Wednesday, February 12, 2020

The Weak Sisters of Western Europe

I have often had occasion to remark on the weak sisters of Western Europe. Propelled by I do not know which ideological delirium the governments of Western Europe have adopted policies that bespeak weakness, cowardice and fecklessness. Naturally, certain elite American intellectuals are all in with weakness. They cringe in terror every time they see President Trump take a risk in the world arena. (See previous post.)

Worse yet, these weak Western European nations are our putative allies. And thus, when they refuse to align themselves with American policies, our elite intellectuals and certain political hacks rush out to explain that we are not being nice to our allies. No one remarks that if these nations want to be treated like allies they ought to act like allies.

One needs to remark that when Great Britain replace the incompetent Theresa May with the omni-competent Boris Johnson it was saying that it no longer wanted to be part of the weak sisters coven.

Anyway, the weak sisters do not want to be seen as weak sisters. They want to be seen as independent and autonomous. And that means, they feel compelled to take a stand against the United States. Not necessarily for principle, but for self-esteem. In recent months they have bent over backwards to defend their good relations with the terrorist sponsoring nation.They were all-in with the weak and feckless Obama policy of the JCPOA, an agreement that would have allowed Iran to have nuclear weapons within several years.

Anyway, the Trump government has imposed crippling economic sanctions on Iran. It has brought the Iranian economy to its knees. It has murdered Iran’s leading terrorist. And, of course, the weak sisters of Western Europe are crying in their tea. And they are also trying to establish a way to continue economic and trade relations with the Islamic Republic. 

Evidently, this is easier said than done. German newspaper editor Anna Sauerbrey explains it in the New York Times:

If you don’t happen to be a foreign policy wonk, you’ve probably never heard of Instex, the Instrument in Support of Trade Exchanges. The company, set up by Germany, France and Britain in January 2019, was supposed to enable trade between Europe and Iran in defiance of United States sanctions. Now, a year later, the first transaction is just about to be processed, according to the German Foreign Office.

All this may sound technical, and, well, wonky. I can already see you wondering: Should I really make the effort to keep reading this column? But it really is worth taking a closer look at Instex and its foibles. Because this instrument — weedy and wonky though it may be — is a prime example of the futility of Europe’s struggle for strategic autonomy from the United States.

And there is the salient point, one that is worth underscoring. The European effort to pretend to be autonomous is futile. Europe has been rendered impotent on the world stage. One might say, as Sauerbrey implies, that the fault lies with President Trump. Then again, Europe’s supine and cowardly attitude toward Muslim migrants is not the fault of Donald Trump. Nor is the fact that Muslims represent large voting blocs in European nations, making it ever more difficult for the weak sisters of Western Europe to do anything but submit.

If anybody in Berlin needed a reminder of how dangerously impotent Europe is in the face of President Trump’s erratic foreign policy, Jan. 3 should have done the trick. On that day, the Iranian general Qassim Suleimani was assassinated by an American drone strike in Iraq; the fallout pushed the United States and Iran to the brink of war, and once again reduced European leaders to pleading for caution from the sidelines of world politics.

Again, a nice turn of phrase… pleading for caution from the sidelines. What else would you expect from risk averse weak sisters?

As it happens, Sauerbrey continues to believe that the JCPOA was working just fine. She ignores the fact that important nuclear research facilities were left off the inspection regime and she ignores the fact that Israeli intelligence has shown that Iran never really complied with its terms:

When it signed the deal in 2015, Iran agreed to halt the development of nuclear weapons in return for the end of economic sanctions. Mr. Trump quit the deal three years later, despite reassurances by the International Atomic Energy Agency that Iran did comply with its terms. Soon afterward, the United States reinstated and extended American sanctions on Iran, including so-called secondary sanctions — sanctions that not only prohibit American companies and citizens from trading with Iran, but also affect foreign entities and individuals who do so.

And, she ought to have mentioned that even if Iran had complied with the terms of the deal the net outcome, in five more years would have allowed Iran to have nuclear weapons grade material. A minor detail…

And then, Sauerbrey considers that Trump was bullying Europe, was not taking them as equal partners:

The withdrawal was a major shift in American policy. Instead of the deal’s carrots-and-sticks approach — an approach made in close partnership with Europe — the Trump administration switched to a “maximum pressure” strategy, designed to choke Iran economically. The secondary sanctions also made clear that from the American perspective, Europe was on the wrong side of history and needed to be treated as part of the problem.

The good news is that the weak sisters of Western Europe cannot easily get around the sanctions. They cannot easily prop up the terrorist regime in Tehran. Get out your crying towels:

The enormous impact of America’s secondary sanctions comes not just from the market power of the United States, but also from the power of the dollar and America’s capacity to legally or factually control financial transaction systems. “On some level, almost every company has some sort of connection with the U.S.”, said David Jalilvand, a foreign policy expert who runs Orient Matters, a Berlin-based political and economic consultancy specializing in the Middle East. “Even if a company doesn’t operate on the U.S. market, either its bank does, or one of its insurance companies or one of the reinsurance companies backing their insurance companies.” As a consequence, even companies that do not operate on the American market are affected.

One key, then, to Europe obtaining “strategic autonomy” in international relations, is obtaining a capacity for independent financial transactions. Which brings us back to Instex.

