U.S. WARNS OF EXPANDING IRAN TRADE

The U.K. has said it will expand trade relations with Iran in the face of U.S. warnings that European firms face “painful” consequences if they continue to do business in the country.

Speaking hours after sweeping new sanctions went into force, Mike Pompeo, the U.S. secretary of state, warned businesses not to use a special channel being set up by the EU to allow ongoing trade with Tehran.

“I promise you that doing business with Iran in defiance of our sanctions will ultimately be a much more painful business decision than pulling out of Iran,” Pompeo said.

Downing Street Monday said Britain will continue to expand trade relations with Iran. In a statement the government said it encouraged U.K. firms to “take advantage” of opportunities with Iran and said work is being carried out on protecting businesses from the impact of secondary sanctions.

The U.K., France, Germany and the EU are eager to see businesses continuing to deal with Iran, and the European powers said they would push forward with a Special Purpose Vehicle (SPV), a financial mechanism designed to get around American -restrictions.