Insight
Trump’s Iran policy leaves the EU few options by Luigi Scazzieri 11 December 2018
Trump’s decision to re-impose sanctions has placed the Iran nuclear agreement on life support and further destabilised the region. Unwilling to seriously support the deal, Europeans will have to rely on diplomacy to limit the damage. On November 5th, the US re-imposed sanctions on Iranian oil, banking and shipping. The sanctions followed US president Donald Trump’s decision to withdraw from the Iran nuclear deal, the Joint Comprehensive Plan of Action (JCPOA), in May. Trump urged Iran to “abandon its nuclear ambitions, change its destructive behaviour, respect the rights of its people, and return in good faith to the negotiating table.” To avoid a spike in the oil price, the US granted waivers to enable China, India, Italy, Greece, Japan, South Korea, Turkey and Taiwan to continue importing Iranian oil temporarily. These waivers are only supposed to last 180 days, with beneficiaries gradually reducing their purchases. Moreover, the revenue generated by these purchases will be placed in foreign accounts, which Iran can only access to buy non-sanctioned goods such as food and medicine. The move was welcomed by some of the US’s regional allies: Saudi Arabia, the UAE and Israel. Europeans greeted Trump’s decision with disappointment. The UK, France, Germany and the EU issued a statement pledging to uphold the deal with Iran. Since Trump’s decision to withdraw from the agreement, Europeans have sought to convince Iran to preserve it, by ensuring that European companies could continue doing business with Tehran despite US sanctions. In theory, the EU could mobilise its economic heft to keep the deal alive. For example, it could set up a mechanism to indemnify European businesses for the costs of US sanctions or try to sustain Iranian oil purchases. In early June, the European Commission adopted an update of the EU’s Blocking Statute. Introduced in 1996, following the adoption of new US sanctions on Cuba, Iran and Libya, the statute prohibits EU-based companies from complying with US extraterritorial sanctions. But the measure has proved to be toothless: firms are more fearful of US sanctions than of the statute. European businesses, from aircraft manufacturer Airbus to oil giant Total, have pulled out of Iran. The costs of US sanctions can be very high: CER INSIGHT: Trump’s Iran policy leaves EU few options 11 December 2018
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