Europe is prepared to introduce measures to nullify the effect of Donald Trump imposing sanctions on any non-US firm that continues to do business with Iran, the French government said on Friday, The Guardian reports.
The warning from the French finance minister, Bruno Le Maire, suggests Trump’s proposals to corral Europe into joining US foreign policy towards Iran may lead to a severe backlash by EU firms and politicians, especially by those advocates of a stronger independent European foreign policy.
“We have to work among ourselves in Europe to defend our European economic sovereignty,” Le Maire said, adding that Europe can use the same instruments as the US to defend its interests.
Trump, in announcing he was pulling the US out of the Iran nuclear deal, said on Tuesday he was reimposing sanctions that would be applied to any entity that continued to trade with Iran, in effect threatening billions of euros of European business.
The US treasury has said it is giving companies between three to six months to wind down their contracts, including purchases of Iranian oil.
Le Maire said: “At the end of May I will meet with the British and German finance ministers and the three of us will look at what we can do.”
He disclosed that he had already called the US treasury secretary, Steve Mnuchin, on Wednesday urging him to allow exemptions for French companies or a delay in implementing the sanctions, while admitting he had “few illusions” about the likely response.
Le Maire pointed to the possibility of reinstating EU “blocking regulations”, dating back to 1996, which were used as a countermeasure against US sanctions that targeted third countries doing business with Libya.
The statute permitted European companies to ignore the US sanctions and said that any decisions by foreign courts based on the sanctions would not be upheld in Europe. The US backed down in 1996 before any sanctions were implemented.
“We want to reinforce this regulation and incorporate the recent decisions taken by the United States,” Le Maire said.
“The second avenue is looking at Europe’s financial independence – what can we do to give Europe more financial tools allowing it to be independent from the United States?” One proposal is to set up a purely European finance house to oversee euro denominated transactions with Iran.
Le Maire further noted that the US Treasury has an agency, the Office of Foreign Assets Control, that tracks whether or not foreign companies are respecting its sanctions.
The new US ambassador to Germany was forced on to the defensive this week after sending out a tweet telling German businesses that they should wind down their links with Iran.
Richard Grenell said he had been issuing advice, not an instruction, adding that his remarks derived from a Washington talking points memo.
But Omid Nouripour, the Green foreign policy spokesperson in the German parliament, advised him against “driving a ruthless aggressive policy towards our security interests”. The SDP said Grenell needed tutoring in how diplomacy works.
In Italy, Nathalie Tocci, an adviser to Federica Mogerini the EU external affairs chief, said Trump’s decision to pull out of the Iran deal had to be seen as “an utter and unjustified betrayal of Europe”. She called for proportionate reprisals if necessary.
European ministers are due to meet their Iranian counterparts on Monday to reassure them they intend to preserve the nuclear deal, and resist US sanctions being imposed on European firms that continue to trade with Iran.
The EU and US combined to impose sanctions against Iran between 2012 and 2015, and after the striking of the Iran deal in 2015, the Obama administration worked with European banks to reassure them that some US anti-Iranian sanctions that remained in force did not restrict the rights of European business.
The former US ambassador to Italy, David Thorne, warned that Trump’s decision had the potential to cause the biggest rift between the US and mainland Europe since the 2003 invasion of Iraq.
Ellie Geranmayeh, an Iran expert with the European Council on Foreign Relations, said Europe needed to assemble a counter-package against the US, including penalties against assets of US companies based in Europe to allow for clawback of illegal fines imposed.
So far the UK foreign secretary, Boris Johnson, anxious to avoid a deepening rift with the US, has not criticised the principle of extra territorial sanctions, simply saying he will work with his European partners to do his upmost to protect British business.
The UK is not as heavily involved in Iranian trade as France, Germany and Italy partly because UK finance houses are so strongly interwined with the US, and so vulnerable to fines if they are deemed to have breached existing sanctions.
The sanctions policy gives the US Treasury a good deal of latitude to interpret whether a firm is using its best endeavours to unravel its business links, but previous fines for alleged breaches lead many firms to err on the side of caution.