Trump scraps Iran nuclear deal
By Liam Sheasby, News Editor
09 May 2018
President Trump has pulled the United States of America out of a nuclear accord with Iran and announced his intention to reintroduce strict economic sanctions against the Middle Eastern nation and any foreign companies that continue to do business with Iran.
Following the decision, the price of Brent Crude rose sharply to $77 per barrel – a three and a half year high for the North Sea oil. The US Dollar is also at a year-to-date high, while the price of gold has fallen back fractionally from the rapid gains made in the last week.
The US decision to pull out of the deal wasn’t unexpected, but it was opposed by the other six nations involved in the process: Iran, France, Russia, Germany, Britain, and China. The deal, initially led by President Obama three years ago, saw the seven nations agree to a step-by-step relaxation of sanctions in return for Iran honouring its commitment to not pursue a nuclear programme of uranium enrichment.
President Rouhani at an election rally in Tehran's Azadi Stadium, May 2017
Iran’s President Rouhani said in a press conference after the announcement: “If necessary, we can begin our industrial enrichment without any limitations. Until implementation of this decision, we will wait for some weeks and will talk with our friends and allies and other signatories of the nuclear deal, who signed it and who will remain loyal to it. Everything depends on our national interests.”
This response was a lot more restrained than that of Iranian MPs, who burned a paper US flag in parliament following the US withdrawal from the accord.
Iranian lawmakers set a paper U.S. flag ablaze today at parliament in Tehran after Trump's nuclear deal pullout, shouting, "Death to America!". Trump withdrew the U.S. from the deal on Tuesday and restored harsh sanctions against Iran. Full @AP coverage: https://t.co/MqybGfTnzr pic.twitter.com/Do4uSOxOy5— The Associated Press (@AP) May 9, 2018
The logic held by the US is that the deal is flawed; the limitations to Iran’s nuclear ambitions are fine, but they’re only short-term. The US wants them halted permanently.
Speaking in the Diplomatic Reception Room of the White House, President Trump said; “This was a horrible one-sided deal that should have never, ever been made. It didn’t bring calm, it didn’t bring peace, and it never will.”
The impact of the sanctions on Iran means less economic capacity and less oil production as a result. A reduction in supply causes prices to rise, and this then punishes those nations buying from Iran – specifically China, India, Korea and Turkey. China are already embroiled in the early stages of a trade war with the US, but Turkey are the real losers in this scenario; the Turkish Lira is suffering against the stronger US Dollar and, with the price of oil (priced in USD) now rising sharply, it’s only going to get more difficult President Erdogan’s government.
The other big impact is the European companies at risk of President Trump’s sanctions threat. Shares in companies with ties to Iran have already fallen since the deal was broken off, but the likes of Total and Royal Dutch Shell have fuel deals in Iran. Car makers Renault are involved in a joint 150,000 car venture per year, and Airbus are just three jets into a 100 jet deal worth billions to the company.
World leaders and senior officials took to Twitter to air their thoughts on the situation, with President Macron saying that the nuclear non-proliferation regime is at stake and Barack Obama calling the decision a ‘serious mistake’. The Saudi Embassy to the US tweeted its support of President Trump and said it “hopes the international community will take a firm and unified stance against the Iranian regime, and its destabilizing aggression in the region”.
Britain’s own Foreign Secretary, Boris Johnson, said:
Deeply regret US decision to withdraw from the Iran nuclear deal. UK remains strongly committed to the JCPoA, and will work with E3 partners and the other parties to the deal to maintain it. Await more detail on US plan.— Boris Johnson (@BorisJohnson) May 8, 2018