At the U.N. General Assembly, President Trump Widened the Rift With Europe Over Iran

President Donald Trump unintentionally drew a round of laughter in his address to the U.N. on Sept. 25, when he claimed his Administration had achieved more than almost any before it. But the divisions on display at the 73rd General Assembly were no cause for mirth.

At Turtle Bay, the question of how the world should engage with Iran reached a boiling point, almost five months after Trump withdrew the U.S. from the multilateral agreement designed to prevent Iran from building a nuclear weapon. The issue is becoming a crucial test of U.S. dominance in transatlantic relations.

Trump has already ordered the reinstatement of sanctions on the purchase of Iran's debt and taken steps to stop foreign companies from doing business in Iran. The European governments that spent almost two years negotiating the nuclear deal–France, Germany, Britain and the E.U. leadership–vowed to resist U.S. pressure for compliance and to protect the ability of their companies to evade U.S. penalties.

But some of Europe's largest companies–including German conglomerate Siemens, French energy giant Total and Danish shipping firm Maersk–have stepped back from Iran to avoid losing access to more lucrative U.S. markets. The next wave of U.S. sanctions, due Nov. 5, will target Iran's port operators, insurance and reinsurance businesses, and foreign purchases of Iranian oil. “More will follow,” Trump assured the U.N. on Sept. 25.

The impact on Iran has been swift and severe. Current forecasts estimate its economy will grow by just 1.8% this year before contracting by 4.3% next year. In recent weeks, Iran's currency hit a series of record lows against the dollar, pushing prices higher.

The worry now centers on oil. Iran draws nearly 80% of its tax revenue from oil exports, which have fallen 35% since April in anticipation of November's sanctions. Though Washington isn't responsible for all of Iran's economic troubles, the U.S. penalties have ignited a fast-expanding fire, and November's oil sanctions will add accelerant.

At the U.N., Trump left little doubt about what he thinks of Iran's leaders. They “plunder [Iran's] resources to enrich themselves and to spread mayhem across the Middle East and far beyond.” They “sow chaos, death and disruption.” They are responsible for “havoc” and “slaughter.” Iran is “the world's leading sponsor of terrorism.”

European leaders have a different view. British Prime Minister Theresa May told CBS News on Sept. 23 that Iran is holding up its end of the deal. “We believe the [deal] should stay in place,” she said, “and others involved in putting that deal together believe that it should stay in place.”

Now these countries want to protect their economies and companies from the ill effects of U.S. sanctions. The French, German and British agreed with Russia and China on Sept. 25 to try to set up a new payment system that would allow oil companies and other businesses to continue trading with Iran without having to rely on the U.S.-led global market and the dollar.

In short, they're looking for ways to redefine the broader terms of their relationships with the U.S. Thanks to Trump, Europe is seeking to permanently alter transatlantic relations by ensuring that it is “a sovereign continent, not a vassal, and that means having totally independent financing instruments that do not today exist,” as French Finance Minister Bruno Le Maire said on Sept. 24.

There's little reason to believe this new system will work. Whatever the Europeans build, the U.S. can always use market access to try to coerce others to do what Washington wants. The Iran deal is probably beyond saving, and the damage to U.S.-European relations will get worse.

Transatlantic tensions are nothing new, of course. Trump's dismal approval ratings in Europe match those of President George W. Bush in 2008. Bush's 2003 decision to invade Iraq united Germany, France and Russia in opposition to a U.S. foreign policy priority.

Yet European leaders now face greater pressure than ever to loosen the economic and security ties that bind them to the U.S. A generation has passed since the Cold War that cemented a U.S.-European partnership. And even Bush didn't question the value of NATO or threaten to wage a large-scale trade war on European partners.

These issues, plus the increasingly bitter feud over the Iran nuclear deal, don't add up to a total severing of the transatlantic tether. Leaders of France, Germany and the U.K. won't consistently agree on when and how to engage Washington. Central European leaders like Hungary's Viktor Orban and Poland's Andrzej Duda still have warm relations with Trump. This is more a fraying of U.S.-European ties than a severing.

But the Western diplomats and foreign policymakers who chuckled during Trump's speech had better understand that the momentum is with the U.S. President and his populists and patriots, not with the globalists and multilateralists. And that divide is growing larger by the day.