Europe reacts to salvage benefits threatened by collapse of Iran nuclear deal

Sunday, 2018-05-20 15:36:01
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Britains Foreign Secretary Boris Johnson, German Foreign Minister Heiko Maas, French Foreign Minister Jean-Yves Le Drian and EU High Representative for Foreign Affairs Federica Mogherini take part in meeting with Irans Foreign Minister Mohammad Javad Zarif in Brussels, Belgium , May 15, 2018. (Photo: Reuters)
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NDO – The US's unilateral withdrawal from the Iranian nuclear deal, also known as the Joint General Plan of Action (JCPOA), is putting the interests of European companies on the brink. In order to cope with the consequences of the collapse of the JCPOA, European countries are aggressively promoting their final efforts to save the historic nuclear deal. A "blocking statute" has been launched to protect European businesses against US sanctions.

European companies are puzzled over the US’s decision to put an end to the controversial multilateral Iranian nuclear deal between the US and its European allies. The European Union (EU) leaders had to meet urgently in order to find a solution to prevent the JCPOA from collapsing, as well as seeking to protect European companies that are currently doing business with Iran.

The EU put forward a nine-point proposal to save the JCPOA, which focuses on maintaining economic ties with Iran, ensuring that Teheran continues its business related to oil and gas and access to international financial markets, while protecting European companies in Iran. The EU is also seeking solutions to develop special financial facilities in its exchanges with Iran.

Measures were designed to protect the interests of European companies that have flocked to Iran after the Islamic country opened its market to welcome the first wave of international investment two years ago. Last year, the value of EU exports to Iran was nearly EUR11 billion, up 66% from 2015. This spectacular growth is one of the reasons that has led to the unprecedented diplomatic efforts from European countries to minimise the damage from the US’s withdrawal from the Iranian nuclear deal.

However, holding the Iranian nuclear deal is said to be extremely difficult, as the US, an important partner in the deal, has now retreated. The European leaders have admitted that they cannot make up for the damage caused by the US sanctions. In order to improve the situation, the EU leaders have given the green light to the European Commission (EC) to act at any time to protect Europe’s interests.

A case solution issued by the EU, is an existing EU "blocking statute," which was launched in 1996 to deal with the US sanctions against Cuba, Iran and Libya. In fact, this mechanism has not been applied because of the disputes over the punishment at that time. However, in the face of the risk of harm to European businesses, the EC has started to apply this mechanism to deal with the US sanctions that will come into effect from August 6. Accordingly, the EC will launch the process of activating a law banning European companies from following US sanctions against Iran and not recognising any court orders enforcing the US sanctions.

Denmark’s Maersk has joined other European firms in ceasing commercial activity in Iran. (Photo: EPA)

Although political efforts to save the JCPOA continue to be promoted by European leaders, companies from the “old continent” are still raising their concerns and have begun to take measures to avoid US sanctions. Danish shipping giant Maersk Tankers has announced it will cease its operations in Iran. Total, an energy giant from France, and many European businesses, have stated that they intend to withdraw from Iran before the sanctions come into effect. MSC, the world's second-largest shipping company, has also announced it will stop accepting new shipping orders to Iran. Major corporations such as Allianz Insurance and Siemens are also expected to reduce their business operations in Iran, despite the previous expectations of profitability that “Persia” offers.

European countries are being forced to form a new coalition, which is aimed at fighting US sanctions. In reality, however, the dominance of the US in global finance makes it difficult for European countries to circumvent the sanctions from Washington. Many companies have no choice but to give up their benefits in Iran if they do not want to lose their business opportunities with the US. This shows that the efforts to save the JCPOA are difficult to reverse given the fact that the historic deal is like a “candle in the wind” and the interests of European companies in the Iranian market are seriously threatened.