Europe ready to defy the US if economic sanctions imposed on Iran

The EU is mulling its options in the event of a US withdrawal from the Joint Comprehensive Plan of Action, the 2015 multinational nuclear deal struck with Iran. Various European nations have been exploring ways of increasing business with the middle eastern country since the deal was struck, and are invested in making sure that the deal sticks and that sanctions are not reimposed.

The Nuclear Deal

The parties to the Joint Comprehensive Plan of Action (commonly referred to as the JCPOA) agreed to lift all nuclear-related sanctions on Iran if they would apply strict limitations on their nuclear program. The US, China, Russia, France, Britain, Germany and Iran struck the accord in July of 2015, the implementation of which began in January of 2016.

The US President, Donald Trump, however, has overtly expressed his opposition to the deal, which was negotiated by Barack Obama, Trump’s predecessor, and has repeatedly threatened to “terminate” it. In January, he extended the waivers of economic sanctions against Tehran for 120 days “for the last time.”

The re-imposition of the sanctions would have effectively ended the nuclear agreement. Trump issued an ultimatum of four months to the US Congress and to Britain, Germany, and France to find ways to “fix the disastrous flaws” in it, or else the US would withdraw from the accord altogether and impose extraterritorial sanctions on the middle eastern country.

Parties Committed to the Pact

In spite of Trump’s position on the matter, the European parties, together with Russia and China are committed to the pact, on which they will not renegotiate, and view it as working quite well in its present iteration. Iran has expressed that they will not agree to any further obligations than those which they have already agreed to under the JCPOA, and will not renegotiate the deal. Therefore, Trump’s concerns can only be considered by US Congress and will have no legal jurisdiction over the nuclear deal, Tehran or the International Atomic Energy Agency.

Europe’s Options

At the Euromoney Iran Conference 2018, held in Paris, France, Denis Chaibi, the head of the Iranian task force at the EU’s external action service, declared on Thursday that the bloc could restore “blocking regulations” in the event of a US withdrawal from the nuclear accord.

These “blocking regulations” were enacted in 1996 as a countermeasure to the extraterritorial sanctions imposed on Cuba, as they saw that such measures benefited American interests at the expense of those of EU member nations.

This would allow European firms to continue doing business with Iran if the US should withdraw from the JCPOA and restore its strict economic sanctions. These extraterritorial sanctions would impact even foreign firms doing business with Iran using American currency, which were a major reason why many international financial firms and businesses have not resumed trade activity in the nation.

“We are looking at a number of possibilities. It is not complicated to do it legally in that the legal instrument exists, but it doesn’t require a huge internal debate.” He pointed out that these regulations “could be revived or put back, but only if it is clear that the US is putting back sanctions with extraterritorial sanctions and that they are being applied. It can’t be done protectively.”

France has also continued on its own to encourage domestic firms to trade with Iranian firms as the director of bilateral relations at the Finance Ministry, Joffrey Celestin-Urbain, told the Euromoney Iran Conference “We are encouraging companies to keep doing business in Iran” even though the political climate has left the economic atmosphere somewhat uncertain, Celestin-Urbain says “We are in limbo on the international scene… This is the uncertainty our French companies are facing and this is something you have to take for granted if you want to do business in Iran.”