Trump Takes His Nafta Trick to Iran

(Bloomberg Opinion) -- This week Donald Trump hailed the new trade agreement with Mexico and Canada as “a great deal for all three countries.” And maybe it was. But it also was surprisingly similar to the North American Free Trade Agreement that it replaced — and which Trump has denounced ferociously for years.

The approach appears to be much like the one he’s trying to take with North Korea: start by denouncing and threatening, then work toward achieving modest progress.

Can the same pattern work with Iran?

Trump’s negotiating style is now familiar. He begins by creating a crisis by attacking existing arrangements. Negotiations follow and a tweak to the pre-existing arrangements is established. The new normal looks a lot like the old normal, but is rebranded. Trump takes credit for saving the country from the errors of his predecessors.

The Nafta replacement, dubbed the U.S.–Mexico–Canada Agreement, includes some noteworthy changes to its 24-year-old predecessor. But many of the most significant changes are drawn from the Trans-Pacific Partnership that former President Barack Obama had negotiated and which Trump consigned to the trash as soon as he took office.

Rebranding relations with Iran, though, may prove to be more difficult. North Korea was delighted to engage with the U.S. at the leader-to-leader level, gaining unprecedented legitimacy at no cost. Iranian leaders, by contrast, would be taking a considerable political risk by meeting Trump in public.

Trump enraged both Iran’s leaders and public by summarily withdrawing from the nuclear agreement reached during Obama’s presidency, calling it “the worst deal ever,” and launching a campaign of “maximum pressure,” largely in the form of financial war.

The resulting sanctions are biting hard and fast. Iran’s currency, the rial, is in free-fall. And some of the most powerful sanctions, including on the oil industry, have yet to fully take effect.

European efforts to create a “special payments vehicle” that would allow countries and companies to pay Iran in currencies other than dollars and skirt U.S. sanctions appear doomed.

All this is bolstering Iranian hard-liners and causing many Iranians to rally around the flag. But they are also aggravating existing divisions in Iran and narrowing the government’s room for maneuver.

Unrest is mounting among Iran’s ethnic minorities, including Baluchis, Kurds and Arabs.

Beyond the sanctions, the U.S. has teamed up with regional allies to intensify strategic pressure. U.S. troops are staying in eastern Syria, while Israel is confronting Iran and its Hezbollah proxies from Lebanon in the west. And the U.S. and Saudi Arabia have been pursuing an effective campaign to weaken Iran’s grip on Iraq, most recently by securing the appointment of a new prime minister who Iran tried but failed to block.

Both sides began the confrontation with exaggerated confidence. But it soon became clear that there were limits to what either could achieve. Iran isn’t going to be able to isolate Washington, no matter how frustrated Europeans become with Trump. And U.S. pressure on Iran isn’t going to produce a major policy change, let alone regime change.

So, unless both sides want a war, and neither side does, Iran and the U.S. will have to find a way to re-engage.

Trump has signaled that he wants a new understanding with Iran, saying in July: “They want to meet, I’ll meet. Anytime they want. No preconditions. If they want to meet, I’ll meet.”

Washington’s idea of a deal would address three aspects of the six-nation nuclear deal that Trump withdrew the U.S. from in May.

First, the U.S. wants restraints on Iran’s nuclear activities that don’t expire in a few years, as they do under in 10 to 15 years under the nuclear deal. Second, it wants to limit Iran’s missile development, which is not covered by the nuclear deal at all. And third, the White House wants agreements curtailing Iran’s destabilizing regional policies, especially support of violent militias like Hezbollah.

It’s going to be politically difficult and emotionally galling for Iranian leaders to get back into a dialogue with Washington. But the only way to relieve the pressure they face is to seek a new accommodation. And the economic pressures are also helping create a bigger Iranian constituency for re-engagement, despite widespread outrage at American perfidy. Righteous indignation only goes so far when you’ve got to pay the bills.

So they are already laying the groundwork. At the September meeting of the United Nations General Assembly, Iranian Foreign Minister Mohammed Javad Zarif was left the door open, saying, “I’m not ruling out the prospect of talks.” In July, President Hassan Rouhani enraged Trump by warning of the “mother of all wars,” but he also offered to help craft “the mother of all peace” with Washington.

According to David Ignatius of the Washington Post, at the UN Trump told French President Emmanuel Macron that he was “ready to negotiate” with Iran, but added: “It’s too early. They need to suffer.”

Ignatius wrote that he was skeptical that U.S. pressure tactics can work against Iran. But even the faint signals of re-engagement show that the two sides are closer to a new dialogue, possibly beginning through European intermediaries, than many people would have thought when Trump pulled out of the nuclear agreement.

Washington and Tehran are communicating that neither wants war, but also that neither is satisfied with the current arrangement. That means both sides must want a deal. And that’s progress, even though it’s far from clear that either side’s idea of a fair deal would ultimately prove acceptable to the other.

So give Trump credit. His pressure on Iran seems to be working as planned so far.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Hussein Ibish is a senior resident scholar at the Arab Gulf States Institute in Washington.

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