"Anyone doing business with Iran will NOT be doing business with the United States," Donald Trump said on Tuesday, hours after the EU's 'blocking law' was reactivated to counter the economic threat posed by US sanctions against Iran towards European businesses.
The sanctions came into effect early on Tuesday at midnight EDT (6.01am CEST), adding pressure to the Islamic Republic’s economy and leadership, despite dismay from Washington’s European allies. It comes three months after President Trump pulled the US out of the international accord limiting Iran's nuclear activities.
The first batch of measures target financial transactions, trade in gold and other metals, the car industry and commercial aviation. Further sanctions on Iran’s lucrative oil industry and energy sector are due to follow in November.
In a TV appearance, Iran’s President Hassan Rouhani accused Washington of “wanting to launch a psychological war against the Iranian nation”. He dismissed a US call for talks, saying “we are always in favour of diplomacy and talks… But talks need honesty”.
Donald Trump issued a statement on Monday, saying “the Iranian regime faces a choice: either change its threatening, destabilizing behavior and reintegrate with the global economy, or continue down a path of economic isolation”. He has accused Iran of supporting the Syrian government, Houthi rebels in Yemen, Hamas in Gaza and the Lebanese Hezbollah.
The measures are expected to hit Iran’s economy hard, with the country already reeling from high unemployment and inflation. Its currency the rial has lost almost two-thirds of its value in six months.
European officials have condemned the renewed sanctions as illegal and in violation of a UN Security Council resolution, vowing to counter the US measures and save the Iran nuclear accord. The sanctions follow the Trump administration’s withdrawal from the 2015 deal known as the Joint Comprehensive Plan of Action (JCPOA).
The European Union Foreign Policy Chief Federica Mogherini says the EU is encouraging investors to maintain business ties with Iran to preserve the nuclear deal, despite the US withdrawal.
“We are doing our best to keep Iran in the deal, to keep Iran benefitting from the economic benefits that the agreement brings to the people of Iran, because we believe that this is (in) the security interests not only of our region but also of the world. If there is one piece of international agreements on nuclear non-proliferation that is delivering, it has to be maintained,” she said on Monday.
The EU’s “blocking statute”, aimed at shielding European companies that do business with Iran, came into effect on Tuesday. It sets out to allow firms to recover damages from bodies that enforce US sanctions – and bans companies from complying with US sanctions without EU permission.
Between a rock and a hard place
Analysts believe the EU’s statute will be difficult to enforce and many international companies – facing the alternative of stiff US penalties and the potential loss of access to US markets – are withdrawing investment from Iran.
“Most of the companies have already made up their mind, whether it’s the German Siemens, the French carmaker PSA, the Danish Maersk – all these companies that have said they don’t want to risk losing access to the US market, they don’t want to risk losing access to the financing in dollars by US banks, and also they don’t want to lose their US shareholders. So for the moment the choice is already made by most of these companies to pull out of Iran, despite the threat of the EU to sue them for doing so,” Euronews’ Brussels correspondent Bryan Carter reported for Good Morning Europe.
President Trump said on Monday the US was “fully committed to enforcing all of our sanctions” and would aim “to ensure complete compliance”. His administration has previously rejected pleas from the EU to grant exemptions to European firms.