Europe Seeks US Sanction Exemptions for Firms in Iran

EghtesadOnline: Ministers from Germany, France and Britain have written to senior US officials urging them to protect European companies working in Iran from getting caught up in Washington’s new sanctions on the Islamic Republic.

News ID: ۷۸۲۸۶۹

10 June 2018

In the June 4 letter, the foreign and finance ministers singled out key areas where they expected exemptions for EU firms, including pharmaceuticals, healthcare, energy, automotive, civil aviation, infrastructure and banking, Reuters reported.

The letter appeared to concede that despite their efforts to circumvent secondary sanctions, the US action could prevent the EU from continuing “meaningful sanctions relief to Iran”.

Washington said last month it would impose new economic penalties after pulling out of a 2015 pact that world powers signed with Iran, under which Tehran agreed to curb its nuclear activities in return for sanctions relief, according to Financial Tribune.

Germany, France and Britain were all signatories to that deal and said in the letter they were still committed to keep it going.

“An Iranian withdrawal from the (nuclear agreement) would further unsettle a region where additional conflicts would be disastrous,” said the ministers and the EU’s top diplomat in the letter to the US Treasury Secretary Steven Mnuchin and US Secretary of State Mike Pompeo seen by Reuters on Wednesday.

The European ministers said they shared most of Washington’s concerns about the status of Iran’s nuclear program after 2025, its development of ballistic missiles and “destabilizing actions” in the Middle East.

But they said preserving the 2015 nuclear deal was “the best basis on which to engage Iran and address those concerns”.

The ministers said they expected the United States as an ally to refrain from taking actions that would harm Europe’s security interests, including secondary sanctions that could prevent the EU from continuing to uphold the nuclear accord.

“As close allies, we expect that the extraterritorial effects of US secondary sanctions will not be enforced on EU entities and individuals, and the United States will thus respect our political decisions,” they wrote.

The ministers also urged Washington to grant exemptions to maintain banking and financial channels with the Central Bank of Iran and other Iranian banks that are not sanctioned by the EU.

US Officials on Roadshow to cut Iran Investment, Trade

US officials are touring the globe to pressure countries to shun trade with Iran following Washington’s withdrawal from a nuclear deal between Tehran and world powers, a move that undermines European efforts to save the accord, sources said.

US state and treasury department officials have traveled to Japan and this week US diplomats are in eastern Europe as Britain, France and Germany scramble to save the 2015 pact and convince Iran that they can continue to do business with Tehran.

“The Americans are on a roadshow and going everywhere. They are dogmatic,” said a senior European diplomat. “We were clear and told them: if you are coming to tell to us how to apply American laws here, then you’re not welcome,” the diplomat said.

The US roadshow suggests there is little appetite in Washington to compromise.

“We will hold those doing prohibited business in Iran to account,” US Undersecretary of the Treasury Sigal Mandelker said in a blunt speech on Tuesday.

A second EU official said the US was sending out such teams across the world with a private warning against doing business with Iran.

One EU official said the US had also pressed the European Investment Bank, which has never done business in Iran, not to invest in European firms doing business there, despite a European Commission proposal it start doing so.

Global Reach

The European powers are trying to come up with a package to ring-fence trade with Iran against renewed US financial sanctions to dissuade Tehran from quitting the accord.

But the global reach of the US financial system, forcing companies to choose between two irreconcilable options-selling to Iran or to the vast US market-is driving home the limits of European efforts to shield their revived trade with Tehran.

According to two diplomats, Andrew Peek, deputy assistant secretary of state with responsibility for Iran and Iraq, was in the Czech Republic on Tuesday and Hungary on Wednesday.

“The state department delegation to Europe seeks to garner support for our global effort to pressure Iran and to explain our sanctions policy,” an US State Department official said.

“We are making stops to many countries and will expand our diplomatic outreach efforts worldwide in the coming weeks. Meanwhile, our engagement with the E3 (Britain, France, Germany) is ongoing, including during this worldwide diplomatic engagement.”

Peek briefed senior EU diplomats in Washington in May and warned the bloc to cut investments in Iran, telling EU officials doing business with Tehran helped fund its missile program and support for proxies in Yemen and Syria, diplomats said.

One diplomat said the focus on Eastern European nations might be designed to pressure those EU countries most dependent on US security assistance in the face of a resurgent Russia.

However, another diplomat suggested the push could backfire.

“This escalation and strategy of confrontation is a serious mistake and risks provoking even more chaos and instability in the Middle East,” said a diplomat aware of the roadshow, saying US efforts had begun to “irritate quite a few of its allies”.