U.S. Risks Losing World Power to China and Russia by Splitting with Allies on Iran, Experts Say

The U.S. could risk forfeiting its central role on the international stage both politically and economically by splitting with its allies and other major powers that oppose upcoming sanctions against Iran, according to two former State Department officials who helped craft the 2015 nuclear deal.

In line with President Donald Trump's withdrawal from a 2015 nuclear agreement in May, the U.S. was set to impose Monday the first batch of sanctions that would affect Iran, as well as European and other international companies. The decision would be only the latest of a series of schisms between the Trump administration and the EU, which has continued to endorse the Iran deal.

When asked by Newsweek if top U.S. rivals China and Russia could stand to benefit from the split, former State Department Deputy Lead Coordinator and Coordinator for Iran Nuclear Implementation Jarrett Blanc said "yes."

"This is not strategic behavior, we're all over the map, we don't have a list of priorities, we're not relating issue A to issue B and so then of course that puts in a stronger position anyone who can set their priorities and tie these issues together," Blanc said Wednesday during a conference call hosted by progressive think tank Diplomacy Works, based in Washington, D.C.

The Iranian is seen on top of the Austrian Chancellery during the visit of Iranian President Hassan Rouhani in Vienna, Austria, July 4. Many U.S. allies in Europe, as well as China and Russia, have continued to support the Iran deal after President Donald Trump's exit. Lisi Niesner/Reuters

The nuclear accord, known officially as the Joint Comprehensive Plan of Action, is a plan to curb Iran's nuclear production in exchange for sanctions relief and was worked out between the administrations of former President Barack Obama and Iranian President Hassan Rouhani. In July 2015, the U.S. and Iran were joined by China, France, Germany, Russia and the U.K. in signing the agreement. The deal was a hard sell to both U.S. and Iranian conservatives, however. Trump has accused Tehran of using the sanctions relief to fund militant groups and vowed to scrap the deal if its terms were not renegotiated, something Iran has said was not possible.

Monday marks 90 days since Trump abandoned the deal and the first of two major deadlines set out by his administration. Iranian sectors affected include the country's currency, the sale of metals and the automobile and aviation industries. The second deadline was set to be introduced at the 180-day mark, which is November 4. These sanctions would hit Iran's oil exports with the stated aim of reducing them to zero.

Richard Nephew, former principal deputy coordinator for sanctions policy at the Department of State and the lead sanctions expert for the U.S. team negotiating with Iran, warned that the prospect of cutting Iran's oil market off entirely was highly unlikely. Instead, he warned that the Trump administration's heavy-handed tactics could "alienate us" from European allies who have become increasingly frustrated with the U.S. dominance over the world financial system.

"To date, people have been willing to deal with us, notwithstanding their frustration that we can sort of pull strings a little bit more due to our weight and due to our centrality and significance, because we haven't abused it, and they might not have been happy, but the benefits outweighed the costs," Nephew said during Wednesday's press call. "I think there's a very legitimate argument to be made that the cost to everyone else of us pulling our weight on all these various different issues is increasing."

Russian President Vladimir Putin (L), Chinese President Xi Jinping (C) and Iran's President Hassan Rouhani are seen before the opening ceremony at the Expo Center at the fourth Conference on Interaction and Confidence-Building Measures in Asia (CICA) summit in Shanghai on May 21, 2014. China is the top buyer of Iranian oil and Russia has a strategic alliance with Iran in Syria. ALY SONG/AFP/Getty Images

Nephew described his "biggest fear" as "the development of alternative systems." If this happens, he said, "then the real problem we've got is not that we're limiting our own national security use of these tools in the future, although that's pretty big, but we're also going to be limiting our economic benefit from being the center of the international economic universe."

He added, "I don't think we fully understand yet what that looks like and what happens to the U.S. banking system without having people wanting to put money here, what happens to the U.S. investment and U.S. financial markets without people wanting to put money here."

Nephew called this "a longer-term problem," but "definitely one that's becoming an increasingly dangerous one with the kinds of diversion policies that are being taken by this administration."

The Iran deal is not the only leading issue in which Trump has clearly split with his European allies. The EU has joined China and Russia, as well as U.S. neighbors Canada and Mexico, in opening a World Trade Organization case against the Trump administration's recent tariffs on steel and aluminum imports. These countries have announced retaliatory measures set to cost the U.S. billions of dollars.

Trump also caused a major fuss at last month's meeting of the NATO Western military alliance, when he called on allies to spend more on defense and drew international criticism last year for his decisions to move the U.S. Embassy from Tel Aviv to Jerusalem, sparking a wave of Palestinian unrest, and to withdraw from the Paris Climate Agreement.

A chart published July 17 shows the top international importers of Iranian oil. Iran's oil exports could fall by as much as two-thirds by the end of the year because of new U.S. sanctions, putting oil markets under huge strain amid supply outages elsewhere in the world. Reuters

As France, Germany and the U.K. scramble to save the Iran deal, China—Iran's top oil consumer—and Russia—Iran's strategic ally in Syria—have easily been able to portray the U.S. as the odd man out among world powers. The recent fiery rhetorical exchange between Trump and Iranian leaders, sparked by reports of an electronic U.S. pro-regime change propaganda campaign in Iran, has only further heightened tensions over an agreement that was once hailed as a milestone in U.S.-Iran relations, which fell out after the 1979 Islamic Revolution that overthrew a CIA-reinstalled, pro-West monarchy.

"I think the Iranians are quite pleased that really for the time since the revolution, the Americans seem isolated vis-a-vis Iran, not the other way around. If the Europeans, the Chinese, the Russians keep doling out those positive political signals I think that means a great deal," Blanc said, noting that ongoing unrest over a deteriorating economy in Iran undermines the political benefits of international support.

Nephew described the current state of affairs in Iran as "stable" and better than the pre-nuclear deal years, but not necessarily "good." Still, he said Trump's strategy of going against European allies would mitigate the negative effects of the upcoming sanctions and potentially even backfire.

"I think that the easiest way they can circumvent sanctions comes from the way in which we're implementing them, which is by dividing our own partnership," Nephew said. "The fact that we are not working with Europe, but rather confronting Europe means that we will not have an EU-wide system of sanctions that we're working with them. Instead, it's going to be all about who has benefits in the United States and who doesn't, who has economic interests in the United States, and who doesn't. And that's a bad way to have sanctions work, especially with our closest partners."