France Taps Mechanisms to Salvage Iran Business

Euro-denominated financing set up by European countries to trade with Iran will not be enough to sustain economic ties with Tehran in the face of US sanctions, an adviser to the French president said on Tuesday.

Following Washington’s withdrawal from the Iran nuclear agreement last week, Europe needs a “more global approach to reinforce our legal arsenal” and defend companies doing business with countries under unilateral US sanctions, the French official said during a briefing for reporters in Paris, Reuters reported.

Business leaders met French officials on Tuesday as President Emmanuel Macron’s government presses Washington for waivers covering companies such as Airbus, Sanofi, Renault and PSA Group. Many had reinvested in Iran since the 2015 accord, which suspended sanctions in return for curbs on Tehran’s nuclear program.

France, Italy and Germany are among countries that had set up export mechanisms designed to avoid dollar transactions and withstand an anticipated renewal of US sanctions. But France’s scheme, administered by the bpifrance sovereign fund, was recently put on hold, sources have said.

“It’s important that we develop mechanisms allowing us to counter extraterritorial laws, and a financing vehicle such as BPI’s is part of that,” the senior adviser said.

“But Iran is a particularly tough case, and I’m not sure the BPI [program] alone will allow big companies to go and invest in Iran.”

A second French official said it was not clear how much appetite there would be for euro-denominated financing tools from companies in Iran.

“We don’t have much with which to threaten the Americans. When you’re an economic player and a multinational with interests in the United States that works in dollars you have a choice and that choice is made quickly.”

French Finance Minister Bruno Le Maire, after meeting executives, reiterated that France wants the European Union’s executive to strengthen sanction-blocking rules and create a body that enforces the bloc’s own economic and trade rules, similar to the US Treasury’s Office of Foreign Assets Control.

In Brussels, Iran’s Foreign Minister Mohammad Javad Zarif and EU foreign policy chief, Federica Mogherini, vowed to maintain the 2015 accord after talks in Brussels, but diplomats conceded that US sanctions threatened its substance.

In the short term, France is focused on “ensuring an orderly exit from the Iranian market” for companies now seeking to withdraw, the official said, while “creating the conditions for those who want to stay to do so”.

Europeans are discussing the issue at an informal EU summit in Sofia, Bulgaria, held on Wednesday and Thursday.