By Javad Heirannia

EU want to continue economic cooperation with Iran: Bunn

September 26, 2018

TEHRAN - Matthew Bunn, a specialist in nuclear security at Harvard’s John F. Kennedy School of Government, believes that “Trump administration's wrong-headed decision to reimpose U.S. sanctions is likely to have a big impact on many companies' decisions on investment and trade with Iran.”

“EU leaders sincerely want to continue Europe's economic cooperation with Iran and maintain as many of the JCPOA's benefits for Iran as possible,” Bunn tells the Tehran Times in an exclusive interview.

He adds that “Given the huge size of the U.S. market and the importance of the U.S. financial system to international trades around the world, most companies will reluctantly choose not to do anything that would expose them to U.S. sanctions -- which means not investing in Iran, financing transactions with Iran, or buying Iranian oil.”

Following is the full text of the interview:

Q: Some argue that the European Union laws does not have an effect to protect Iran against the impact of U.S. sanctions. In other words, the law is a new version of the "Blocking Statute" that the European Union approved in 1996 to protect Cuba against U.S. sanctions. In your opinion, how much this law is effectiveness to protect Iran against U.S. sanctions?

A: EU leaders sincerely want to continue Europe's economic cooperation with Iran and maintain as many of the JCPOA's benefits for Iran as possible.  They are working to find creative ways to keep this cooperation going despite the U.S. sanctions -- as indicated in their joint statement with Iran some weeks ago.

Nevertheless, the Trump administration's wrong-headed decision to reimpose U.S. sanctions is likely to have a big impact on many companies' decisions on investment and trade.  In essence, companies are faced with a stark choice: do they want to maintain the option to do business in the U.S. market and make use of the U.S. financial system, or do they want to do business with Iran?  Given the huge size of the U.S. market and the importance of the U.S. financial system to international trades around the world, most companies will reluctantly choose not to do anything that would expose them to U.S. sanctions -- which means not investing in Iran, financing transactions with Iran, or buying Iranian oil.

Q: Previously, in 1996, without the Europe support, America put sanction on Cuba, and Europe did not accept these sanctions. Nowadays Is Europe still able to resist U.S. sanctions against Iran?

A: Most European companies, and most companies elsewhere, are private companies, not owned by or controlled by the government, and are free to make their own trade and investment decisions.  European governments can try to persuade them, and can offer some legal protections and subsidies, but ultimately they will have a hard time counteracting the threat of being frozen out of U.S. markets (and even having assets in the United States seized).

Q: In Europe, economic companies have the right to choose and freedom, and the EU also does not want to restrict this freedom. Does the EU can push the companies to work with Iran? How the EU can force the companies to cooperate with Iran?

A: There are likely, however, to be many complex efforts by both firms and governments in a variety of countries to get around these sanctions.  Firms may be established that have no business with the United States or its financial system, and hence no business or assets the United States can sanction.  There may be efforts at "flag swapping," in which one entity buys something (e.g., oil) from Iran and then relabels it as coming from somewhere else.  China, for example, might buy Iranian oil and then relabel it as Chinese oil for sales elsewhere.  Given that both Europe and China are now in disputes with the United States over their own trade -- with the United States imposing tariffs on both -- it would not be surprising if responses to U.S. sanctions on European or Chinese companies got rolled into their trade disputes, in the form of tariffs on U.S. goods to retaliate against sanctions penalties.  The picture will be complex and complicated for some time to come, and it is hard to foresee just how serious the impact on Iran's economy will be.

Ultimately, it is my hope that the U.S. government will return to a sensible policy and that the parties to the JCPOA will renew their compliance with that accord and negotiate longer-term cooperative arrangements that serve all of their national interests in facilitating trade while reducing the dangers of nuclear proliferation that other states perceive from Iran's nuclear program.

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