Economy, Business And Markets

Europe Taken Hostage by American Policy

Europe Taken Hostage by American PolicyEurope Taken Hostage by American Policy

With the completion of the nuclear deal and the opening of Iranian market, European businesses expected a trade bonanza.

But three months after the lifting of many sanctions against Iran, there is growing frustration among European politicians, diplomats and businesspeople over the inability to complete dozens of energy, aviation and construction deals with the Iranians, reads an article published by The New York Times.

The main obstacle, the Europeans say, is their ally, the United States. Wary of running afoul of new sanctions imposed by Washington, European banks are refusing to finance any of the deals, effectively perpetuating Iran’s isolation from the global financial system.

Europeans also point to new American visa regulations that make it more difficult for them to enter the United States if they have traveled to Iran. Those financial and travel restrictions, they say, make it nearly impossible to reach agreements with their Iranian counterparts.

The hurdles set up by the United States, Europeans say, are undermining what Iranians understood to be one of the main goals of the nuclear deal.

“Europe is being taken hostage by American policy,” said Marietje Schaake, vice president of the European Parliament’s Delegation for Relations with the United States. “We negotiated the nuclear deal together, but now the US is obstructing its execution.”

“The question is, now that the nuclear sanctions are lifted, what status quo will emerge when it comes to doing business with Iran?” said Cyrus Razzaghi, the chief executive officer of Ara Enterprise, a Tehran-based consultancy. “Now everything is ambiguous. If the situation doesn’t change for the better—banking, more deals—for Iran this will be a growing risk for the deal.”

During a recent meeting with Prime Minister Matteo Renzi of Italy, Iran’s Leader Ayatollah Ali Khamenei, complained that there had been “no tangible results” from the nuclear agreement.

“The Americans are frightening other countries from cooperating with Iran.”

Iran’s Foreign Minister Mohammad Javad Zarif, who negotiated the nuclear deal, said this week that Iran was not seeking access to the United States financial system but expected help from Washington with the European banks.

“What we asked was to implement the nuclear deal, which requires the United States to allow European financial institutions to have peace of mind for dealing with Iran,” he told The New York Times on Wednesday.

On Monday, Secretary of State John Kerry told the Jewish lobbying group J Street in Washington that Iran had so far received only $3 billion after the nuclear deal, far less than what some Republican critics of the deal claimed were $150 billion in frozen assets.

“We thought it would be $55 billion, but guess what,” Kerry said, holding up three fingers.

European oil companies, whose capital and expertise Iran is in need of to revitalize its flagging oil industry, are not making any deals until the Treasury provides clarity over the use of dollars for sales of Iranian oil, diplomats and industry insiders say.

Federica Mogherini, the European Union’s foreign policy chief, flew to Tehran last week to try to convince Iranian officials that the bloc is doing all it can to “reassure” major European financial institutions that it is safe to work with Iran.

The United States first imposed sanctions against Iran in 1979, focusing over the years primarily on disrupting its ability to connect to international financing networks. As a result, no foreign credit or debit cards work in Iran, forcing visitors to carry large amounts of cash. Selected European banks were once allowed by the Treasury to use dollars in their dealings with Iran. That ended with the nuclear sanctions.

Europe never imposed any trade restrictions on Iran. Until 2006, Germany was its biggest trading partner and there were dozens of flights between Europe and Iran.

Iranian oil was refined in the Dutch port of Rotterdam. The European oil giants Royal Dutch Shell and Total were engaged in major oil projects.

When the European Union joined the American effort to pressure Iran over its nuclear program, the bloc’s main action was to impose a boycott on Iranian crude. European banks, oil companies and producers subsequently abandoned the country after increasingly tough sanctions imposed by the administration of President Barack Obama.

Despite the obstacles, European officials say they are determined to clear a path for restoring commercial relations.

“We used to be Iran’s first partner in the field of economy, trade, investment,” Mogherini told Iran’s Tasnim News Agency on Tuesday. “We want to return to those days.”