EU stays in nuclear deal but official warns there is ‘no one magic option’ over trade after US withdrawal

Tehran is being given assurances that European governments will seek to protect companies doing business in Iran from renewed US sanctions, as foreign ministers prepare to meet in Brussels to salvage the nuclear deal.



Iran’s foreign minister, Mohammad Javad Zarif, met Federica Mogherini, the EU external affairs chief, on Tuesday morning and will meet the foreign ministers of France, Germany and the UK – the three European signatories to the deal – in the evening. Iran wants assurances that EU trade with Iran will continue to grow, despite Donald Trump pulling the US out of the nuclear deal.

Zarif said after his first meeting that talks were “moving in the right direction”, adding that it was “a nice and constructive meeting”.

Speaking after her meeting with Zarif, Mogherini said the EU had agreed to start work on a multi-level stream of work designed to keep the Iran deal alive. She said the work would cover:

the continued sale of Iran’s oil and gas products



effective banking transactions with Iran



continued sea, land, air and rail transportation relations



new EU investments in Iran

financial banking, insurance and trade

a blocking mechanism aimed at nullifying US sanctions on EU firms

The crisis, potentially plunging the US and Europe into a sanctions war and raising serious questions about European economic sovereignty, will also be discussed at a meeting of EU heads of state on Wednesday in Sofia.

In a pre-emptive strike on Tuesday, the US treasury imposed new sanctions on the governor of the Iranian central bank, Valiollah Seif, and the Iraq-based Al-Bilad Islamic Bank – in both cases for allegedly moving millions of dollars to Hezbollah on behalf of Iran’s Revolutionary Guards.

The US treasury said the move would cut off Iran’s access to the critical bank network. The US has said it will progressively reintroduce the main sanctions against Iran, starting with the automobile and civil aviation sectors on 6 August. Energy and finance will follow on 4 November.

An EU spokesman played down suggestions that concrete proposals would be offered to Iran on Tuesday, but insisted it would be left in no doubt that the EU would stay in the deal, which was signed in 2015, as long as inspectors find that Iran is complying with its terms.

Play Video 2:11 What is the Iran nuclear deal? – video

An EU official said it was clear that all options had deficiencies for protecting firms, but there was no need to take specific decisions at the informal dinner of EU heads of state in Sofia on Wednesday evening.

What is the Iran deal and why does Trump want to scrap it? Read more

Possible measures include reviving an EU-wide blocking regulation from 1996, which was intended to prevent US sanctions from affecting European firms trading with Cuba, Libya and Iran.

The commission members were “very well aware that there is no one magic option which can be applied”, said a senior EU official, who added that measures would take time to come into effect. “There will be a complicated and comprehensive pattern of options both at the EU and at the national level and therefore it may take some time to establish all of them.”

The US has given all firms, not just European ones, between three and six months to wind down their business dealings with Iran, with the timeframe dependent on the nature of the business. But European businesses and Iranian moderates need relatively swift assurances that trade will be protected.

Perry Cammack, of the Carnegie Middle East foundation, said “The primary target of US secondary sanctions is not Iran itself but foreign financial institutions that trade with it. The Trump administration will demand that those countries choose between the US financial system and Iran’s.” He predicted that “many countries, perhaps most, will reluctantly adhere to Trump’s demands.”

Pre-existing US sanctions against Iran have hit EU firms, with large fines imposed since 2009 on EU banks with US subsidiaries, such as HSBC, Standard Chartered, ING, Barclays, Credit Suisse BNP and Lloyds.

Speaking in the House of Commons, the UK foreign secretary, Boris Johnson, admitted it would be very difficult to protect European business “due to the extra-territorial effect of US sanctions and the difficulty companies have when they touch the live wire of the American financial network and they find themselves almost immediately sanctioned”.

The French finance minister, Bruno Le Maire, and the French foreign minister, Jean-Yves Le Drian, were due to meet 60 French firms that trade regularly with Iran on Tuesday to discuss the legal and technical implications of the sanctions.

The French president, Emmanuel Macron, spoke by phone to his Russian counterpart, Vladimir Putin, stressing that France, like Russia and China, disagreed with Trump’s decision last week to pull out of the deal.

Mike Pompeo, the US secretary of state, spoke to his European counterparts to set out how he expects European companies to withdraw from trade with Iran.

German exports to Iran totalled nearly €3bn (£2.6bn) in 2017, while French exports soared from €562m in 2015 to €1.5bn in 2017. The French oil company Total has pledged to invest $5bn in Iran’s South Pars gas field.

The Turkish president, Recep Tayyip Erdoğan, told Bloomberg that his country would not accept sanctions. Qatar, due to a blockade mounted by its fellow Gulf states, has become increasingly dependent on Iran and would in effect be cut off from the world if it followed US demands to sever all links. The US has its largest Middle Eastern military base in Qatar.