Berlin (CNSNews.com) – The U.S. withdrawal from the Iran nuclear deal and reimposing of tough sanctions on Iran that could affect European companies signals a “break” between the U.S. and Europe, according to German Chancellor Angela Merkel.
“We have experienced a break in German-American, in European-American relations,” Merkel told a labor union congress in Berlin on Tuesday.
Although she acknowledged that the Joint Comprehensive Plan of Action (JCPOA) “wasn’t perfect” – noting in particular Iran’s behavior in the region including its heavy involvement in Syria – Merkel defended it as the best available option.
“We still think that, with the agreement, we would be in a better position to speak with Iran about further agreements, than by unilaterally canceling an agreement that had been unanimously approved and endorsed in the U.N. Security Council,” she said.
Germany, France and Britain – three of the remaining five JCPOA negotiating partners – are examining ways to save the deal, with the matter set to be discussed Wednesday when E.U. heads of state meet in Bulgaria.
The three foreign ministers also met in Brussels Tuesday with Iranian Foreign Minister Javad Zarif. Iran wants the E.U. trio to guarantee that it will get the benefits it has been promised under the nuclear deal, despite the U.S. departure.
After the meeting, Zarif sounded optimistic, saying the talks were “a good start. We’re not there. We are beginning the process and we need to receive those guarantees. We’ll see how best we can move forward.”
Merkel’s comments on the transatlantic relationship come shortly after a Pew Research Center survey found that only 42 percent of Germans consider U.S.-German relations to be “good,” compared to 68 percent of Americans.
American respondents believe that security and defense ties are the most important element in the relationship, whereas Germans view economic ties and shared democratic values to be of greater significance.
Those economic ties are now in the spotlight, given the Trump administration’s decision to withdraw from the JCPOA. European businesses operating in Iran will have a 90-day wind-down period (180 days in some cases) to end the contracts or face U.S. secondary sanctions.
Around 120 German firms have operations in Iran, and some 10,000 German companies trade with Iran.
European businesses may find themselves having to choose between retaining access to the U.S. market, or the much less lucrative Iranian one.
Fearing significant consequences for German and European companies, Economics Minister Peter Altmaier (a member of Merkel’s Christian Democrats) warned on Deutschlandradio the ministry had “no legal means” to protect German companies against U.S. sanctions.
German Chamber of Commerce and Industry president Eric Schweitzer called on the federal government for damage limitation measures, saying in a newspaper interview Germany must form a united front with its E.U. partners.
European Council for Foreign Relations (ECFR) senior policy fellow Ellie Geranmayeh recommended in a commentary that E.U. leaders “publicly and unanimously” condemn the U.S. withdrawal from the JCPOA.
She also recommended that the E.U. trio reject any further negotiation with the U.S. over Iran policy “until and unless the Trump administration makes significant adjustments to minimize the enforcement of U.S. secondary sanctions targeting European companies doing business with Iran.”
Robin Lee Allen, partner at international private equity firm Esperance, said Germany’s highly diversified export economy meant that the U.S.’s actions will ultimately only harm itself.
“The current administration is playing a dangerous game that could actually and truly undermine American power, which in the long run is a bad thing,” he said.
This does not mean U.S.-German or U.S.-European ties will fully grow apart, however.
“Europe will remain allied to North America, but has enough collective power to resist the policies of the current administration,” Allen said, adding that the balance of world power still relies on the continued integrity of NATO. “Ultimately, North America and the E.U. are mutually dependent upon one another.”
The JCPOA is not the only current issue with the potential to strain U.S.-German ties.
The Pew poll found that 45 percent of Americans agree with President Trump that European countries should spend more on their national defense, compared to 32 percent of Germans who want to see defense spending increased. (Another 51 percent of Germans said it should remain unchanged, while 13 percent want it reduced.)
Trump has repeatedly called on Germany and other NATO allies to move toward honoring a pledge to spend two percent of gross domestic product on defense by 2024.
However, Germany’s latest budget indicates defense spending will reach only 1.29 percent of GDP in 2019, and even forecasts a drop to 1.23 percent in 2022.