European governments are locked in negotiations over a special purpose vehicle to safeguard trade with Iran as they prepare for a long-awaited US crackdown on Tehran’s oil and finance sectors to come into force. Hours before Monday’s launch of a US squeeze on Iran’s energy industry and central bank, European diplomats said a planned special channel to safeguard non-US trade with Iran would not be ready in time.
Agreement has yet to be reached on crucial details, including where to locate it as countries fear triggering a political and economic backlash from Washington if they play host. European states have not put a formal deadline on when the launch will be, but some diplomats had hoped to have the channel ready in time for the reimposed US sanctions. The Trump administration will add more Iranian banks to its sanctions list later on Monday, forcing international financial messaging system Swift to choose whether to fall in line with the US and cut the institutions from its global cross-border payment network.
The Belgium-based company, which declined to comment on Sunday, could face possible punishment under new EU rules if it complies with US orders. President Donald Trump’s decision in May to pull out of a landmark international nuclear deal with Tehran has pitted the US against European powers and China and Russia, co-signatories to the 2015 accord. Dieter Kempf, head of the BDI, Germany’s main business lobby, echoed widespread European business concern about the potential destabilising effect of the US decision to unilaterally reimpose sanctions it had suspended in exchange for Iran curbing its nuclear programme.
This is the second and final tranche of US sanctions to be restored. New sanctions may also be introduced. “By using the global economy to pursue political goals, the US is straining international relations and the transatlantic partnership,” Mr Kempf said.