Tuesday

19th Feb 2019

Iran: EU and Trump mark divorce on world stage

  • US leader Donald Trump scrapped the Iran nuclear deal last May (Photo: whitehouse.gov)

Europe's split with the US on foreign policy has widened after three EU states created a new company designed to skirt US sanctions on Iran.

Britain, France, and Germany registered the new entity, called an Instrument in Support of Trade Exchanges, or Instex, in Paris on Thursday (31 January).

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • Iran's Javed Zarif speaks to EU diplomats at security conference in Munich, Germany, in 2014 (Photo: securityconference.de)

It is to be managed by a German former banker, Per Fischer, and is to start trade in food and medicine with Iran in the next few months, excluding US banks and US dollar transactions, in a way that removes the legal basis for the US to sanction firms which take part.

The move was announced by Britain, France, and Germany at an informal EU foreign ministers' meeting in Romania.

It comes after months of EU complaints that US leader Donald Trump's decision to reimpose sanctions on Iran last May would wreck a nuclear arms control deal agreed with Tehran in 2015, prompting a nuclear arms race in the Middle East.

It also comes amid a laundry list of other EU scraps with Trump - on Nato, Russia, Syria, Israel, free trade, and climate change - as well as the US leader's verbal tirades against Europe.

Instex would facilitate "legitimate trade between European economic operators and Iran" and would be "open to economic operators from third countries who wish to trade with Iran" in future, Britain, France, and Germany said in a joint statement.

The idea is to use it to trade oil and gas down the line.

But the project has a wider potential to "teach its managers lessons that can be applied to other cases [besides Iran] in the future," Jarrett Blan, a former state department official now with the Carnegie Europe think tank in Washington, said earlier this month.

The US has also threatened to punish British, Dutch, French and German companies taking part in Russia's plan to build a new gas pipeline to Germany, called Nord Stream 2.

For Heiko Maas, the German foreign minister, Instex was primarily a "precondition for us to meet the obligations we entered into in order to demand from Iran that it doesn't begin military uranium enrichment".

France's Jean-Yves Le Drian said in Bucharest it was "a political act ... a gesture to protect European companies".

"Registration is a big step, but there is still more work to be done," British foreign minister Jeremy Hunt said.

The Instex move was welcomed by EU foreign relations chief Federica Mogherini and by Iranian foreign minister Javad Zarif, who called it "a long overdue first step".

Failure foretold

The US state department said it would fail, however.

"As the president has made clear, entities that continue to engage in sanctionable activity involving Iran risk severe consequences that could include losing access to the US financial system and the ability to do business with the United States or US companies," it said on Thursday.

US ambassadors in the EU, such as the one in Brussels and the one in Berlin, have being saying the same in contacts with CEOs of European firms.

Leading EU companies, including German engineering giant Siemens, German chemicals firm Basf, and French oil and gas firm Total have pledged to quit Iran in response.

The exodus of EU and US firms leaves Iran open to Chinese and Russian investors instead.

"At the end of the day, it will be companies that decide whether or not they want to work in Iran, bearing in mind the risk of American sanctions," Belgian foreign minister Didier Reynders said in Bucharest on Thursday.

The 2015 nuclear arms control treaty does not cover Iran's ballistic missile programme, human rights abuses, or other problems, such as Iran's recent attempts to assassinate regime opponents in Denmark and France.

The EU, earlier this month, blacklisted two Iran regime members and part of the Iranian ministry for intelligence and security over the Danish and French plots.

Same direction?

"We're clear: This commitment [the 2015 nuclear deal] does not in any way preclude us from addressing Iran's hostile and destabilising activities," Hunt, the British foreign minister said.

It was "essential we show our American colleagues that we are going in the same direction as them" on other aspects of Iran foreign policy, Belgium's Reynders added.

Trump's presidency has marked the worst rift in the transatlantic alliance in the past 70 years of its post-WW2 history despite the EU politeness, however.

It is also likely to leave a bitter after-taste even when he, one day, departs.

"The way in which ... the American administration makes policy in general at the moment, with a lot of sanctions, with the fact that international agreements are scrapped, is not a good way to cooperate," Annegret Kramp-Karrenbauer, the head of the ruling CDU party in Germany, told Bloomberg, a US news agency, last week.

EU firms in Iran caught between US and Europe

European companies with business in Iran appear caught in a tug of war between the European Union and Washington. The US demands they leave Iran or face sanctions. The European Union says remain in Iran or face penalties a home.

Markets shun Nord Stream 2 amid US threat

Markets unwilling to lend money to finance the Russia gas pipeline due to risk of US sanctions, forcing its EU backers to "review" their plans.

News in Brief

  1. Estonia kicks out Danske Bank over money laundering scandal
  2. May and Juncker meet over Brexit on Wednesday
  3. EU promises to open up advisory groups
  4. EU agrees to limit CO2 emissions by trucks
  5. Juncker under attack in Hungary government ad
  6. EU would not oppose extending Brexit talks, Juncker said
  7. Juncker expects Trump not to impose new car tariffs
  8. Former EU official sentenced for office rape

Stakeholders' Highlights

  1. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  2. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  3. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  4. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  5. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  6. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  7. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  8. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  9. Nordic Council of MinistersSeminar on disability and user involvement
  10. Nordic Council of MinistersInternational appetite for Nordic food policies
  11. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  12. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups

Latest News

  1. College of Europe alumni ask rector to cut Saudi ties
  2. EU says Hungary's anti-Juncker campaign is fake news
  3. Trump right for once: Europe should take back foreign fighters
  4. EU should clarify rules for plant burgers and lab meat
  5. Italian populists could be second biggest force in EU parliament
  6. Merkel defends Russia ties, ridicules Trump on cars
  7. British MPs condemn Facebook CEO's misrule
  8. EU's chance to step up on Hungary and Poland

Stakeholders' Highlights

  1. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”
  2. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  3. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  4. Nordic Council of MinistersState of the Nordic Region presented in Brussels
  5. Nordic Council of MinistersThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  6. Nordic Council of MinistersThe Nordic gender effect goes international
  7. Nordic Council of MinistersPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  8. Nordic Council of MinistersNordic design sets the stage at COP24, running a competition for sustainable chairs
  9. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  10. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  11. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  12. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs

Join EUobserver

Support quality EU news

Join us