Middle East & Africa | Raining on Iran’s parade

Scrapping the deal with Iran could embolden its hardliners

An unlikely alliance against Islamic State may unravel

|KIRKUK

FOR three years American forces have quietly worked in tandem with Iran’s Revolutionary Guard Corps (IRGC) to roll back Islamic State in Iraq. It was as unlikely an alliance as any imaginable. A decade ago IRGC operatives orchestrated attacks on American soldiers in Iraq. Crowds still gather in Iran to chant “Death to America!” Yet as American planes struck from the sky, Iran managed the advance on the ground. All this may be about to change.

As The Economist went to press, President Donald Trump was threatening to list the IRGC as a terrorist organisation and to “decertify” the nuclear deal that America and five other global powers signed with Iran in 2015. The agreement lifted some economic sanctions on Iran in exchange for limitations on its nuclear programme and close scrutiny of it, designed to prevent it from developing nuclear weapons.

Mr Trump’s denunciation of the deal—he has warned of a coming “storm”—has been met with similar bluster from IRGC commanders, who have all but threatened to shoot at American soldiers. These are echoes of an earlier period of tense relations. After President George W. Bush said Iran was part of an “axis of evil”, the IRGC encouraged attacks on American soldiers in Iraq. “Trump has no idea how complex this region is,” says an Iranian businessman who deals with America.

Decertifying the nuclear programme need not destroy the deal immediately. Congress would still have to decide whether to reimpose the sanctions and lawmakers, even those who opposed the deal, may not have the appetite for doing that. Nonetheless, decertification would send a signal that could strengthen the very hardliners in Iran that America has struggled for decades to contain.

In his campaign for re-election in May, Hassan Rouhani, Iran’s president, repeatedly baited the IRGC, accusing them of denying Iran the economic fruits of the nuclear deal that he had negotiated. The Guards argued, in turn, that Mr Rouhani should never have trusted America. Now their warnings sound prophetic.

Iran’s currency has slumped to new lows against the dollar and business confidence is sliding. “Trump is making a buffoon out of Rouhani,” says a Guards sympathiser. “The hardliners are mobilising and will paralyse his government.”

Some argue that, provided the European signatories continue to hold up their side of it, there is probably enough in the deal to ensure that Iran will abide by its commitments. The country’s oil exports have almost doubled since the lifting of UN sanctions in January 2016, to 2.2m barrels a day. Trade with Europe doubled in 2016 and has doubled again in the first six months of this year, taking it close to the level before sanctions were imposed.

There is also enough at stake to keep European countries in the agreement. Big companies such as Total and Airbus have struck deals with Iran since sanctions were lifted. Renault and Volkswagen, two European carmakers, are back. Quercus, a British company, has just announced a €500m investment to build and operate a solar power station in Iran.

Theresa May, Britain’s prime minister, has urged Mr Trump to reconsider. But he has called the deal “one of the worst and most one-sided” that America has ever made. He may have made up his mind.

This article appeared in the Middle East & Africa section of the print edition under the headline "Raining on Iran’s parade"

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