European Union officials on Friday began taking steps to block recently announced U.S. sanctions on Iran, according to a statement from the European Commission.
President Donald Trump last week said the United States would withdraw from the Joint Comprehensive Plan of Action (JCPOA), commonly referred to as the Iran nuclear deal, and reimpose all nuclear-related sanctions that had been lifted under the agreement after a final wind-down period for existing contracts expires Nov. 4.
The move sent shockwaves throughout the international community, as companies that had resumed doing business in Iran following the 2015 signing of the JCPOA scrambled to figure out if they would be able to continue operations in and trade with the Middle Eastern country.
"We will begin the 'blocking statute' process, which aims to neutralize the extraterritorial effects of U.S. sanctions in the EU. We must do it and we will do it tomorrow morning at 10:30," Jean-Claude Juncker, head of the European Commission, said Thursday at a summit in Sofia, according to media reports.
The "blocking statute" is a 1996 regulation intended to limit the effects of foreign sanctions on EU businesses.
The statute “forbids EU companies from complying with the extraterritorial effects of U.S. sanctions, allows companies to recover damages arising from such sanctions from the person causing them, and nullifies the effect in the EU of any foreign court judgements based on them,” the commission said, adding that it aims to bring the measure into force before Aug. 6, when the first batch of U.S. sanctions are scheduled to take effect.
Because the statute was initially created as a means of circumventing the U.S. embargo on Cuba, however, it was never actually put into effect in any meaningful way. As such, trade analysts have already begun questioning whether it can have the desired effect in this case.
In addition, the European Commission has begun the formal process of removing obstacles to the European Investment Bank financing activities in Iran.
“This will allow the EIB to support EU investment in Iran and could be useful in particular for small and medium-sized companies,” it said, noting that the European Parliament will have two months to object to either measure and that both would be terminated in the event that “political circumstances no longer justify [their] adoption.”
The commission will also “continue and strengthen the ongoing sectoral cooperation with, and assistance to, Iran, including in the energy sector and with regard to small and medium-sized companies,” starting with Miguel Arias Cañete, commissioner for Climate Action and Energy, traveling to Tehran this weekend.
The EC further encouraged EU member states to “explore the possibility of one-off bank transfers to the Central Bank of Iran,” as this “could help the Iranian authorities to receive their oil-related revenues, particularly in case of U.S. sanctions which could target EU entities active in oil transactions with Iran.”
All four proposals received the unanimous backing of EU heads of state or government at the leaders’ meeting in Sofia, according to the commission.
“In Sofia, we saw a show of European unity,” Juncker said. “As long as the Iranians respect their commitments, the EU will of course stick to the agreement of which it was an architect — an agreement that was unanimously ratified by the United Nations Security Council and which is essential for preserving peace in the region and the world.
“But the American sanctions will not be without effect,” he added. “So we have the duty, the Commission and the European Union, to do what we can to protect our European businesses, especially SMEs.”
According to a report from Agence France-Presse, French President Emmanuel Macron said Thursday the primary reason for blocking the reimposition of sanctions and preserving the JCPOA was “so that [EU] businesses can remain” in Iran.
EU President Donald Tusk echoed those remarks, and even went a step further, comparing the current U.S. administration with Iran’s government.
“The real geopolitical problem is not when you have an unpredictable opponent or enemy, the problem is if your closest friend is unpredictable,” Tusk reportedly said at a press conference with Juncker. “It's not a joke now.”
Several prominent European businesses, including French energy giant Total and German insurance provider Allianz, have already announced plans to end activities in Iran. Geneva-based ocean carrier Mediterranean Shipping Co., for example, said earlier this week it has ceased all bookings to and from Iran due to the United States’ withdrawal from the JCPOA, but will continue to transport “certain legally acceptable cargoes” like food during the wind-down period.
According to the Financial Times, Macron said Thursday that France would not force French companies to stay in Iran against their will, nor would the EU pursue more punitive forms of retaliation against specific U.S. companies.
“The French president is not the CEO of Total,” he said.