European Union considers little-used statute to block U.S. sanctions over Iran

Glen Norman
May 18, 2018

The renewal of USA sanctions after Donald Trump's decision to withdraw from the Iran nuclear deal has raised questions about a number of major energy initiatives.

The EU launched formal steps Friday aimed at sparing European firms fallout from United States sanctions on Iran as part of efforts to preserve the nuclear deal with Tehran.

The EU's blocking statute bans any EU company from complying with USA sanctions and does not recognize any court rulings that enforce American penalties. The decision follows US President Donald Trump's decision to withdraw from the treaty- and penalise companies that carry on doing business with Iran.

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The European Commission said on Friday it had started the process of renewing a sanctions-blocking measure to protect European businesses in Iran, after the United States pulled out of the Iran nuclear accord and reimposed sanctions on Tehran.

Much to Europe's displeasure, foreign companies doing business with Iran are also at the crosshairs of the USA sanctions.

Unless it is formally rejected by the European Parliament and EU governments, the measure will come into force within two months, and can be activated sooner if there is strong political support.

"This approach could help the Iranian authorities to receive their oil-related revenues, particularly in case of US sanctions which could target European Union entities active in oil transactions with Iran", the Commission said, referring to what it called "one-off" bank transfers to Iran's central bank.

"The American sanctions will not be without effect".

"Following the green light of EU leaders at the informal meeting in Sofia (the EU-Western Balkans summit on May 16-17), the European Commission has today taken steps to preserve the interests of European companies investing in Iran and demonstrate the EU's commitment to the Joint Comprehensive Plan of Action (JCPOA) - the Iran nuclear deal", the document said.

Where do Europe's leaders stand?

"We will have to see whether those remaining in the JCPOA can deliver those benefits to Iran", he said in the Belgian capital on Tuesday.

German Chancellor Angela Merkel acknowledged the deal "certainly has weaknesses", but said that sticking to it was the best way forward. Companies are concerned Iranian ties could incur penalties from the US.

Speaking on Thursday, Juncker said if the U.S. exempted the European Union from import tariffs, the bloc would consider buying more liquefied natural gas from the US.

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