China and India seen as Europe's last hope to save Iran deal

The European Union will defend the Iran nuclear accord despite Tehran’s decision to backtrack on its commitments in response to US sanctions, diplomats believe, but European powers expect it to collapse without a deal to sell Iranian oil to China or India, Reuters reported.

Britain, France and Germany, which signed the 2015 deal along with the United States, China and Russia, are determined to show they can compensate for last year’s U.S. withdrawal from the accord, protect trade and still prevent Tehran from developing a nuclear bomb.

But with Iran’s economy dependent on crude exports that are traded in U.S. dollars, a promised European trade channel to bypass American sanctions has proved complicated, is not yet operational, and may never be able to handle oil sales.

“This situation now risks deteriorating, but it will be step by step and not a collapse all in one go,” said a senior European diplomat. A French diplomat talked of a “negative spiral” in which trade in food and medicines was simply not enough, while another European envoy spoke of Iran’s “phased exit” from the deal.

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The Iran accord, one of the West’s biggest foreign policy achievements until U.S. President Donald Trump pulled out in May 2018, lifted punishing United Nations’ sanctions on Iran in return for Iranian compliance with the deal.

Iran has met its terms but Trump withdrew because he believes the accord did not curtail Tehran’s ballistic missile programme or address Iranian involvement in Syria’s civil war, something Europeans argue the 2015 deal was not designed to do.

By reimposing punitive sanctions, the United States says it aims to dramatically weaken Iran’s clerical rulers and force Tehran to renegotiate a broader arms control deal.

The European Union says that can still be done without tearing up the nuclear accord, which put strict limits on Iranian enrichment.

Iranian President Hassan Rouhani warned on Wednesday that Tehran could resume enrichment at a higher grade if the European powers, China and Russia did not do more to circumvent U.S. sanctions on banking and energy to boost trade.