Western Europe is in a bind. The last time the German military wanted to do tank exercises it discovered that it had no functioning tanks. It was reduced to using private automobiles, as tank substitutes. The person most responsible for the pathetic state if the German military, former Defense Minister Ursula von de Leyen is now chairing the European Commission.

When compared to Mr. Maas’s strong rhetoric in Bucharest, the sound emanating from German foreign policy circles today is rather mealy-mouthed. The first transaction is said to be a “test case.” German officials have declined to name the exact amount, but say it is “less than a million” euros. They like to stress that everything about it is entirely legal and in accordance with the American sanctions regime: The first trade deal operated through Instex is a shipment of medical goods produced by a German company.

Still, the exporting company’s name has been treated like a state secret — as are the names of the banks involved, for fear they might become the targets of American wrath. Also, there have been no Iranian imports to the E.U. in return, as laid out in the original concept of the barter system. The amount due for the shipment has been provided by Instex itself.

Get through all that? Here’s the tl;dr version: Under constant American diplomatic pressure and threats, Instex has gone from being promoted as the linchpin of an independent European foreign policy to a company sending less than a million euros’ worth of humanitarian aid to Iran in half-secrecy. The once-defiant posture — Europe proudly standing up to a bully — is long gone.

Standing up to a bully. Sauerbrey has not noticed that the weak sisters of Western Europe are effectively submitting and bending over for the Iranian bully. Which one is their ally? 

For Europe, a direct neighbor of the Middle East, the stakes of Mr. Trump’s risky Iran strategy are extremely high; in January, Europeans learned that the American president would put the Continent’s security interests at risk without batting an eye. This, as well as the bitter lessons learned from the Instex experiment, illustrate once again how hard it is to run an independent foreign policy in a dollar world in which the United States is weaponizing trade. European policymakers have been left with both a sense of urgency and a feeling of utter impotence. Not a comfortable pairing.

At present, it looks like German foreign policymakers are willing to live with it, for lack of better options and for fear of retaliation if they step out of line. They are sustained by a vague hope that Iran’s nuclear program can be contained until the American presidential election. If Donald Trump is re-elected on Nov. 3, however, a tipping point may be reached: The danger of sticking with the United States will outweigh the danger of letting go. Alternate partners have already offered themselves: Both China and Russia have long worked on diminishing their dependency on the dollar and on financial transaction channels dominated by the United States. They have followed Europe’s Instex initiative with great interest, offering to join in. So far, Germany has declined the offer.


Dan Patterson said...

A fascinating puzzle with no pleasant answer in this the global theater of diversity and equality, and of self-deception. And for the ruin of formerly stable societal foundations the blame is squarely at the feet of women in power. It is a recent fashion to not only treat the fairer sex with deference but to cower before them - watching all the while as they place first one, then the other foot firmly in a bucket and stomp around the dance floor seeking approval.
Trade is not so complicated provided everyone understands and follows the same rules. Remove the US from the equation and the parties are reduced to weighing only the risks of trading with an insane party with the benefits. Viable alternatives to US money have yet to be discovered and the US seems to have rediscovered it's MOJO, so yes the sanctions will be applied to enemies and yes the business conducted in US greenbacks, and all the business those greenbacks touch, will generally fall in line.

trigger warning said...

Naturally, the instinctive reaction of EU-niks to Trump's Iranian sanctions was to create a bureaucracy. INSTEX is a EU-nik funded and managed "special purpose vehicle" (SPV) designed to evade SWIFT banking regulations. The most famous SPVs were the Enron entities used to conceal losses and fabricate earnings.

The way INSTEX was supposed to work was sanctions evasion via transactions with STFI, another SPV on the Iranian side. So, de jure, both sides of the transaction appear to have occured within Iran.

At least, that was the plan.

Unfortunately, INSTEX trade has been stymied by... [ahem] "negative travel advice" discouraging the lead EU-nik INSTEXocrat, Michael Bock, from visiting Iran. [, 1/14/20] Instead, Mr Bock was forced to brief the EuroParliament's Iran delegation in Brussels. Pity, that.

"Several sources have even confirmed to EURACTIV that there had been no transactions through the mechanism so far, though it has been staffed and operational, having already been in contact with EU-Iranian businesses. However, there is hope to carry out transactions shortly, the sources added."
--- ibid.


Sam L. said...

Can you say "Bye, bye, Europe", boys and girls? Yes, I KNEW you could.

Freddo said...

To top it off: where Anne Sauerbrey writes "Europe" it can be read as shorthand for "the bureaucrats of Brussels". Good for her that she does not even try to suggest that the craven EU policy on Iran has the slightest bit of popular mandate or support.

The only people supporting the mullahs are the mullahs, Obama and those faceless EU bureaucrats.

UbuMaccabee said...

The strong do what they will, and the weak do what they must. Where would you place "pleading from the sidelines?"

Great color-work. Trigger. "Negative travel advice," is classic. Even the EU is too afraid of Iran to allow their money men to travel there without fear of getting nicked in some fashion.

Thanks for the update of the pure impotence of the EU, Stuart. I will write INSTEX off along with the German army as something not likely to matter in my lifetime. Another empty gesture that Donald Trump should tweet about. Sad.