BICOM

The EU has implemented a “blocking statute” in an attempt to protect EU companies doing legitimate business with Iran from the impact of US secondary sanctions.

Yesterday, US President Donald Trump signed an executive order re-imposing a number of sanctions on Iran that target Iran’s access to the US dollar, Iran’s gold and other precious metals, the car industry and imports of Persian carpets and pistachios to the US.

A joint statement from Foreign Secretary Jeremy Hunt, EU foreign policy chief Federica Mogherini and the foreign ministers of France and Germany said the Joint Comprehensive Plan of Action (JCPOA) is “working and delivering on its goal, namely to ensure that the Iranian programme remains exclusively peaceful” and is crucial for global security.

European firms are being encouraged by the EU to maintain their business links with Iran. The EU’s blocking statute is designed to protect EU businesses doing legitimate business with Iran from the impact of US sanctions and may even give them a route to sue the US for compensation.

The EU added that efforts to work on the preservation and maintenance of effective financial channels with Iran, and the continuation of Iran’s export of oil and gas, “will be intensified and reviewed at Ministerial level in the coming weeks”.

US President Donald Trump said in a statement that, “the US is fully committed to enforcing all of our sanctions, and we will work closely with nations conducting business with Iran to ensure complete compliance. Individuals or entities that fail to wind down activities with Iran risk severe consequences,” he added.

Iran’s President Hassan Rouhani responded that Iran could hold talks with the US only if Washington was “sincere”. Rouhani implied that if the US signed up again to the nuclear deal and lifted sanctions, then that could lead to negotiations. “If you stab someone with a knife and then you say you want talks, then the first thing you have to do is remove the knife,” Rouhani said in a speech broadcast live on state television.

The EU’s new blocking statute is an update from the one it imposed in 1996 against the effects of US sanctions on Cuba. In 2017 the EU was Iran’s second largest trading partner, with total trade worth approximately €8.9bn. Business analysts are undecided as to whether the EU statute will be able to protect EU companies. Most large companies with business interests in the US or US bank accounts are also likely to completely avoid any business dealings with Iran.