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Energy 10 May, 2018 10:00 am   

Victory Day for wilfulness

European countries celebrate the end of World War II on May 8. The Russians have their Victory Day a day later. The decision of Donald Trump to leave the nuclear agreement with Iran could be the day of victory for the newly inaugurated President of Russia Vladimir Putin. It is a day of failure for supporters of multilateral arrangements to increase international security, writes Wojciech Jakóbik, editor-in-chief of BiznesAlert.pl.

USA’s about-turn

The US president announced that his country would withdraw from a nuclear agreement with Iran.  Analysts fear that a taking off the Iranian oil  from the market of at least part of it, will further reduce the supply reduced by the shareholders of the OPEC + oil group. The Secretary-General of the cartel, Mohammed Barkindo, said the signatories would not change the exploration level after the decision of the US.

For this reason, US Treasury secretary Steven Mnuchin was to talk to oil producers about the need to increase supply in order to offset the possible effect of US sanctions. They will hit the countries that resumed import of Iranian oil after removing the restrictions in 2015. Polish companies, such as PKN Orlen and Grupa Lotos, refrained from such a solution, as they were concerned only with test deliveries due to concerns about the return of the USA.

It was different in the case of Western European countries. Consumers of Iranian oil are, according to Bloomberg, descending: China, India, South Korea, Turkey, Italy, Japan, United Arab Emirates, Spain, France, Greece, Syria, Taiwan, Croatia, the Netherlands, Poland and Malaysia. China and India brought the most oil (over 600,000 barrels a day). After them, most Western countries imported (about 200,000 barrels a day). It’s Italy, Spain, France and Greece.

The appeal of the secretary Mnuchin for the intervention of oil producers is irony of fate. Until now, the Americans have argued that the price of oil should be decided solely by the market and were skeptical about attempts to manually lift the value of the barrel by means of a nuclear agreement. Now, seeing the risk of losses on the side of US allies due to the exit from the deal with Iran, Washington is appealing to the producers for the opposite movement, i.e. the manual lowering of the price of the barrel through increased extraction.

It is not known if Trump’s decision is dictated by anything else than the pressure of his voters with a negative attitude towards opening a relationship with Iran initiated by the Obama administration. The US president said that Israel provided evidence that Iran, despite numerous visits by international inspectors, continued to conduct a military nuclear program. The Israeli government is supposed to have documents confirming this fact.

Until we see them, Vladimir Putin remains the main winner of Trump’s decision. The arbitrary decision of the President of the United States has disappointed Washington’s European allies, which, as seen above, will lose some of the resumption of sanctions against Iran. This will be another factor deepening divisions in the West.

A blow to the West

The leaders of France, Germany and Great Britain expressed disappointment with Trump’s decision. Their representatives sat at the P5 + 1 negotiation table. The President replied on Twitter that the regime of non-proliferation of nuclear weapons is at stake. However, he may also be threatened by this decision, because it reduces the credibility of the US as a guarantor of compliance with collective agreements. This is another broken arrangement after the Budapest memorandum. It assumed the resignation of nuclear weapons by post-Soviet Ukraine in exchange for a security guarantee made by the USA, China, Russia, France and the United Kingdom. It has not been kept. We do not know, however, how the US volatility will affect talks on denuclearization of North Korea announced by the American administration.

Only the actual evidence that Iran was able to bypass international control and pursue research on acquiring nuclear weapons would be an argument for such a costly US turnaround. America’s allies affected by Trump’s decision are probably waiting impatiently for information on this subject. The hope of stabilizing the situation is a signal from Washington about the readiness to negotiate a new agreement. It is not known, however, whether the other interested will agree. High Representative for Security and Foreign Policy of the European Union Federica Mogherini has already announced that the EU will not withdraw from the agreement with Iran.



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