Domestic Economy

EU Vows to Protect Businesses in Iran

EU Vows to Protect Businesses in Iran
EU Vows to Protect Businesses in Iran

The European Union, in a joint statement with France, Germany and Britain on Friday, said they regret Washington’s decision to reimpose sanctions on Iran.
"We deeply regret the further reimposition of sanctions by the United States, due to the latter’s withdrawal from the Joint Comprehensive Plan of Action," reads the statement published by the European Commission's website.
The first round of renewed US sanctions reimposed on Aug. 7 prohibits Iran's purchase of US dollars and precious metals, part of a larger move that attempts to cut the country off from the international financial system. A second tranche of US sanctions on Iran's oil and gas sector are set to go into effect on Sunday. 
"The JCPOA also provides for the lifting of international sanctions in order to have a positive impact on trade and economic relations with Iran, but most importantly on the lives of the Iranian people," the statement added. 
US President Donald Trump announced back in May his decision to unilaterally pull the United States out of the nuclear deal signed between Iran and world powers, including the United States, in 2015. The deal came into effect a year later and saw the removal of economic sanctions against the Islamic Republic in exchange for the country to limit the scope of its nuclear program.
"It is our aim to protect European economic operators engaged in legitimate business with Iran, in accordance with EU law and with UN Security Council Resolution 2231,” the joint statement noted.
European Union foreign policy chief, Federica Mogherini, and the respective foreign ministers of France, Germany and the UK, Jean-Yves Le Drian, Heiko Maas and Jeremy Hunt, as well as the respective finance ministers of France, Germany and the UK Bruno Le Maire, Olaf Scholz and Philip Hammond signed the statement.


Special Purpose Vehicle

A new European Union mechanism to facilitate payments for Iranian exports should be legally in place by Nov. 4, but EU diplomats say it will not be operational until early next year.
Mogherini announced the plan at the United Nations General Assembly in New York in September.
The mechanism, a so-called special purpose vehicle (SPV), is designed to circumvent the sanctions, under which Washington can cut off any bank that enables oil transactions with Iran.
SPV, which could incorporate a barter system, aims to sidestep the US financial system by using an EU intermediary to handle trade with Iran. It could ensure, for example, that Iranian oil bought by Europeans could be paid for with EU goods and services of the same value.
"As parties to the JCPOA, we have committed to work on, inter alia, the preservation and maintenance of effective financial channels with Iran, and the continuation of Iran’s export of oil and gas. On these, as on other topics, our work continues, including with Russia and China as participants to the JCPOA and with third countries interested in supporting the JCPOA. 
"These efforts have been intensified in recent weeks, particularly those underpinning the European initiative to establish the Special Purpose Vehicle on which we are proceeding with work to set up. This will enable continued sanctions lifting to reach Iran and allow for European exporters and importers to pursue legitimate trade," the joint statement added.


Blocking Statute

SPV will operate in addition to the so-called Blocking Statute that Brussels passed in August, which stops European companies from complying with the US sanctions unless they have authorization from the commission.
National governments could impose effective, proportionate and dissuasive penalties on any of their companies that cave in.
The statute also blocks the effects of US court actions in Europe and allows European firms to recover damages arising from the sanctions from anyone who causes them.
The Blocking Statute also means that EU firms won’t be able to react to the American threat without facing penalties at home.
The European Commission says it will grant exceptions, if the company can prove that it is leaving Iran for reasons not linked to the US threat.
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 incorporated in the EU and ships registered in an EU state or fly an EU member state flag.
According to Mogherini, trade between Iran and the EU is a fundamental aspect of the Iranian right to have an economic advantage in exchange for what they have done so far, which is being compliant with all their nuclear-related commitments.
"Further work must be done to assist and reassure economic operators pursuing legitimate business under EU law. Our finance ministers will further pursue this at their next meeting. Our collective resolve to complete this work is unwavering. We remain committed to implementing the JCPOA as a matter of respecting international agreements and of our shared international security, and expect Iran to play a constructive role in this regard," the joint statement concluded
Latest Eurostat data show trade between Iran and the 28 member states of the European Union during the first half of 2018 amounted to more than €8.3 billion, registering a 12.8% decrease compared with last year’s corresponding period.
Iran exported €4.68 billion worth of commodities to EU member states during the period, indicating a 2.2% fall and imported €3.61 billion in return, down 23.7% year-on-year.

Add new comment

Read our comment policy before posting your viewpoints