The EU is set on a collision course with Donald Trump after its foreign policy chief called for Europeans to increase their business dealings with Iran in defiance of bellicose statements from the US president.
As Trump vowed to block those trading with Iran from the US market, the EU stepped up efforts to save the Iran nuclear deal by encouraging its companies to ignore the White House.
Federica Mogherini, the EU’s high representative for foreign affairs, said Brussels would not let the 2015 agreement with Tehran die, and she urged Europeans to make their own investment decisions.
The EU, China and Russia remain signatories to the joint comprehensive plan of action under which economic sanctions on Iran have been lifted in return for the regime curtailing its nuclear aspirations. Trump reneged on the deal in May, describing it as “a horrible one-sided deal that should never, ever have been made”.
The clash risks destabilising the wider transatlantic relationship weeks after the European commission president, Jean-Claude Juncker, and Trump vowed in the White House rose garden to increase tariff-free trade between the EU and the US and to move on from recent disagreements.
During a trip to Wellington, New Zealand, on Tuesday, Mogherini said: “We are doing our best to keep Iran in the deal, to keep Iran benefiting from the economic benefits that the agreement brings to the people of Iran, because we believe this is in the security interests of not only our region but also of the world.
Hours earlier, Trump had tweeted: “The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level. Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less!”
He said in an official statement: “We urge all nations to take such steps to make clear that the Iranian regime faces a choice: either change its threatening, destabilising behaviour and reintegrate with the global economy, or continue down a path of economic isolation.”
The efficacy of the blocking statue remains in serious doubt. The German carmaker Daimler AG said on Tuesday that it was suspending its “very limited” activities in Iran. In early 2016 the company announced plans for local truck production and cooperation with an Iranian partner. On Tuesday it said a representative office “will not be continued”.
A first set of reimposed US sanctions targets financial transactions that involve US dollars, Iran’s automotive sector and purchases of commercial planes and metals, including gold. A second batch of sanctions to be imposed in early November will hit Iran’s oil sector and central bank.
Mogherini said it was vital for Iran to feel the economic benefit of the nuclear deal, describing it as a “fundamental aspect of the Iranian right to have an economic advantage in exchange for what they have done so far, which is being compliant with all their nuclear-related commitments”.
The US move has strengthened calls in Brussels for a looser transatlantic alliance. The leader of the liberal group in the European parliament, Guy Verhofstadt, a former prime minister of Belgium, said: “This shows yet again why we as Europeans must strengthen our foreign policy to be able to shape relations with the greater Middle East independently from the US.”
The Russian foreign ministry said in a statement: “We are deeply disappointed by US steps to reimpose its national sanctions against Iran. This is a clear example of Washington violating UN resolution 2231 [on the Iran deal] and international law.”
Moscow said the multi-party nuclear agreement Trump abandoned in May had “shown its effectiveness”. It called on the international community “not to allow such significant achievements in multilateral diplomacy to be sacrificed in the name of American aspirations to settle political scores with Iran”.
Iran’s president, Hassan Rouhani, in a live interview on state television on Monday night, reassured Iranians that his administration was prepared to stave off the impact of the return of sanctions. He dismissed the punitive measures as psychological warfare designed to help Trump in the upcoming midterm elections. “Our system is stable, we’re all standing together,” he said.
The sanctions have come at a critical time, when a combination of factors ranging from environmental challenges to economic grievances and a lack of political freedom is putting Iran’s leadership under unprecedented pressure. The Iranian currency, the rial, has lost at least half of its value since April, fuelling sporadic street protests across the country that are increasingly taking on a political dimension.
Iran’s central bank has eased foreign exchange rules in response to the sanctions, allowing the dollar to be traded in secondary, often black markets. Local agencies reported markets showing a positive response to the change in policy. The rial recovered some of its value against the dollar on Tuesday, but it was too soon to say how the policy will play out in the long run.
Iran’s parliamentary speaker, Ali Larijani, said the country could benefit from the new sanctions by focusing on internal renovation of the economy.
“By focusing on the domestic economy, reforming its structure and facilitating investment, the enemies cannot talk to Iran like that from now on because Iran’s resilience is increasing and this situation offers a good prospect for the country,” he said late on Monday, according to the semi-official Tasnim news agency.