Angela Merkel and the EU have struck a defiant tone in the wake of Trump’s re-sanctioning of Iran, and made lots of noise about how they’re going to stop his tariffs and slap him down at the G7 summit.
The reality is, though, that while they’re making lots of loud noises to appease their far left, anti-American constituencies, they are quickly folding:
For all of Europe’s bluster, and increasingly vocal “resistance” to Trump unique approach to international politics, especially when it comes to Iran when Brussels swore it would defy the US president and continue business as usual with Tehran, it took Europe about a month to fold, and as Reuters reports European refiners are now unofficially winding down oil purchases from Iran, closing the door on a fifth of the OPEC member’s crude exports.
And since the only true leverage that Iran had vis-a-vis Europe was its deeply discounted crude oil, the shuttering of crude purchases from the Islamic republic will suddenly make European governments especially ambivalent whether to continue fighting Trump in hopes of salvaging the Iranian nuclear, when there is only downside left.
How did Trump win? By the implicit threat to sanctioning and cutting off Europe’s financial institutions, and although European governments have not – yet – followed Washington by creating new sanctions, banks, insurers and shippers are gradually severing ties with Iran under pressure from the U.S. restrictions, making trade with Tehran complicated and risky, and if anything, all cash (or bitcoin).
“We cannot defy the United States,” a senior source at Italy’s Saras, which operates the 300,000-barrels-per-day Sarroch refinery in Sardinia, told Reuters. Saras is determining how best to halt its purchasing of Iranian oil within the permitted 180 days, the source said, adding: “It is not clear yet what the U.S. administration can do but in practice we can get into trouble.”
Saras is hardly alone: virtually all other European brand refiners, including France’s Total, Italy’s Eni, Spain’s Repsol and Cepsa as well as Greece’s Hellenic Petroleum are preparing to halt purchases of Iranian oil. These refiners account for most of Europe’s purchases of Iranian crude, which represent around a fifth of the country’s oil exports.
The problem is that Trump is not a social justice warrior or dumb liberal who will be very impressed by attempts at social shaming and “mean girl” politics at the G7 summit, which is about all the weak and corrupt Europeans can even do anymore.
The tariffs won’t last, but that’s largely because I expect the Europeans to fold quickly.