By Lupicinio Rodríguez

EU acts in light of Trump’s sanctions against Iran

June 6, 2018

At the beginning of May, we heard the surprising news that the U.S. had decided to exclude itself from the Iran Nuclear Deal and intended to once again launch new sanctions against Iran, secondary sanctions had previously been suspended under the Joint Comprehensive Plan of Action (JCPOA).

According to President Trump, this politically significant step has been taken as a result of Iran’s failure to comply with its nuclear and ballistic obligations. Trump’s statement clearly contradicts the reports of the International Atomic Energy Agency (IAEA) which, following exhaustive inspections, has always concluded that the Iranians were fully complying with their obligations under the JCPOA.

The reality, and ultimate cause of the U.S.’s behaviour, is that the two key allies of the U.S. in the Middle East - Saudi Arabia and Israel - are worried about the political and economic power that Iran has been gaining in the area following the suspension of sanctions. Iran’s history, culture, demography, economy and role at the head of the Shiite world mean that, under normal conditions – that is, without being placed under economic sanctions – it would inevitably play an important role within the region. Watching an important player gradually return to power in the region has undoubtedly made some of Iran’s neighbours nervous. With this in mind, it is very significant THAT the U.S. Secretary of State, Mike Pompeo, has recently stated that THE JCPOA has not made the Middle East more stable, displaying, clearly, his attitude, and that of the U.S.’s allies, towards the strengthening of Iran’s geopolitical power.

Recently, however, events have gone even further. On 22nd May the U.S. Administration announced that not only would it be abandoning the JCPOA, but it would also be actively increasing its sanctions against Iran.

The behaviour of the United States has created a sense of disquiet and concern in the world and in the European Union particularly. Right from the off, European authorities have stated, and maintained, that Iran is complying with its commitments under the JCPOA, and that this agreement is an extremely useful instrument for the preservation of peace and stability and, consequently, that it should be upheld and fulfilled by all those involved. The EU’s concern is not just politically motivated but also stems also from economic considerations; in brief, authorities in Brussels are extremely concerned with the impact that the U.S.’s decision could have on European companies that have invested in Iran since the JCPOA came into action and for others that more generally maintain commercial relations there.

Faced with this challenge, the EU has shown signs of great unity, surprising unity perhaps, and has made clear its political independence and its willingness to occupy a decisive and critical role on the international scene. For this reason, on 18th May the EC adopted a series of measures to protect the interests of European companies with a presence in Iran and to demonstrate Europe’s continued commitment to the Nuclear Deal with Iran. It also hopes that these measures will contribute to the continuing growth of business relationships between Iran and the EU.

The commission is going to focus on four courses of action. With regards to the first two plans of action that follow, the Parliament and Council will have two months to register any objections that they might have.

The first line of action is to begin the process of activating the blockade statute or antidote law, that is to say the Council Regulation (CE) nº 2271/96 Council, of November 22nd, 1996, relative to the protection against the effects of the extraterritorial application of the legislation adopted by a third country, and against actions based on such or derived from such; in such a way it will update the annex as regards the U.S. sanctions of Iran. The consequence will be that European companies will be largely excluded from the extraterritorial effects of U.S. sanctions in many different regards, such as the inadmissibility in Europe of foreign judgments issued in the application of such sanctions. The blockade statute is intended to be fully operational by August 6, 2018, the date on which the first part of the sanctions will come into force.

A second measure is to begin the process of removing the obstacles that prevent the European Investment Bank (EIB) from approving the financing, with the guarantee of the Union budget, of activities in Iran. In other words, the EIB can financially support investments of Europeans in Iran.
Thirdly, the EU will maintain and strengthen sectoral cooperation with Iran, including in the energy sector. In fact, as a first step, Commissioner Arias Canete has already travelled to Tehran to meet with Vice President Salehi, the head of the Atomic Energy Organization of Iran. Actions of this kind are intended to reinforce mutual trust between the EU and Iran.
Finally, as a fourth measure, the Commission has encouraged the Member States to consider the possibility of facilitating the carrying out of bank transfers with the Central Bank of Iran. This would help the Iranian authorities to receive income related to oil.
All these measures could prove very important instruments to face up to the worst effects of the reactivation of sanctions by the United States. Without doubt, their real effectiveness will only be truly known over time. But in itself, the fact that the EU has adopted a determined policy against President Trump's position on Iran shows that the European authorities are, at least for the time being, firm supporters of maintaining the JCPOA and that they plan to act independently and objectively with regards to this thorny matter.

Lupicinio Rodríguez is Chairman of Lupicinio International Law Firm & Experts on Sanctions

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