Free trade agreements and nuclear trade-offs

U.S. President Barack Obama is carefully planning his upcoming visit to Israel and, with it, he is also complicating a negotiated diplomatic solution to the Iranian nuclear crisis and undermining the rather unusual efforts of the European External Action Service. 

On March 15, with no extra publicly available data to back the statement and no special provocative statements from Iran, President Obama warned that, despite the Iranian bomb could be more than one year away, a military option remained pretty much on the table.

On a more discreet note, although equally important and closely related, last February 28, the U.S. Senate passed Resolution 65, calling the U.S. to provide support for Israeli strikes on Iran, aimed at preventing the Islamic republic from acquiring nuclear capabilities, in the form of military, economic and diplomatic backing.

To make things even more complicated, it all comes in the aftermath of North Korea’s latest long-range missile test, in December 2012, and third nuclear test, earlier in February, both taking place on the heels of the signature of a bilateral cooperation  agreement in the fields of science and technology – signed in Tehran on September 1, 2012 with both Iranian President M. Ahmadineyad and North Korean Chairman of the Presidium of the Supreme People's Assembly Kim Yong-nam present at the official ceremony – and allegedly supported by (and even carried out on behalf of) Iran, which has also successfully test-fired two different short-range missiles.

This conflict-geared agenda is undermining the efforts of other international players to defuse tensions and negotiate a palatable solution to the conflict over Iran’s nuclear plans. Most notably, the almost unprecedented proactive efforts of the often reactive European Union diplomatic arm to take the lead in negotiating a peaceful resolution to the Iranian nuclear issue are being not-so-subtly being put aside by the combined efforts of the revamped Netanyahu cabinet (now including a right-wing defense minister M. Yaalon) in Israel and its American ally.

It also comes at a complicated time for the European Union to answer back and hold its ground: after several months of preparatory meetings and negotiations, the European Commission has given the green light to launch talks leading to a comprehensive Free Trade Agreement (FTA) with the United States of America, Europe’s main trade partner, an agreement that would remarkably boost transatlantic cooperation and bilateral trade.

Signing this FTA not only makes economic sense for the sputtering EU economy, but also carries great diplomatic and geostrategic clout: amid notable cuts in defense budgets all across Europe – military expenditure across Asia has overtaken Europe’s for the first time in contemporary history – and fears that NATO’s role and capabilities are being undermined in the context of Washington’s much-trumpeted “pivot to Asia” , Europe’s democracies are trying hard not to become irrelevant in the multipolar 21st century.

When silence is the only sound coming from the European External Action Service and the loudest voices can be heard in the Directorate Generals for Trade and Economic and Financial Affairs, the only valid conclusion one can reach is that Europe needs to export its way out of the crisis and thus further improve its balance of trade, a discourse that has two clear implications for the involved parties. First, the EU enjoys a healthy and growing positive trade balance with Israel (up from under €3 billion surplus in 2009 to over €5 billion surplus in 2011 when combining trade in goods and services) and is not willing to see it vanish overnight. Second, free trade with the United States would notably boost European exports across the Atlantic, raising European aggregated GDP an estimated 0.5% per year, and any source of growth is now sorely needed. In the words of Mr. Vale de Almeida, EU Ambassador to the U.S., “it is good to see Europe perceived again in Washington as a source of growth, and we must seize the moment.”

Green light, therefore, from Brussels for Israel and the United States to take the course they consider more fit for the Iranian nuclear issue... of course, China and its strategic energy interests permitting.