... will probably be asymmetrical, harming US interests in other realms, such as Syria and Iraq. While it may not be immediate, a push-back is inevitable,” he said in a briefing note.
For now, Iranian officials have suggested there are three broad responses.

Resume high-level enrichment
Speaking immediately after Trump’s announcement, Rouhani said he had instructed the Iranian Atomic Energy Organisation “to take the necessary measures for future actions so that if necessary we can resume industrial enrichment without limit”.
The head of the organisation, Ali Akbar Salehi, has said Iran is ready to resume high-level uranium enrichment to 20 per cent “within five days”.

The deal restricted Iran to enrichment to around 3.5 per cent, the level needed for nuclear power stations. Although 20 per cent is still within civilian use limits, the move would mean Iran was building up a stock that could then be enriched to military-grade levels of 80 per cent or more.

Stay in the agreement
Rouhani said on Monday that Iran would stay in the agreement even if the US pulled out. But he wants assurances that Iran’s interests -- primarily trade benefits from the deal -- will be preserved.
“Either what we want from the nuclear deal is guaranteed by the non-American parties, or it is not the case and we will follow our own path,” he said.

Europe has been adamant that it wants to preserve the accord, but Washington has already threatened that European businesses in Iran must be wound down within six months.
Parliament speaker Ali Larijani said that Europe had caved to US pressure before, having seen many of its businesses shut up shop under previous international sanctions from 2012-15. “We can’t put much confidence in their statements about preserving the agreement, but it’s worth testing for a few weeks so that it’s clear to the world that Iran has tried all the avenues to a peaceful political resolution,” Larijani said on Wednesday.

Supreme leader Ayatollah Ali Khamenei said recently that a top priority in Iran’s foreign policy today was “preferring East to West”.
That reflects Iran’s strengthening of relations with Russia, an ally in the Syrian conflict, and with China, which has no qualms about its business ties to the Islamic republic.
Khamenei has also warned in the past that Iran would burn the nuclear deal if the US walked out.
But while he has ultimate authority in Iran, any decision will emerge from discussions between officials from across the political spectrum.