The EU v. Donald Trump: can it prevail?

“Frankly speaking, Europe should be grateful to President Trump.” That’s what Donald Tusk, the European Council president, said in Sofia last week. But he wasn’t extending the hand of friendship, said Gabriela Baczynska on Reuters. He was expressing the fury shared by the 28 EU leaders who’d gathered in the Bulgarian capital to work out how to react to Trump’s tearing up of the Iran nuclear deal, and to his threat to impose heavy sanctions on companies – including European ones – that carry on doing business with Iran. Trump’s “capricious assertiveness” has shown us, Tusk went on, that “with friends like that, who needs enemies?” We can’t rely on others: we must rely on ourselves.

The EU leaders certainly talked tough, said Charlemagne in The Economist. “Do we want to be vassals who obey decisions taken by the US while clinging to the hem of their trousers?” asked French finance minister Bruno Le Maire. They’d tried flattery, but it had conspicuously failed – embarrassingly so in the case of the “Trump whisperer”, Emmanuel Macron. So they agreed unanimously to try to keep the nuclear deal going. But how? The Europeans could “line up awkwardly” with Russia and China to offer Iran sweeteners, but the very fact of having to coax the Iranians to stay in the deal betrays their lack of leverage. In any case, many European firms can’t afford to be blocked off from the US market. Germany exports as much to North Carolina alone as it does to Iran. The key problem for Europe, said Jeremy Warner in The Daily Telegraph, is the central position of the US dollar in world trade. All companies doing business in dollars (which includes all oil traders) – have to have a “clearing licence” from the US Federal Reserve. Those that rebel against America’s “bully-boy tactics” on Iran could lose their licences and be frozen out of the international payments system. In the face of Trump’s economic aggression, both the EU and China may start looking to set up rival offshore payment and clearing systems of their own. But for now, the power of the dollar will ensure the nuclear deal stays dead and buried.

The problem for Trump, though, said Elizabeth Rosenberg in Foreign Policy, is that there will be far more opportunities for independent traders and oil smugglers to cheat if the rest of the world – Europe in particular – refuses to help the US enforce its sanctions: if it declines, say, to share intelligence on evasion or impedes US official access to violators. So the unintended consequence of Trump’s action may be to undermine the status of sanctions as a tool of US statecraft. Scrapping the nuclear deal may be bad not just for Europe, but for US national security too.