Brussels moved one step closer this week to imposing a so-called blocking statute, which is meant to shield European firms from U.S.
sanctions over ties to Iran.makes American court decisions and
administrative actions regarding sanctions on Iran void in Europe. It
also prohibits Europe-based firms from discontinuing their business ties
to Iran due to foreign sanctions.
The green light for the measure from EU foreign ministers on Monday is part of the EU’s reaction to President Donald Trump’s decision in May
to pull the United States out of the deal.
The bloc aims both to protect European companies from U.S. sanctions and persuade Tehran that the deal is still in its economic interests.
Under the terms of the pact, international sanctions on Iran were lifted
after Tehran agreed to accept strict limits on its nuclear program,
verified by regular inspections and monitoring.EU foreign policy chief
Federica Mogherini hailed the latest move on Monday as a “consistent
step forward in the set of measures that the European Union has put in
place to make sure that the economic benefits deriving from the nuclear
deal can continue to be in place for Iran.”
“We are working full speed,” Mogherini said, noting U.S. sanctions are due to come into force in August and November.
The EU’s blocking statute only creates legal burdens and headaches for European companies,” said former U.S. official Richard Nephew, who
served as the lead sanctions expert for the American team negotiating
the 2015 Iran deal.
“It doesn’t really force EU companies to stay in Iran, just to find excuses to leave that don’t involve U.S. sanctions compliance. That’s
because the real problem is the business interests that European
companies have in the United States or that their banks have in the
United States,” he said.The blocking statute applies to what goes on
inside the EU — and thus cannot prevent the U.S. from targeting American
branches and assets of Europe-based companies.
“European governments have been fairly clear that European companies would be on their own and, on their own, they’ll make the decisions
they need. Other EU actions — such as creating separate financial
channels — may help sway European business decisions but, left to only
the blocking device, this initiative will fail,” Nephew said.The
blocking statute was originally created in 1996, as the EU was grappling
with the impact of U.S. sanctions on Cuba. But that statute was never
fully implemented, creating uncertainty over how it would function in
practice.
“We have a number of questions on how this blocking statute is going to work,” said Luisa Santos, director for international relations at
BusinessEurope, the leading lobby group representing European firms.
Companies fear that they now need to choose between continuing their operations in Iran and facing penalties in the United States — or
discontinuing their operations in Iran and suffering potential legal
consequences in the EU.
