EU may offer credit to firms trading with Iran if Trump pulls out of nuclear deal

EU leaders discuss contingency plans if US withdrawal exposes multinationals to loss of financial support

The EU is looking to provide European companies trading with Iran access to emergency credit lines and funding support if Donald Trump presses ahead with his plan to withdraw from the Iran nuclear deal.

A US pullout, leading to the reimposition of a tough sanctions regime, would expose multinational firms trading with Iran to potentially devastating loss of financial support by commercial banks. The US is due to make a decision on 12 May, and it has the potential to pitch Europe and the US into dispute.

Contingency plans were discussed by EU foreign ministers this week as they battle to persuade the US administration that it is better to leave the nuclear deal intact and address separately other criticisms of Iran, notably its ballistic missile programme.

The EU foreign affairs chief, Federica Mogherini, made a reference on Monday to the EU’s plans to shield Europe from US sanctions, saying the EU was “starting to prepare in case it will be needed to protect European interests in case other decisions are taken elsewhere”.

The UK foreign secretary, Boris Johnson, told MPs on Wednesday that the EU might be able to keep the Iran deal alive if Trump pulled out. He said: “It would be much less valuable, and very difficult to work, but it is possible to envisage the JCPOA [joint comprehensive plan of action] without the US, but that obviously would be very difficult to achieve.”

The former UK Foreign Office political director Sir Simon Gass, the key British official responsible in 2015 for negotiating the JCPOA, has backed practical steps to keep the European part of the plan alive if Trump pulls out.

In a new paper for European Leadership Network, Gass argues that EU member states should be ready to respond robustly to the imposition of swingeing penalties on EU companies that have acted in good faith and should be prepared to extend non-dollar lines of credit and credit guarantees to preserve as much of the deal as possible.

The genesis of Trump’s particular antipathy to Iran is hard to pin down.  Before entering office he had been sceptical of Iran’s regional rival, Saudi Arabia. But during the 2016 election campaign all his closest foreign policy advisors, such as Michael Flynn, shared a worldview that portrays Iran as an uniquely malign actor in the Middle East and beyond. After the election, Israel, Saudi Arabia and the United Arab Emirates were successful in capturing the ear of Trump and his son-in-law and top adviser Jared Kushner.

“The Europeans will also be acutely aware that if the US does withdraw, there will be an onus on them to show how they could preserve as much as possible of the economic benefit from the agreement, given that Iran will have fully lived up to its obligations,” he writes.

“This would pitch the Europeans into uncomfortable company with Russia, China and Iran. Such a division between the US and some of its closest allies would cause as much dismay in European capitals as it would glee in some others.”

Other ideas, deemed as legally fraught and impractical, are to legislate to immunise EU firms trading with Iran from US sanctions.

Patrick Pouyanné, chief executive of the French oil company Total, has said that if sanctions are reimposed his company will argue they cannot apply to Total since its contract signed last year to develop phase two of Iran’s giant South Pars gas field predates the change in US policy.

EU, German, French and UK officials have been working intensively to convince Washington that steps can be taken to toughen the west’s approach to Iran without jettisoning the deal or even seeking to reopen its terms, a step that would lead Iran to withdraw, in a blow to multilateralism and disarmament.

Johnson referred to improving accessibility of Iranian nuclear sites for the International Atomic Energy Authority, and restriction on Iranian ballistic missiles beyond a range of 2,000km (1,240 miles). But he said it would be very difficult to renegotiate the sunset clauses – the speed with which Iran can return to uranium enrichment at the end of the deal – since that arguably opened up the text of the JCPOA. The sunset clauses are a sticking point for Washington.

Asked if Trump was set to end the deal, Johnson said he was “not absolutely certain which way the president is going to go”.

Some UK officials believe they persuaded Saudi Arabia’s crown prince, Mohammed bin Salman, in talks last week that the region’s security would be better protected if the deal continues. In public there has been little suggestion that the Saudis are willing to relent in their unremitting hostility to the deal.

But the replacement of Rex Tillerson by Mike Pompeo as US secretary of state has cemented the view in Tehran that Trump will tear up the deal.

The Trump administration criticises the deal for effectively allowing Iran to start enriching uranium within 12 months of the deal ending in 2023. The short so-called breakout time has always been the biggest criticism of the deal.


Patrick Wintour Diplomatic editor

The GuardianTramp

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