Europe is threatening to fight Trump on Iran sanctions

When the Trump administration withdrew from the Iran nuclear deal on Tuesday, it notified the world that companies doing business with Iran have between three and six months to wind down any business with the country before facing sanctions. But Europe wants to protect its businesses — and it’s looking into plans to fight back against those sanctions.

French Finance Minister Bruno Le Maire said on Friday that the European Union will look into reviving “blocking regulations” that were originally created in 1996 to protect European companies doing business with Libya and Cuba from US sanctions. They were an effective tactic at the time: They actually convinced Washington to back down from imposing sanctions.

“We have to work among ourselves in Europe to defend our European economic sovereignty,” Le Maire told Europe 1 Radio.

Europe’s interest in using the tool shows how committed it is to pushing back against US threats to its private sector — and it exposes yet another source of tension in the weakening relationship between Europe and the US in the Trump era.

Europe doesn’t want to look like it’s bowing to US pressure

The 1996-era blocking regulations allowed European companies to ignore US sanctions and stipulated that Europe won’t uphold foreign court rulings based on the sanctions, according to the Agence France-Presse.

Le Maire wants to update that statute to deal with the US’s threats to impose sanctions on companies and banks doing business with Iran. He said that at the end of May, he will meet with his British and German counterparts and that together, “the three of us will look at what we can do.”

Le Maire also said Europe is also looking to achieve “financial independence” from the US in response to the sanctions. According to the Guardian, one proposition for executing that would be creating “a purely European finance house to oversee euro-denominated transactions with Iran.” The basic idea is that Europe could create financial institutions that are immune to US sanctions because they don’t deal in US dollars or link up with the US financial system.

There’s talk on Capitol Hill of how to counteract Europe’s attempts to rebuff US sanctions. According to the Weekly Standard, several congressional offices are reviewing a memo drafted by the hawkish Foundation for Defense of Democracies that recommends policies for getting Europe to comply with the sanctions. It specifically calls for the Trump administration to rule out exceptions to its sanctions, even though the administration has said exceptions could be granted on a case-by-case basis.

Experts say that even if the EU does enact these blocking regulations, whether or not European companies actually continue to do business with Iran is a separate question.

Ilan Goldenberg, a Middle East expert at the Center for a New American Security and former senior Pentagon official, told me he’s skeptical that European banks and businesses will want to risk being hit by US sanctions since the effectiveness of any future European blocking regulations is unclear.

“No European company is going to want to be the guinea pig in the middle of a trans-Atlantic food fight,” Goldenberg said in an interview right before the US withdrew from the deal.

Several of the major companies that could be hit by US sanctions are French — including the oil and gas company Total and the car companies Peugeot and Renault.

If Europe is in fact able to pass blocking measures and persuade some businesses to continue doing business with Iran, their hope would be that Iran will have more incentive to continue to stick to the deal’s terms and not ramp up its nuclear program. But many Iran experts think it won’t be enough after the US reneged on its commitments to the deal entirely.

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