Saturday

3rd Dec 2022

EU firms in Iran caught between US and Europe

  • Donald Trump unilaterally pulled the US out of the 2015 Iran nuclear deal earlier this year (Photo: kamshots)

European businesses that pull out of Iran because of US sanctions may end up being sued by EU states.

A European Commission spokeswoman on Monday (6 August) told reporters in Brussels that EU firms are banned from following US demands to cut business ties with Iran, unless specifically authorised to do so.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The measure is part of a broader European Commission response, known as the 'blocking statute', that also allows the firms to recover damages arising from US extra-territorial sanctions.

"It also forbids EU persons from complying with those [US] sanctions unless exceptionally authorised to do so by the commission," said spokeswoman Mina Andreeva.

She said such exceptions can be made in cases where "non-compliance seriously damages their interests or the interests of the European Union."

The commission says this is designed to protect EU firms in Iran by allowing them to recover any US damages, including legal costs.

The statute, set to enter into force by 6am Tuesday, is a response to the Trump administration decision in May to unilaterally withdraw from the 2015 Iran nuclear deal.

Trump described it as the "worst deal ever" and has since announced Washington would reimpose sanctions on any companies that operate in Iran.

He says the move is needed to prevent Iranian nuclear ambitions. The decision has been condemned by the EU's foreign policy chief Frederica Mogherini.

"Preserving the nuclear deal with Iran is a matter of respecting international agreements and a matter of international security," she said, in a joint statement on Monday along with the foreign ministers of France, Germany, and the United Kingdom.

The commission says such US sanctions are illegal and refuses to abide by them, noting that it intends to maintain trade and economic relations with Iran as part of the hard-won 2015 deal, signed by the so-called 'P5+1' powers - namely the five permanent members of the UN Security Council (the US, UK, China, France and Russia), plus Germany.

That also means that EU firms won't be able to react to the American threat without facing penalties at home.

The European Commission said it will grant exceptions if the company can prove that it is leaving Iran for reasons not linked to the US threat.

"If the authorisation is rejected, then the company shall not comply with US law and if it does it is subject to the penalties foreseen by each member state," said one EU senior official.

Fines vary from EU state to EU state, and must be "effective, proportionate and dissuasive".

The blocking statute applies to anyone, foreign or otherwise, who is a resident in the European Union and also does business in Iran. This includes companies incorprated in the EU and ships registered in an EU state or fly an EU member state flag.

Analysis

EU has no 'magic bullet' against US Iran sanctions

EU leaders in Sofia will discuss how they can protect the bloc's economic interests against US threats to sanction companies doing business in Iran. But their options are limited.

Interview

EU and US clash on Iran: an ex-spy's view

Halting the Iran deal could plunge its nuclear programme back underground, the CIA believes. It could also create a sanctions clash with EU states, a former US spy has warned.

Portugal was poised to scrap 'Golden Visas' - why didn't it?

Over the last 10 years, Portugal has given 1,470 golden visas to people originating from countries whose tax-transparency practices the EU finds problematic. But unlike common practice in other EU states with similar programmes, Portugal has not implemented "due diligence".

Stakeholders' Highlights

  1. Nordic Council of MinistersCOP27: Food systems transformation for climate action
  2. Nordic Council of MinistersThe Nordic Region and the African Union urge the COP27 to talk about gender equality
  3. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  4. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  5. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe
  6. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos

Latest News

  1. EU must break Orbán's veto on a tax rate for multinationals
  2. Belarus dictator's family loves EU luxuries, flight data shows
  3. How Berlin and Paris sold-out the EU corporate due diligence law
  4. Turkey's EU-funded detention centres ripe with abuse: NGO
  5. In green subsidy race, EU should not imitate US
  6. EU Commission proposes suspending billions to Hungary
  7. EU: Russian assets to be returned in case of peace treaty
  8. Frontex leadership candidates grilled by MEPs

Join EUobserver

Support quality EU news

Join us