Published: Fri, May 18, 2018

Europe to exempt its firms from United States sanctions on Iran

Europe to exempt its firms from United States sanctions on Iran

European Union officials say they are revamping the blocking statute to encompass Trump's May 8 decision to revive Iran-related sanctions.

This mechanism, dating back to 1996 and never used, adopted at the time to circumvent the embargo on Cuba, allows European companies and courts not to submit to regulations relating to sanctions taken by third countries. On Wednesday, the French oil giant Total said it would have to divest from Iran unless it received an exemption from the American sanctions.

Historic deal on Iran's nuclear program from 2015 provides for the removal of sanctions against Iran in exchange for limiting its opportunities for the enrichment and storage of nuclear materials.

Jean Claude Juncker, president of the European Commission, said on Thursday the commission has a "duty to protect European companies" from American sanctions.

On Friday morning the European Commission, the EU's executive arm, will begin putting a so-called blocking statute in place to shield European companies doing business with Iran from US sanctions. The first step was to activate the "blocking statute" that "forbids European Union companies from complying with the extraterritorial effects of USA sanctions, allows companies to recover damages arising from such sanctions from the person causing them, and nullifies the effect in the European Union of any foreign court judgements based on them", the document says.

The measures announced in Brussels will come into force within two months unless the European Parliament or the EU governments formally reject them.

Following our discussion of Europe's angry response to Trump's unilateral Iran sanctions, in which European Union budget commissioner, Guenther Oettinger made it clear that Europe will not be viewed as a vassal state of the USA, stating that "Trump despises weaklings".

However, there are signs that European and multinational businesses - faced with a choice between cutting ties with Iran and jeopardising operations in the world's biggest economy, the United States - are opting for the former.

President Donald Trump has repeatedly threatened to pull out of the JCPOA unless Congress and America's European allies "fix" it with a follow-up accord.

U.S. individuals and entities are barred from doing business with them following the move.

What was the reaction to Trump's decision?

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