Companies told to ignore White House demands to drop all business with Iran
The EU has launched an attempt to protect European businesses from Donald Trump’s sanctions against Iran as the US administration voiced its intent to apply maximum pressure on Tehran by vigorously applying its punitive measures.
The sanctions are to enter into force at midnight (US east coast time). At the same time, a blocking statute – last used to protect EU firms from US sanctions against Cuba – will be brought into force in an attempt to insulate firms and keep alive a deal designed to limit the Iranian government’s nuclear aspirations.
European firms have been instructed that they should not comply with demands from the White House for them to drop all business with Iran. Those who decide to pull out because of US sanctions will need to be granted authorisation from the European commission, without which they face the risk of being sued by EU member states.
A mechanism has also been opened to allow EU businesses affected by the sanctions to sue the US administration in the national courts of member states.
Trump announced his intention to hit firms doing business with Iran when he reneged on a deal struck in 2015 designed to help curtail Tehran’s nuclear ambitions in return for limited sanctions relief.
A joint statement issued on Monday by the foreign ministers of the EU’s 28 member states, including the UK’s Jeremy Hunt, said there was a “determination to protect” the bloc’s economic interests and the nuclear deal, which Brussels, along with China and Russia, continues to support.
The statement said: “The lifting of nuclear-related sanctions is an essential part of the deal; it aims at having a positive impact not only on trade and economic relations with Iran, but most importantly on the lives of the Iranian people.
“We are determined to protect European economic operators engaged in legitimate business with Iran, in accordance with EU law and with UN security council resolution 2231. This is why the European Union’s updated blocking statute enters into force on 7 August to protect EU companies doing legitimate business with Iran from the impact of US extra-territorial sanctions.”
Despite the tough public stance, there are concerns about the efficacy of the blocking statute; EU officials admit that companies continuing to invest in Iran are taking a risk.
The Trump administration said on Monday it was not particularly concerned by the EU decision and that the US strategy was designed to apply maximum pressure on Tehran.
“This is completely consistent with what the president has done with other less friendly regimes … to keep the maximum pressure until our goals are achieved,” a senior administration official told reporters.
The Trump administration said it was ultimately seeking a new deal that addressed “the totality of the Iranian threat”, even as Tehran and key US allies have scoffed at the notion of renegotiating the 2015 nuclear accord known as the joint comprehensive plan of action (JCPOA).
The Iranian president, Hassan Rouhani, praised the EU for its stance and dismissed the sanctions as “psychological warfare” designed to help Trump’s political allies in the US midterm elections in November.
Speaking on state television on Monday, Rouhani also said that Trump’s recent offer to meet him was now meaningless: “The person who has knifed his rival’s arm … now says that he wants talks. They should first take out their knife and put it in their pocket.”
The controversial decision to withdraw the US from the JCPOA paved the way for the reimposition of sanctions in two stages. The first round comes into force on Tuesday, and the second takes effect on 4 November, 180 days after Trump ended US participation. The transition period was intended to provide companies already doing business with Iran time to wind down their activities.
“Our stated policy has not been regime change, it has been to modify the regime’s behavior,” a US official said.
Iran’s foreign minister, Mohammad Javad Zarif, pledged that his country would “overcome this period of hardship”, dismissing the new round of sanctions as mainly psychological warfare.
Zarif said the fact that sanctions targeted Iran’s ability to purchase passenger planes showed the US contempt for the Iranian population at large. “If you have [good] relations with people of Iran, then the question is why the first round of sanctions you imposed were targeting planes?”
There have been scores of plane crashes in Iran since the 1979 Islamic revolution, resulting in at least 1,985 deaths. Decades of western sanctions have limited the country’s access to spare parts or new planes.