How long can Europe walk US-Iran tightrope?

US President Donald Trump holds up a signed executive order to increase sanctions on Iran. Photo / AP

For more than a year, Europeans have balanced between Washington and Tehran as they sought to preserve the Iran nuclear deal, under pressure from both sides and trying to avoid angering either. But the next few days could be decisive as Europe desperately tries to hold the agreement together.

After Iran announced it had surpassed the 2015 accord's cap on uranium enrichment — the second breach of the agreement in a week — European diplomats gave themselves another week to encourage Tehran to come back into a compliance.

The European high-wire act could come to an end soon: France, Britain and Germany see higher levels of uranium enrichment as a red line that would leave them little alternative but to reimpose sanctions and end the deal.

The Europeans are also worried the United States could retaliate for continuing to do business with Iran.

However, they remain furious with the Trump administration for its unilateral pullout from the deal last year. They have little appetite to sign on to new sanctions, although they have even less interest in a nuclear Iran.

Europe is now racing against the clock to save the Joint Comprehensive Plan of Action, or JCPOA.

"The Europeans are trying to find the softest landing possible, before the dilemma scenario of a collapsed JCPOA and a potential US or Israeli military strike on Iran is imminent," said Ellie Geranmayeh, an expert on Iranian nuclear proliferation at the European Council on Foreign Relations.

Europe also doesn't want to antagonise the US, since it depends on Washington for security from Russia and other threats. But Britain, France and Germany have poured months of effort into a complex bartering tool intended to shield some business deals.

To Iran's frustration, they have not yet managed any transactions. And now the Iranian announcements make it politically harder to launch the tool, known as Instex, since Europe does not want to reward bad behaviour.

At the same time, European leaders are not in any rush to trigger a dispute resolution clause of the nuclear deal that could eventually lead to sanctions. They say the fact that Iran stayed bound to the agreement for more than a year after the United States pulled out is a sign there might be a way to salvage it.

That could change if Iran makes a dramatic break from the deal. Then Europe would have little choice but to reimpose sanctions, lining up with the United States in unhappy harmony.