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The reinstatement of US sanctions against Iran. Can the Europeans react?

(B2) Not content with reinstating US sanctions on Iran, Donald Trump has also threatened his allies and other countries with similar sanctions if they dare continue to trade with Iran. Should Europeans be afraid? Can they react? What is the expected effect? Three basic questions...

Is the threat of extra-territorial sanctions effective for European companies even if the Europeans claim to want to leave the system intact?

Yes. At the economic level, the simple warning coming from Washington makes sneeze in the cottages of the big companies engaged in the resumption of trade with Iran. It forces us to slow down or at least to re-consider any investment in Iran in the light of possible new American measures. The cost of investment will become more expensive for large companies, which will therefore have no real choice but to lower the level of their investments, or go through circuitous routes, to avoid being caught in the bag. Large companies in particular which trade in dollars, and cannot lose this guarantee, will find it difficult to play this game.

What is the possible effect of the American decision in the long term?

At first glance, it is European companies just as much (if not more) than American companies that are targeted by the reinstatement of sanctions. And if the Iranian economy could suffer from it, it should be able to find other alternatives on the international market. Russian and Chinese companies, but also Indian, Pakistani and Korean companies will strengthen their presence in Iran. Paradoxically, the American decision will reinforce the weight of the 'enemies' of the USA. Thanks Trump!

Can the Europeans react?

There is indeed a US anti-sanctions device which dates from 1996, in reaction to the Helms-Burton law on Cuba and the Amato-Kennedy law after the Lockerbie attack. But it never really served. It is based on a fairly voluntary basis, in the event that a company wishes to lodge a complaint (which in international trade is quite risky). A device " not very concrete according to an expert contacted by B2. Even Europeans hardly believe it. NB: Read our sheet: The US anti-boycott law of the European Union (V2): effective?

Can this device be hardened? Or have other recourse?

In theory, yes. In practice, we seem skeptical. The European Commission has proposed to modify this regulation, mainly on questions of form (to allow a more autonomous power of delegation of the European executive). For three years since the proposal was made (in February 2015), no new text has been adopted. According to information collected by B2, the subject has even been buried at the bottom of the drawer by successive presidencies. This shows the will of the 28 to use this instrument... There is also the possibility for Europeans to lodge a complaint with the WTO in the event of the introduction of sanctions. You still have to want it...

(Nicolas Gros-Verheyde)

Nicolas Gros Verheyde

Chief editor of the B2 site. Graduated in European law from the University of Paris I Pantheon Sorbonne and listener to the 65th session of the IHEDN (Institut des Hautes Etudes de la Défense Nationale. Journalist since 1989, founded B2 - Bruxelles2 in 2008. EU/NATO correspondent in Brussels for Sud-Ouest (previously West-France and France-Soir).