US faces European backlash against Iran sanctions

Patrick Wintour* – The Guardian 

Senior politicians says Europe will consider countermeasures to keep trading with Iran

Europe is prepared to introduce measures to nullify the effect of Donald Trump imposing sanctions on any non-US firm that continues to do business with Iran, the French government has said.

The warning from the French finance minister, Bruno Le Maire, suggests Trump’s proposals to corral Europe into joining US foreign policy on Iran may lead to a severe backlash by EU firms and politicians, especially advocates of a stronger independent European foreign policy.

“We have to work among ourselves in Europe to defend our European economic sovereignty,” Le Maire said, adding that Europe could use the same instruments as the US to defend its interests.

When Trump announced he was pulling the US out of the Iran nuclear deal he said the US was also reimposing sanctions, including on any entity that continued to trade with Iran, in effect threatening billions of euros of European business

The US Treasury has said it is giving companies three to six months to wind down their contracts, including purchases of Iranian oil.

Le Maire said: “At the end of May I will meet with the British and German finance ministers and the three of us will look at what we can do.”

He disclosed that he had called the US treasury secretary, Steve Mnuchin, on Wednesday, urging him to allow exemptions for French companies or a delay in implementing the sanctions, while admitting he had “few illusions” about the likely response.

Le Maire pointed to the possibility of reinstating EU “blocking regulations”, dating back to 1996, which were used to counter US sanctions that targeted third countries doing business with Libya.

The statute permitted European companies to ignore the US sanctions and said that any decisions by foreign courts based on the sanctions would not be upheld in Europe. The US backed down before any sanctions were implemented.

“We want to reinforce this regulation and incorporate the recent decisions taken by the United States,” Le Maire said.

“The second avenue is looking at Europe’s financial independence – what can we do to give Europe more financial tools allowing it to be independent from the United States?” One proposal is to set up a purely European finance house to oversee euro-denominated transactions with Iran.

German Chancellor Angela Merkel said possibilities to save the deal without Washington needed to be discussed with Tehran, while economy minister, Peter Altmaier, said Germany was ready to give help to its affected firms, including legal advice, to continue doing business in Iran.

The new US ambassador to Germany was forced on to the defensive this week after sending out a tweet telling German businesses they should wind down their links with Iran.

Richard Grenell said he had been issuing advice, not instructions, and his remarks derived from a Washington memo.

Omid Nouripour, the Green foreign policy spokesperson in the German parliament, advised Grenell against “driving a ruthless aggressive policy towards our security interests”. The Social Democrats said Grenell needed tutoring in diplomacy.

In Italy, Nathalie Tocci, an adviser to the EU external affairs chief, Federica Mogerini, said Trump’s decision to pull out of the Iran deal was “an utter and unjustified betrayal of Europe”. She called for proportionate reprisals if necessary.

European ministers are to meet their Iranian counterparts on Monday to reassure them they intend to preserve the nuclear deal, and resist US sanctions being imposed on European firms trading with Iran.

The EU and US combined to impose sanctions against Iran between 2012 and 2015. After the Iran deal was struck in 2015, the Obama administration worked with European banks to reassure them that some US sanctions that remained in force did not restrict the rights of European business.

The former US ambassador to Italy, David Thorne, said Trump’s decision had the potential to cause the biggest rift between the US and mainland Europe since the 2003 invasion of Iraq.

Ellie Geranmayeh, an Iran expert with the European Council on Foreign Relations, said Europe needed to produce a counter-package against the US, including penalties against assets of US companies based in Europe to allow for clawback of illegal fines imposed.

The British foreign secretary, Boris Johnson, apparently anxious to avoid a deepening rift with the US, has not criticised the principle of extra-territorial sanctions, simply saying he will work with European partners to do his utmost to protect British business.

The UK is not as heavily involved in Iranian trade as France, Germany and Italy, partly because UK finance houses are so strongly interwined with the US, and therefore vulnerable to fines if they are deemed to have breached sanctions.

The sanctions policy gives the US Treasury considerable latitude to interpret whether a firm is doing its best to unravel its business links, but previous fines for alleged breaches led many firms to err on the side of caution. Fri 11 May 2018

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*Patrick Wintour is diplomatic editor for the Guardian 

 

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