European Union prepares measures to protect from U.S. sanctions on Iran

Larry Hoffman
May 17, 2018

"We are talking about solutions to keep the deal alive" now that the United States has walked away from Iran's 2015 nuclear agreement with world powers.

"If the U.S.is aggressive, then you could see some explosion on the diplomatic front".

European Commission President Jean-Claude Juncker says that all efforts must be made to keep the Iran nuclear agreement alive despite the USA pullout because "to end the deal would gravely threaten the peace and security in this tumultuous region". The U.S. Treasury announced on Tuesday more sanctions on officials of the Iranian central bank, including Governor Valiollah Seif, for allegedly moving millions of dollars on behalf of the country's Revolutionary Guards Corps to Lebanon's Shi'ite Hezbollah group. Now, it will take several months to re-impose sanctions on Iran.

As a practical matter, however, Washington has a powerful weapon to punish foreign companies that won't toe the line: It can bar them from ever doing business in the United States.

She told reporters it was a positive meeting. Iran has since been in talks with the other signatories to ensure the deal continues.

European firms, especially those from France and Germany, rushed to invest in Iran following the 2015 accord, under which Tehran agreed to freeze its nuclear program in return for an end to punishing global sanctions.

However, just as in the case of the climate change, where the rest of the world made a decision to forge ahead without the US, Iran and the remaining signatories have indicated their readiness to courageous the odds and go ahead with JCPOA.

But the reach of the USA financial system, the dominance of the dollar and the presence of European companies' operations in the United States all weaken any potential EU measures.

Meanwhile, most American firms have steered clear of the Iranian market from the beginning.

Crude oil prices have been historically pegged to the dollar on worldwide markets, and therefore, any attempt to circumvent the dollar as payment for crude oil would be hard for anyone buying it from Iran. "It is absurd to even think that the European Union could be a threat to the US".

British Foreign Secretary Boris Johnson warned Tuesday that Washington's sanctions may be able to strike around the world because of the long reach of the US financial system.

The goal of the talks was to ensure that Iran's interests are respected, along with those of the remaining parties to the deal, he added.

"Our meeting with Iranian Foreign Minister Zarif in Brussels is a chance to discuss how we can continue to support sanctions relief with Iran while they maintain their nuclear agreement obligations, but also raise our worries about Iran's wider, disruptive behavior in the Middle East region", Johnson said.

Yet analysts said the impact of Trump's announcement to pull out of the deal was muted.

That translates to merely 3 to 6 cents added to the price of a gallon of gasoline, said Patrick DeHaan, head petroleum analyst at GasBuddy.

While fulfilling an election promise may be one explanation for the irrational ending of a productive agreement with Iran, it is puzzling as to why Trump is so keen to end an agreement which all of the Western countries agree was a good deal and was being complied with by Iran over the past two years.

A French government official told reporters earlier this week that the US practice of punishing foreign companies operating in foreign countries like Iran "is a real problem".

"The European economies and Asian economies have a lot more trade with the United States".

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