EU, others to sidestep US on Iran trade

The European Union, China and Russia backed a mechanism to allow “legitimate” business to continue with Iran, a plan aimed at sidestepping American sanctions and allowing international trade to continue unimpeded as President Donald Trump pursues his ‘America First’ agenda.

The push for such a channel, announced by EU foreign affairs chief Federica Mogherini in New York on Monday, reflects growing calls in countries such as France and Germany for the EU to adopt tools that will allow it to pursue its foreign-policy goals with less recourse to an unpredictable US ally. A chief catalyst was Trump’s decision to withdraw from the Iran nuclear deal even as world powers urged the US to stick to its mandate.

“In practical terms this will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran, and this will allow European companies to continue trade with Iran,” Mogherini said after meeting other signatories: the UK, France, Germany, Russia, China plus Iran. This will be “in accordance with European Union law, and could be opened to other partners in the world,” she said.

Trump reimposed the sanctions after quitting the Iran accord in May, and called on U.S. allies to comply. European companies including Daimler AG and Total SA have halted activity or backtracked on investment plans to avoid U.S. punishment, but France and Germany have repeatedly said that they support the Iran deal and want business with Iran to continue.

The decision to set up a special purpose vehicle to facilitate payments including for Iranian oil comes on the back of a new EU push for a stronger international role for the bloc’s own currency, the euro. Allowing transactions with Iran to go through will help the EU economy and businesses grow more independent from the dollar and the US economy.

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