Iran's President Hassan Rouhani is viewed as a pragmatist. Photo: Reuters/Eduardo Munoz
Iran's President Hassan Rouhani is viewed as a pragmatist. Photo: Reuters/Eduardo Munoz

Looking at the recent arguments over the European Union’s strategy toward Iran, it is evident that the path to full normalization of relations between Brussels and Tehran — following a deal to limit Iranian nuclear activities in the summer of 2015 and the start of its enforcement in early 2016 — remains fraught with stumbling blocks.

In recent days, the EU — or its politicians — have been accused of political interference in Iran’s internal affairs and of excessive acquiescence to the Islamic Republic’s policies.

On October 6, the EU Parliament’s Foreign Affairs Committee approved a road-map for engagement with Iran. Liberal and pro-Israel members of the European legislative assembly criticized the document — which must also be passed by the parliament’s plenum — as being unbalanced. Their objections relate to its focus on the EU’s interest in expanding trade ties with Tehran and securing a possible role in de-escalating tensions between the Islamic Republic and Saudi Arabia, rather than on condemning Iran’s human rights violations and support for the Syrian regime of Bashar al-Assad and several terrorist groups.

Earlier, German Economy Minister and Vice Chancellor Sigmar Gabriel’s two-day visit to Iran, wrapped up on October 4, aroused the local hard-liners’ discontent. Ali Larijani, the Iranian parliament’s conservative speaker, called off a scheduled meeting with Gabriel after the latter’s comments on Tehran’s abuse of human rights, need for domestic reforms, involvement in the Syrian war and refusal to recognize Israel.

Iranian conservatives hitting back

Criticism of Gabriel’s words by the Iranian conservative camp adds to that voiced by Tehran’s foreign ministry to the EU diplomatic service after Brussels officials condemned, on September 30, a recent sentence validating the imprisonment of Narges Mohammadi, an Iranian journalist and activist.

Iranian conservatives cannot but be suspicious of EU leaders due to their manifest backing for President Hassan Rohani, the pragmatic architect of the country’s efforts to thaw relations with the United States and other Western nations. The EU and its member states encourage a less confrontational approach to Iran than does Washington — in large part they view Rohani’s presidency as a force for stability at home and in the Persian Gulf region. In particular, they believe he can spearhead the creation of a business-friendly environment and push conservative hard-liners linked to Supreme Leader Ali Khamenei aside.

Blossoming economic cooperation

The international community has lifted most economic and financial sanctions leveled against Tehran over its controversial nuclear program. The European bloc in particular has been quick to strengthen trade ties with Iran, a promising market of some 80 million people and a prominent oil and gas producer.

Unsurprisingly, there has been a succession of business missions from Europe’s capitals to the seat of the former Persian empire over the past year. And in April, the Iranian Foreign Minister Mohammad Javad Zarif and EU Foreign Policy Chief Federica Mogherini agreed on terms for developing cooperation down the line.

They believe he can spearhead the creation of a business-friendly environment and push conservative hard-liners

The EU is Iran’s third-largest trading partner, behind China and the United Arab Emirates, according to the EU Commission. Driven by European demand for Iranian crude, trade turnover between Tehran and the EU increased 43 percent, on a year-to-year basis, to US$5.7 billion in the first two quarters of 2016, according to Eurostat. Trade remains low compared with before the most significant round of sanctions was levied, in 2011 — when it was worth $31 billion thus — but it is picking up.

Tehran has, however, repeatedly called on the EU to boost banking cooperation to further foster trade cooperation. Despite the removal of nuclear-related penalties, financial transactions between the Islamic Republic and EU members are hampered by existing US restrictions on the use of dollars in banking operations with Iranian institutions and companies.

These ongoing sanctions, which Washington imposed on Iran over its ballistic missile program, collusion with terrorist organizations and poor human rights record, have prompted European countries to limit their interactions with Iranian businesses for fear of incurring American fines.

Kid gloves

As coordinator of the joint body that oversees Iran nuclear deal’s implementation, and a key trading partner for Tehran, the EU has its cards to play with the multilayered Iranian leadership. Yet European leaders are obliged to tread a fine line and treat the Iran file with kid gloves. They know well that Rohani’s administration could face internal resistance if it was seen to be too accommodating to Western demands.

European leaders hope to help Iranians improve their economic plight — which is the only way for the moderate-reformist coalition led by Rohani to rally public support and win next year’s presidential election. This is a win-win prospect for EU nations desperate for new and reliable markets as an antidote to economic stagnation and for geopolitical stability in the Middle East.