In­vestors eye de­ci­sion on Iran deal

De­cer­ti­fi­ca­tion could trig­ger back­lash aimed at U.S. com­pa­nies

USA TODAY International Edition - - NEWS - Jim Michaels @jim­michaels USA TO­DAY

“Much more is at stake for the en­tire in­ter­na­tional com­mu­nity than the na­tional in­ter­ests of Iran.”

Ali Ak­bar Salehi, Iran’s nu­clear chief

A de­ci­sion by Pres­i­dent Trump to back out of the Ira­nian nu­clear agree­ment could de­rail bil­lions of dol­lars in Western in­vest­ment head­ing to­ward Iran and trig­ger Euro­pean eco­nomic re­tal­i­a­tion against U.S. busi­nesses, an­a­lysts say.

“It sig­nals the break­down of con­sen­sus be­tween the U.S. and its Euro­pean al­lies,” said Has­san Hakimian, di­rec­tor of the Lon­don Mid­dle East In­sti­tute.

Trump is ex­pected to an­nounce his de­ci­sion this week to de­cline to cer­tify the nu­clear deal. The 2015 agree­ment, signed by Pres­i­dent Obama, along with Bri­tain, France, Ger­many, Rus­sia and China, lifts in­ter­na­tional sanc­tions on Iran in re­turn for a long-term sus­pen­sion of its nu­clear development pro­gram.

Since the deal was signed, Euro­pean coun­tries have “been lin­ing up like mad” to trade with Iran, Hakimian said. If the United States takes ac­tion that slows the in­vest­ment pour­ing into Iran, Euro­pean gov­ern­ments would an­tag­o­nize U.S. al­lies who could re­tal­i­ate with trade re­stric­tions against Amer­i­can firms.

Euro­pean gov­ern­ments have urged the United States to stand by the agree­ment. And Ira­nian nu­clear chief Ali Ak­bar Salehi on Tues­day crit­i­cized Wash­ing­ton’s re­cent “delu­sion­ary neg­a­tive pos­tures” and hoped the deal would not fall apart.

“Much more is at stake for the en­tire in­ter­na­tional com­mu­nity than the na­tional in­ter­ests of Iran,” he said, adding that he didn’t want the pact to fall apart.

A de­ci­sion to “de­cer­tify” won’t mean an im­me­di­ate end to the agree­ment, which Trump has called the “worst deal ever.” Congress would have 60 days to reim­pose sanc­tions, but an­a­lysts say such a vote is un­likely, ef­fec­tively leav­ing the agree­ment in place.

De­cer­ti­fy­ing means the U.S. be­lieves Iran is not com­ply­ing with the nu­clear agree­ment, even though there’s no clear ev­i­dence of that, or that the deal is not in the na­tional in­ter­est. Trump has sig­naled he will back out of the ac­cord be­fore an Oct. 15 dead­line for cer­ti­fy­ing that Iran is com­ply­ing with the terms, which United Na­tions in­spec­tors say is the case.

The Trump ad­min­is­tra­tion may try to use the 60 days to ne­go­ti­ate an agree­ment that it con­sid­ers more fa­vor­able. The agree­ment, for ex­am­ple, does noth­ing to limit Iran’s bal­lis­tic mis­sile development or pun­ish it for sup­port­ing Ha­mas and Hezbol­lah, both con­sid­ered ter­ror­ist groups. Other sanc­tions im­posed by the United States pun­ish Iran for its sup­port of in­ter­na­tional ter­ror groups.

Even un­der that sce­nario, the cli­mate of un­cer­tainty sur­round­ing the deal would likely make com­pa­nies in Europe, Ja­pan and else­where think twice about investing in Iran for fear of vi­o­lat­ing reim­posed sanc­tions.

“De­cer­ti­fi­ca­tion will be seen as a warn­ing shot that their in­vest­ment may come un­der fire from sanc­tions,” said Richard Nephew, an an­a­lyst at the Cen­ter on Global En­ergy Pol­icy.

Trump has an­other op­por­tu­nity to scut­tle the deal in Jan­uary, the next dead­line for waivers that have to be is­sued ev­ery 120 days to pre­vent old sanc­tions from be­ing reim­posed.

“He’s go­ing to have lots of bites at the ap­ple,” Nephew said.

U.S. com­pa­nies haven’t ben­e­fited much from the lift­ing of sanc­tions, since the U.S. trade em­bargo re­mains in ef­fect. Most of what was lifted were “sec­ondary sanc­tions” to pe­nal­ize nonU.S. com­pa­nies who did busi­ness with Iran.

One ma­jor ex­cep­tion is Boe­ing, which has agree­ments worth about $19 bil­lion to sell air­craft to Iran. The U.S. did lift some pri­mary sanc­tions for the avi­a­tion in­dus­try.

But Euro­pean coun­tries have flooded Iran with trade del­e­ga­tions ea­ger to get a chunk of a po­ten­tially lu­cra­tive mar­ket.

“It could put Euro­pean busi­nesses on a col­li­sion with the Trea­sury De­part­ment if sanc­tions are reim­posed,” Hakimian said. Even the threat of sanc­tions may be enough to make busi­nesses in Europe or Asia hes­i­tant about investing.

“De­cer­ti­fi­ca­tion would send a pretty neg­a­tive sig­nal to those com­pa­nies and their cor­po­rate boards,” Nephew said.

In re­sponse, Euro­pean na­tions may look to re­tal­i­ate against Amer­i­can firms. “Even the con­ver­sa­tion (about de­cer­ti­fi­ca­tion) is go­ing to make things re­ally hard if you are a U.S. busi­ness op­er­at­ing in Europe,” Nephew said.

Wil­liam McGlone, an ex­pert in sanc­tions law, is skep­ti­cal that the Euro­pean Union would agree on re­tal­ia­tory sanc­tions.

But he said re­cent de­vel­op­ments may have height­ened the worry among Euro­pean com­pa­nies con­sid­er­ing investing in Iran. “There’s def­i­nitely a chill­ing ef­fect out there and it may be in­creas­ing,” he said.


Pres­i­dent Trump may back out of the Iran nu­clear deal, which makes peo­ple in Tehran skep­ti­cal about Amer­ica.

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