How Europe can play a bad hand over Iran

LONDON, March 9 (Reuters Breakingviews) - How many wake-up calls does Europe need? Donald Trump’s first administration did not do the trick, despite the U.S. president’s anti-European rhetoric. Nor did Russia’s full-scale invasion of Ukraine four years ago. Nor did Trump’s re-election in 2024. Now in quick succession this year, Washington has pummelled Venezuela, threatened Greenland and attacked Iran.

It is hard to see anything good for Europe from the ​United States-Israeli attack on the Islamic Republic. It strengthens Russia and weakens Ukraine, threatening Europe’s own security. It undermines the global rule of law, which is valuable for the region given that it is ‌not a geopolitical power.

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The latest Middle Eastern conflict is also threatening Europe’s economy. Much, of course, will depend on how long the conflict goes on — in particular whether Iran can keep up a blockade of oil and gas through the Strait of Hormuz. As a hydrocarbon importer, Europe is vulnerable to high energy prices. Its mostly highly indebted governments are not well placed to cushion a blow to either businesses or consumers. Meanwhile, a descent into civil war in Iran, or a further crackdown on internal dissent, could unleash a wave of immigration, with some of its 93 million ​citizens heading towards Europe.

In the short run, there is little the region can do but suffer and squirm. A principled response would have been to condemn Trump’s attack as contrary to international law while at the same time ​denouncing Iran’s nuclear weapons programme. But Europe is too dependent on U.S. military support to do that, especially given the Russian threat. It is also increasingly dependent on American energy ⁠since its gas purchases from Moscow are down dramatically and now Qatar is offline.

Spain has criticised the attack on Iran. But Europe’s big three — Germany, France and Britain — have provided half-supportive, opens new tab statements, opens new tab that sit uneasily with their values. Not that that has earned them U.S. ​gratitude: Trump lambasted British Prime Minister Keir Starmer as “not Winston Churchill”.

The lesson is clear. Europe will be helpless in a world of sharks until it gets stronger and more united. The EU itself will need greater integration. Meanwhile, the United Kingdom requires ​a bolder partnership with the club it left as a result of Brexit, covering economic and energy security as well as defence.

MOSCOW’S WAR CHEST

Europe’s core vulnerability is that it needs U.S. protection because it cannot yet defend itself against Russia on its own. Its biggest worry therefore is that the Iran war is strengthening Moscow by relaxing the grip on the Kremlin’s financial windpipe.

True, Vladimir Putin has had to sit by idly as the United States has bombed an ally and killed its leader. This is bad for the Russian president’s prestige. What is more, Tehran will ​struggle to supply Moscow with more attack drones, as it will need any it can produce for itself.

But what Russia gains from higher oil and gas prices probably more than compensates for this loss. At the start of the year Moscow ​was feeling the squeeze from tighter sanctions and lower crude prices. Trump was strong-arming India, previously Russia’s largest customer after China, to stop buying its oil. Moscow had to offer purchasers deep discounts on the global price while some cargoes were piling up on the high ‌seas unsold. ⁠The government’s oil and gas revenue halved to $5.1 billion in January compared to the same month last year.

These dynamics are going into reverse. Brent crude prices are up 50% to around $90 a barrel since the start of the year, before the drumbeats of the Middle East war started in earnest. European gas prices have roughly doubled. With rival Gulf suppliers unable to export, Russia has bargaining power. Indian refiners have started buying its crude again, paying a $4-$5 a barrel premium over Brent on a delivered basis compared to a $13 discount for cargoes traded last month. The Kremlin’s war chest could soon fill up.

What is more, Ukraine will struggle to get more of the anti-missile defences it desperately needs from the United States, as Washington will keep these for itself, Israel ​and its Gulf allies. This will make Ukraine’s infrastructure vulnerable ​to Russian attack. Not that Kyiv is totally without ⁠cards. It has developed cheap anti-drone defences that could be of use to Washington and Gulf states — and may be able to trade some of these for sophisticated weapons it does not produce itself.

Even so, the overall balance has swung in Moscow’s favour. And that is bad for Europe.

STRONG AND UNITED

To be fair, Europe increasingly realises that it will only be able to advance its ​values and interests if it increases its autonomy. For example, France last week set out a plan to boost its nuclear arsenal and involve European allies in war games with ​its atomic weapons. Meanwhile, the EU ⁠unveiled proposals to work with trusted partners to boost investment in strategic economic sectors to cut dependence on the likes of China.

The EU is also making a renewed attempt to boost its competitiveness by breaking down barriers in services industries and unifying its capital markets. It seems increasingly determined to move ahead even if some of its 27 members disagree. Great Britain is also getting closer to the bloc, albeit with insufficient ambition or urgency.

But it will take a long time for these initiatives to bear fruit. In the meantime, ⁠many Europeans will be ​in two minds about how they want Trump’s new war to pan out. If the U.S president triumphs he may feel emboldened to bully ​Europe — perhaps turning his attention back to Greenland, which is part of Denmark, an EU member. On the other hand, if the United States gets embroiled in a quagmire in Iran, the big winner may be China — and Europe will not be happy if the People’s Republic throws its weight around more.

All ​the more reason to heed the wake-up call and make itself stronger and more unified.

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Editing by Peter Thal Larsen; Production by Streisand Neto

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Hugo Dixon

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Hugo Dixon is Commentator-at-Large for Reuters. He was the founding chair and editor-in-chief of Breakingviews. Before he set up Breakingviews, he was editor of the Financial Times’ Lex Column. After Thomson Reuters acquired Breakingviews, Hugo founded InFacts, a journalistic enterprise making the fact-based case against Brexit. He was also one of the founders of the People’s Vote which campaigned for a new referendum on whether Britain should leave the EU. He was one of the initiators of the G7’s “partnership for global growth and infrastructure”, a $600 billion plan to help the Global South accelerate its transition to net zero. He is now advocating a $300 billion “reparation loan” for Ukraine, under which Moscow’s assets would be lent to Kyiv and Russia would only get them back if it paid war damages. He is also a philosopher, with a research focus on meaningful lives.

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