Should Washington be Concerned with Italy’s Iran Policy?

Italy has again changed government through inner-party machinations rather than elections. The U.S. may not look at Italy’s messy politics with more than curiosity, but obviously what Washington is really interested in is Italy’s policies.

U.S. officials will watch how the new executive led by Matteo Renzi, the young center-left leader, approaches one source of bilateral friction – namely the flurry of exchanges between Italy and Iran since the June 2013 election of pragmatist Hassan Rouhani as Iran’s president. The meetings culminated in then-foreign minister Emma Bonino’s December 2013 trip to Tehran, the first Iranian visit by an EU foreign minister in almost 10 years.

In her wake, the foreign ministers of Belgium, Poland, Sweden, and Spain, as well as an increasing number of business delegations, have visited Tehran.

Bonino is now gone. Her successor, the relatively inexperienced Federica Mogherini, does not possess comparable foreign policy knowledge or Middle East contacts. She is unlikely to show the initiative that characterized Bonino, especially on sensitive issues such as Iran.

Still, Italy’s interest in Iran transcends party lines and is shared by the business community. Mogherini may feel pressure to maintain Bonino’s line, as suggested by the confirmation of Lapo Pistelli, the driving force behind Bonino’s Iran policy, as deputy foreign minister.

U.S. officials can hardly be blamed for their concerns. After forging a large international coalition opposing Iran’s nuclear plans, the U.S. has just persuaded Iran to temporarily limit its most sensitive nuclear activities in return for modest sanctions relief. As Iran and the so-called P5+1 (Britain, China, France, Germany, Russia and the U.S.) pursue a comprehensive nuclear agreement, Washington has every interest in ensuring that Iran continues to feel the pressure.

The Obama administration views Italy’s outreach to Iran as dangerously premature, threatening to ease Iran’s isolation and erode the sanctions regime before Iran has given verifiable guarantees of the peaceful nature of its nuclear program. In his testimony before the Senate Foreign Relations Committee, Treasury Undersecretary for Terrorism and Finance David Cohen mentioned Italy as a country he visited to warn that ‘Iran is not open for business’.

Undoubtedly, Italy’s overture has been premised on the hope that it would be ‘first in line’ in accessing Iran’s markets (or at least one of the first) if and when the nuclear issue is resolved and sanctions lifted. Over the last years Italian companies operating in sectors as diverse as energy, constructions, infrastructure, automotive, machinery, pharmaceuticals, furniture, and interior design, have been forced by U.S. and EU authorities to abandon or reduce their share in the Iranian market. Italian businesses are therefore eager to restart activities.

Yet, strengthening ties has not only been about trade interests and economic gains. Italy has also sought to reinforce the dialogue on flashpoints of mutual concern, such as the stability of Afghanistan and the pacification of Syria. And Italy shares U.S. concerns about Iran’s nuclear program and, albeit reluctantly, has supported the use of sanctions, including self-harming ones, as a means to curb it.

True, the Italian record on Iran sanctions contributes to the frictions with Washington. It was not until mid-2010 that Italy’s energy giant Eni – along with other European firms – agreed to end its Iranian operations in exchange for avoiding further U.S. sanctions scrutiny. For these companies, unilaterally reneging on their deal with U.S. authorities would make little sense. Moreover, until 2010 EU companies did not face domestic limitations to their activities in Iran. Since then, however, the EU has established wide-ranging sanctions prohibiting most EU activity in Iran’s energy markets and dramatically restricting EU banking with Iran.

Washington could nonetheless argue that Italy’s activism has spurred a ‘rush for Iran’ that could over time weaken the EU’s resolve to keep sanctions in place. Yet, EU sanctions can only be lifted by consensus, which gives Britain, France and Germany veto power. In addition, any attempt by Italy to disregard EU sanctions before a final deal would be perceived as a serious breach of European unity and transatlantic solidarity. Whatever profit Italy might hope to gain from Iran is hardly worth such a high price.

The overtures towards Iran are not driven by economic interests alone. They also aim to facilitate the nuclear talks by giving more credibility to the promise of the benefits that would follow a final nuclear deal. Rouhani needs to show that negotiations can bear fruits beyond the temporary sanctions relief already agreed upon. Such openings also serve to balance the perception that the West is not negotiating in good faith engendered by calls for the U.S. to adopt a much tougher stance.

To conclude, U.S. concerns about the Iran policy of Italy’s previous government were exaggerated. If the new government were to follow the same line, however, it would be well advised to better communicate its intentions. Closer coordination may convince Washington to view its allies, even secondary ones like Italy, as an asset rather than a liability on Iran. It would also underscore the danger of U.S. actions that could lead its allies to blame any eventual failure in the nuclear talks on anybody else than Iran. Otherwise, U.S. calls for new restrictions that would certainly follow such an unfortunate outcome could fall on deaf ears.