Sanctions Speak Louder Than Words

What is really going on behind the U.S. Iran Sanctions

Full report written by Christiaan Denynoot, Jim Meszaros & summary written by Viktor Borecky

For the full report, click here.

Few issues in U.S. President Donald Trump’s foreign policy have been more consistent than his opposition to the Iran nuclear agreement, also known as the Joint Comprehensive Plan of Action (JCPOA). He campaigned against it while running for president throughout 2016 and publicly expressed dissatisfaction about it regularly during his first year in office.

Following the U.S. withdrawal from the JCPOA on May 8, the Trump administration chose to re-impose sanctions on Iran that the United States had lifted two years ago. In part, these measures aim to ban Iran from engaging with international financial markets and exporting oil and oil-related products. The first set of sanctions prohibiting the Iranian Central Bank from purchasing U.S. dollars has already been implemented on August 7, 2018 while the energy-related and further banking sanctions are expected on November 5, 2018.

Meanwhile, other JCPOA signatories are attempting to preserve the deal and the economic relations it enabled with Iran. The European Union has sought to block the extra-territorial effect of U.S. sanctions by updating the Blocking Statute, which bans companies incorporated in the EU from complying with the U.S. sanctions.

It is of critical importance for EU companies with exposure in the U.S. and business relations with Iran to request an authorization to be exempted from the Blocking Regulation.

The EU is working with Russia and China to preserve effective financial channels with Iran. Yet, the EU’s efforts to engage the European Investment Bank (EIB) in Iran have not been successful. The bank’s president has stated that the EIB will not invest in Iran, as it would risk the bank’s business model.

The sanctions have already had significant impacts on limiting financial flows to Iran. Economically, U.S. and EU corporations such as Boeing, Airbus, Daimler AG, Total SA, Renault SA, PSA Group, Roche and Nestlé have already said they will backtrack on their Iran plans. Various EU banks have already left Iran, including Germany’s Commerzbank, Deutsche Bank and KCI.

It will be important to see whether the remaining parties to the nuclear agreement will find alternative financing channels for companies wanting to do business with Iran. The country is expected to quit the deal should that prove impossible.

For a magnified look at the U.S. sanctions and EU response, click here.

For new business inquiries in the U.S.A., please contact Ellen DeMunter at EDemunter@webershandwick.com.

For new business inquiries in the EU, please contact Brussels: Laurent Chokoualé Datou, Chairman, EU Public Affairs at LChokouale@webershandwick.com or Christy Schmidt at christy.schmidt@webershandwick.com.