On Tuesday, U.S. president Donald Trumpwithdrew from the Iran nuclear deal. This is probably the second biggest decision, after him pulling out from the Paris climate accord, which reflects his ‘America first’ philosophy on a global scale through his foreign policies. The decision means that Trumpquits the multilateral deal that was meant to hold back Iran’s possible nuclear ambitions in exchange for removing economic sanctions that had crippled the economy in the country. Now the U.S. is no longer constrained by the agreement and Trump seems to want sanctions to be re-imposed on Tehran.
What happens next?
Well, naturally, there will be both winners and losers of this decision. Trumphimself and his supporting base can feel like winners, as indeed finally Trump keeps to his campaign promises. The decision is probably also favouringthe protectionist and separatist movementsin the U.S. and Europe, as relationships between these two allies might be undermined now. Although European leaders, including Angela Merkel and quite recently Emmanuel Macron, tried to persuade Trump to further commit to the deal, these efforts ultimately failed. European leaders regret Trump’s decision and question the amount of trust and reliability they can further place on and expect from Trump’s America.
The protectionist nature of the decision shows also in terms of its possible implications for global trade. According to a Wall Street Journal account, pulling out of the deal will affect European multinationals. With possible new sanctions, the Iranian market will most certainly lose its attractiveness for foreign investors and subsidiaries of multinationals. Moreover, Trumpcan re-impose the pre-deal sanctions regime, which would mean punishments, in terms of decreased access to U.S. markets, for all Western companies and banks that would want to continue working with Iran. In other words, that might mean that European multinationalsand banks soon face the choice of either doing business with Iran or with the U.S. One way or the other, the Iranian economy and global tradein general seem to be the possible losers of the decision.
So far, European political and business leaders plan to stick to the Iranian deal. However, the coming month will bring more clarity on forthcoming sanctions and thus determine the actual possibilities and limitations. What is clear, though, is that Tuesday was yet another day that added to the volatility and concerning trends of the current geopolitical and economic landscape.