US warns EU of harsh consequences if Iran sanctions are circumvented

EPA-EFE/ABEDIN TAHERKENAREH

Iranians walk past a mural depicting Iranian supreme leader Ayatollah Ali Khamenei (L, top) and late Iranian supreme leader Ayatollah Ruhollah Khomeini (R, top) in a street of Tehran, Iran, November 3, 2018. US President Donald J. Trump's administration announced on November 2 that it had reimposed sanctions against Iran that had been waived under the 2015 Iran nuclear deal (Joint Comprehensive Plan of Action, JCPOA).

US warns EU of harsh consequences if Iran sanctions are circumvented


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Speaking from the internationally recognised Israeli capital Tel Aviv, US Special Representative Brian Hook issued a harsh warning to European banks and firms who continue to engage in a special European Union initiative that protects trade with Iran, saying any continued attempt to circumvent the US’ new economic sanctions against the Islamic Republic put themselves at risk of being subject to measures that would severely punish those that the White House believes are deliberately defying the US’ attempt to bleed the Iranian economy dry and force Tehran to return to the negotiating table to discuss a revised nuclear deal that would be far more restrictive than the one signed in 2015.

“We know that historically Iran does not come to the negotiating table without economic and diplomatic pressure. And our pressure campaign is designed to deny Iran the money it needs to not only fund regional militias, the regional aggression that we see Iran performing year in and year out, but it’s also to deny Iran the revenue that it needs to do things like conduct assassination attempts in Europe, bomb plots in Europe, and illegal drug smuggling through Europe.” said Hook in a conference call with international journalists, attended by New Europe.

Hook was in Tel Aviv to meet with Prime Minister Benjamin Netanyahu, one of the fiercest critics of the three-year-old Joint Comprehensive Plan of Action, which has become better known to the public as “the Iran nuclear deal”. Netanyahu has long-criticised the deal for allowing Iran to have too many options to violate the agreement and gave no incentive to Tehran to strictly adhere to the tenets on the deal by putting multiple short-term deadlines on certain provisions that were designed to keep Iran’s Revolutionary Guard Corps from acquiring or sponsoring the development of a nuclear weapon. Netanyahu has been particularly angry of the fact that the deal failed to address Iran’s active support for Islamic terrorist organisations, including Hezbollah in Lebanon and Hamas in the Gaza Strip, both of which are sworn enemies of Israel.

“I had very productive meetings in Israel with the ministry of foreign affairs and with the various folks in the interagency. I met this morning with Prime Minister Netanyahu and we had a very good discussion. We did an assessment of the progress we are making in our campaign of maximum economic pressure. We discussed continued efforts to deter Iranian regional aggression. And then looking ahead to very vigorous enforcement of our sanctions so that we can achieve our goal of putting maximum economic pressure on the Iranian regime.” Hook said during the conference call.

Most European governments fear US backlash

Europe’s efforts to establish a so-called Special Purpose Vehicle have floundered as the main guarantors of the 2015 Iran nuclear deal – Germany, France, and the UK –  have refused to host the proposed clearinghouse, which could be used to help match Iranian oil and gas exports against purchases of EU goods in an effective barter arrangement that circumvents the US’ sanctions by bypassing the use of the dollar on the international energy markets.

Austria, Luxembourg, and Belgium have come under pressure to host the Special Purpose Vehicle, or SPV, out of fear of the US’ retaliation.

The European Union had wanted to have the specifics of the Special Purpose Vehicle legally in place before the end of the of the month, with an eye on having it fully operational by early next year. Support for the SPV garnered significant support from European banks and firms who are heavily invested in Iran and, thus, deeply concerned about the possibility that a highly lucrative market would suddenly be closed to further business. However, with no major European country willing to host the main mechanism for challenging the US’ strong position on the Iran sanctions issue, it appears that the EU-based entities that are still active in Iran will have to reconsider their approach to the US’ threats.

Hook said during his telephone briefing with reporters that Washington policy officials were “not surprised” by inability to coordinate their efforts to undermine the new sanctions regions, saying, “European banks and European companies know that we will vigorously enforce sanctions against this brutal and violent regime,” before adding, “We have seen reports about the difficulty that the European Union has had with finding a country willing to host the Special Purpose Vehicle. And I have seen quotes that I think mischaracterise both the purpose and effect of our sanctions. “European companies are making a decision in their economic interests to choose to work with the United States over Iran. Any major European company will always choose the American market over the Iranian market.  And we have seen only full support for maintaining strong economic relations between European companies and the American market.”

Under the 2015 deal, Iran agreed to halt its nuclear programme in exchange for an end to international sanctions that had been in place for more than a decade and had brought the Islamic Republic’s economy to its knees as it was cut off from international trade.

US National Security Advisor John Bolton had compared the EU’s initial attempt to defy the US’ sanctions as a case of “starting off in denial, then ending up in acceptance.”

“European banks and European companies know that we will vigorously enforce sanctions against this brutal and violent Iranian regime. We have been very consistent throughout in our message that we
need to impose this kind of pressure so that we can start deterring Iran’s aggression. And we are not surprised that there has been reluctance on the part of various nations to host a Special Purpose Vehicle,” said Hook during the teleconference.

Hook was quick to reiterate that the White House had been pleased by the overall support that it has received from the EU as Washington understands, “that there is more daylight between European companies and European governments than there is between the United States and Europe over the way to move forward on Iran.”

“We’re very pleased with the Italian government interdicting a very large shipment of heroin coming from Iran. This is another example of an outlaw regime. And Iran exports bomb plots, assassinations, refugee crises and illegal drug smuggling to Europe,” Hook said.

The White House has granted several waivers to certain countries who have strategic complications that preclude them from being able to make a sudden change in the way they do business with Tehran, a subject that Hook addressed by saying, “We didn’t want our sanctions to harm our friends and partners, so in a couple of very discreet cases we have put in place waivers. We are not looking to grant exemptions or waivers from our sanctions regime. We have looked at these on a case by case basis, taking into account unique needs of friends and partners, and also ensuring that as we impose sanctions on Iran’s oil sector that we do not lift the price of oil.”

Hook was unequivocal when it came to his and Washington’s position on the future of any potential relationship with Iranian regime now that the sanctions are in full force.

“We think it is very important to deter Iran from this behaviour not only in Europe but in the Middle East and around the world. That’s why we are pursuing the diplomatic track that we are pursuing with economic pressure, deterring Iran from regional aggression and from other violent misadventure, and we are very focused on getting a new and stronger and better deal with Iran.”

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