EU Rolls Out Measures to Shield European Firms from Iran Sanctions

'Blocking statute' goes into effect alongside US restrictions
August 7, 2018 Updated: August 7, 2018

WARSAW—The European Union has adopted an updated “blocking statute” under which European businesses will not have to comply with renewed sanctions imposed by the United States, targeting Iranian financial transactions that involve U.S. dollars, Iran’s automotive sector, the purchase of commercial planes, and metals including gold.

More U.S sanctions targeting Iran’s oil sector and central bank are to be reimposed in early November.

The revamped European measures, which were first drawn up by the EU in the 1990s, include provisions that allow EU companies impacted by the sanctions to sue the U.S. for damages in European Union courts.

“The European Union’s updated Blocking Statute enters into force on Aug. 7 to protect EU companies doing legitimate business with Iran from the impact of U.S. extra-territorial sanctions,” reads a joint statement by the vice president of the European Commission, Federica Mogherini, and foreign ministers Jean-Yves Le Drian of France, Heiko Maas of Germany, and Jeremy Hunt of the United Kingdom.

High Representative of the EU for Foreign Affairs and Security Policy, and Vice President of the European Commission Federica Mogherini arrives at the Council of the European Union on the first day of the European Council leaders' summit on June 28, 2018 in Brussels, Belgium. (Jack Taylor/Getty Images)
High representative of the EU for foreign affairs and security policy, and vice president of the European Commission Federica Mogherini arrives at the Council of the EU on June 28, 2018 in Brussels, Belgium. (Jack Taylor/Getty Images)

EU efforts to shelter the bloc’s companies from the consequences of the sanctions may have a limited impact, as many European companies have already pulled out of Iran, arguing that they cannot risk the prospect of damage to their U.S. business.

The joint statement was issued at midnight on Aug. 6 in anticipation of the re-imposition of U.S. sanctions due to its withdrawal from the Joint Comprehensive Plan of Action (JCPOA), commonly known as the Iran nuclear deal.

The statement also expressed the view that EU leaders “expect Iran to continue to fully implement all its nuclear commitments under the JCPOA.”

A ‘Horrible’ Deal

U.S. President Donald Trump declared the 2015 Iran nuclear deal had been “horrible,” leaving the Iranian government flush with cash to fuel conflict in the Middle East.

“The JCPOA, a horrible, one-sided deal, failed to achieve the fundamental objective of blocking all paths to an Iranian nuclear bomb, and it threw a lifeline of cash to a murderous dictatorship that has continued to spread bloodshed, violence, and chaos,” Trump said in an Aug. 6 statement.

U.S. President Donald Trump signs a document reinstating sanctions against Iran after announcing the U.S. withdrawal from the Iran Nuclear deal, in the Diplomatic Reception Room at the White House in Washington, DC, on May 8, 2018. (SAUL LOEB/AFP/Getty Images)
U.S. President Donald Trump signs a document reinstating sanctions against Iran after announcing the U.S. withdrawal from the Iran Nuclear deal at the White House in Washington, DC, on May 8, 2018. (Saul Loeb/AFP/Getty Images)

In an early-morning tweet on Aug. 7, U.S. President Donald Trump said the re-imposition of sanctions means, “Anyone doing business with Iran will NOT be doing business with the United States.”

“I am asking for WORLD PEACE, nothing less!”

Messages of opposition and support followed, including this post by Iranian political commentator and human rights activist Heshmat Alavi: “#Iran’s regime doesn’t want world peace. TY for having the courage to stand alongside the Iranian people. #IranProtests continue & rest assured we Iranians know these sanctions target the mullahs’ regime, not us. More sanctions = lesser crackdown ability for the regime & #IRGC.”

Social Unrest in Iran

The sanctions take effect as widespread protests grip Iran with citizens calling for regime change. The protesters are angry about corruption within the regime and the use of the country’s wealth to fund malign activities in the region instead of helping the Iranian people.

Senior U.S. administration officials told reporters on Aug. 6 that the United States supports the Iranian people but is not calling for regime change. The officials accuse Iran’s rulers of being the biggest funders of terrorism in the world, supporting dictators, and playing a destabilizing role in the Middle East. The sanctions are part of an effort to change the regime’s behavior, the officials said.

Iranian protesters gather during a demonstration in central Tehran on June 25, 2018. (Atta Kenare/AFP/Getty Images)

Trump deferred the reimposition of two sets of sanctions against Iran by 90 and 180 days when he withdrew from the nuclear deal in May. Iran started to suffer from the sanctions even before the measures came into effect. The nation’s currency is collapsing, more than 100 international companies announced their intent to leave the country, and unemployment is rising.

“I am pleased that many international firms have already announced their intent to leave the Iranian market, and several countries have indicated that they will reduce or end imports of Iranian crude oil,” Trump said in a statement on Aug. 6.

“We urge all nations to take such steps to make clear that the Iranian regime faces a choice: either change its threatening, destabilizing behavior and reintegrate with the global economy or continue down a path of economic isolation.”

The details of the sanctions are set out in an executive order Trump signed on Aug. 5 in Bedminster, New Jersey.

Trump Offers to Meet Iranian Leaders

On July 30, Trump offered to meet Iranian President Hassan Rouhani without preconditions. Iran responded to the offer by demanding that the United States rejoin the Iran nuclear deal as a condition for meeting.

“Iran, and it’s economy, is going very bad, and fast!” Trump wrote on Twitter on Aug. 4. “I will meet, or not meet, it doesn’t matter – it is up to them!”

A senior U.S. administration official said that the sanctions will remain in place until Iran stops enriching uranium and ceases its malign activity in the Middle East.

“We are intent on cutting off the regime’s access to resources that they have systematically used to finance terror, fund weapons proliferation, and threaten peace and stability in the region,” the official said.

“Our actions will continue to severely limit the ability of Iran, which as you know is the largest state sponsor of terror, to gain funding to continue to finance its wide range of malign behavior.”

China, Russia, Germany, France, Britain, and the European Union are still party to the Iran nuclear deal.

Ivan Pentchoukov and Reuters contributed to this report.

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