Friday, 16 November, 2018

Europe Looks for Ways to Protect Businesses from Iran Sanctions

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Iran Looks to International Court and European Leaders for Help on Sanctions

Iran has taken its case against the reinstatement of U.S. sanctions to the International Court of Justice. Iranian officials began presenting their argument on Monday that U.S. policy is “intended to damage as severely as possible Iran’s economy and Iranian national companies, and therefore inevitably Iranian nationals,” which they say is a violation of the 1955 Treaty of Amity (the treaty remains in force, according to a previous court ruling). U.S. Secretary of State Mike Pompeo has called Iran’s claims “meritless” and “an attempt to interfere with the sovereign rights of the United States,” and said that the United States will continue to defend the sanctions policy.

The court case is unlikely to produce any change in either country’s policy—both the United States and Iran have disregarded ICJ rulings before. But it is just one aspect of an ongoing dispute that has been building momentum since the first round of sanctions went back into effect on August 7. On August 16, Pompeo announced the formation of a new “Iran Action Group” to manage the U.S. campaign to pressure Tehran at the State Department and coordinate with other U.S. government agencies; BuzzFeed notes that Pompeo formed a similar task force at the CIA during his tenure there as director. The sanctions are beginning to take hold—evident in oil prices edging higher and the announcement from French oil company Total that it has officially withdrawn from Iran. U.S. officials also arrested two men accused of spying for Iran on August 9; Reuters reports that Ahmadreza Mohammadi-Doostdar and Majid Ghorbani, one a U.S.-Iranian dual citizen and the other an Iranian citizen living in California, had been surveilling a Jewish student center in Chicago and collecting information on supporters of the Mujahedin-e-Khalq (MEK), an Iranian dissident organization. Additional U.S. sanctions are slated to go into effect in November.

The limits of the U.S. sanctions policy are already starting to show, though. As analysts have warned for months, a unilateral sanctions policy will not have the teeth of the international campaign that compelled Iran to negotiate the Joint Comprehensive Plan of Action. And with the other parties to the agreement trying to maintain the deal now that the United States has withdrawn, many close U.S. allies are actively working against the Trump administration’s sanctions campaign. German Foreign Minister Heiko Maas proposed last week that Europe begin creating financial systems that are not reliant on the United States and U.S. dollars, in order to insulate European foreign and financial policy from decisions in Washington. In an editorial for the German paper Handelsblatt, Maas wrote that “it’s essential that we strengthen European autonomy by establishing payment channels that are independent of the US, creating a European Monetary Fund and building up an independent SWIFT system.” The centrality of U.S. currency and financial institutions to global markets and transaction systems like SWIFT have given U.S. sanctions reach and influence that extend far beyond U.S. borders; a parallel system that could operate autonomously from the U.S. policy would be a significant blow to the centrality of United States in international finance and protect foreign companies still eager to trade with countries under U.S. sanctions. China, meanwhile, is already influential enough to go its own way—and that’s what it is doing. Earlier this month, Reuters reported that China had switched over to shipping its oil imports from Iran via Iranian tanker ships, circumventing U.S. sanctions. Iranian officials have said that if they can maintain oil exports to China, the effect of U.S. sanctions will be blunted.

Iranian officials have remained defiant while trying to coordinate ways to circumvent U.S. sanctions with European diplomats. On Monday, an Iranian Revolutionary Guards naval officer told Iranian state media that Iranian forces control the Persian Gulf and that “there is no need for the presence of aliens like the U.S. and the countries whose home is not in here.” Meanwhile, President Hassan Rouhani spoke with French President Emmanuel Macron about maintaining access to European banking networks and transportation and insurance companies. Rouhani is walking a difficult balance between taking a tough line, managing partnerships with European leaders, and keeping his domestic rivals at bay, but the U.S. withdrawal from the JCPOA has left an opening for hardliners in Tehran. Over the weekend, the Iranian parliament impeachedMasoud Karbasian, Rouhani’s economy minister. Karbasian is the second Rouhani administration official removed from office in recent weeks; earlier the month, the parliament also ousted the minister of labor and social affairs.

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