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EghtesadOnline: With a reputation of a slow-working institution that only gets its act together in face of an urgent crisis, the speedy reaction of the EU to preserve the nuclear deal with Iran and protect the interests of European companies investing in Iran has taken even experienced observers by surprise.

Perhaps this is another proof, as economic history professor Paola Massa writes in an anthology about the House of European History, that trade has remained a cohesive force even when political and military conflicts threatened to tear Europe apart, reads an article published by The Brussels Times. According to Financial Tribune, excerpts follow:

At an informal meeting in Sofia, Bulgaria, on May 16, European Commission President Jean-Claude Juncker and High Representative of the European Union for Foreign Affairs and Security Policy Federica Mogherini presented proposals to EU leaders on how to protect EU’s economic interests in the face of US sanctions against trade with Iran. Reportedly, they received unanimous backing for going forward.

European Council President Donald Tusk at the press conference in Sofia talked about the unpredictability of the US that withdrew from the Joint Comprehensive Plan of Action, the formal name of the Iran nuclear deal.

Juncker said it was a duty to protect European businesses, “especially SMEs”.

“In Sofia, we saw a show of European unity. As long as the Iranians respect their commitments, the EU will of course stick to the agreement of which it was an architect,” he said.

 List of Measures

Fuelled by a sense of being bullied by the US administration, EU announced already on May 18 a number of measures to defend its economic interests and to keep Iran in the deal. The aim is to have most of the measures in force before August 6, 2018, when the first batch of US sanctions will take effect.

Whether the measures will work and how much they will cost the EU budget is apparently not clear at this stage.

The most uncertain measure is launching the formal process to activate the so-called blocking statue from the 90s. The statue forbids EU companies from complying with the extraterritorial effects of US sanctions and allows companies to recover damages arising from such sanctions.

At a technical briefing, commission experts admitted that the statute is vaguely drafted and that a European company can end up with being fined by the EU for not breaking the US sanctions against Iran.

Another measure is launching the formal process to remove obstacles for the European Investment Bank to decide under the EU budget guarantee to finance activities outside the EU, in this case Iran. Normally, the budget guarantee has not been activated in other countries, but Iran might be different.

The commission is also encouraging member states to explore the possibility of one-off bank transfers to the Central Bank of Iran. This could help the Iranian authorities receive their oil-related revenues, writes the commission.

The commission did not lose any time and dispatched its energy commissioner, Miguel Arias Canete, to Tehran already during the weekend in a show of confidence building. Unusually for EU-Iran meetings, this time the meeting ended with a joint press statement on nuclear safety cooperation and “the strengthening of ties at all levels”.

 Trade Boosted by JCPOA

A spokesperson for the European External Action Service told The Brussels Times that the lifting of sanctions has facilitated trade and economic relations with Iran.

In 2016-the first fiscal year after the JCPOA implementation-EU imports from Iran reached €5.5 billion (+345%) and EU exports amounted to €8.2 billion (+28%).

In 2017, EU imports from Iran went beyond €10.1 billion and exports to Iran peaked at €10.8 billion. Still, this is only a fraction of total EU trade.

According to Eurostat, total extra-EU28 exports and imports with third countries amounted to €1.87 billion and €1.854 billion in 2017 respectively.

EU genuinely believes that keeping the deal is “essential for preserving peace in the region and the world”, as Juncker said.

German newspaper Die Welt reported on Sunday that a meeting will take place in Vienna on Friday with diplomats from EU, the United Kingdom, Germany, France, China and Russia to discuss next steps after the US withdrawal from the deal. Iran will apparently join the meeting.

 

Iran deal Iran nuclear deal EU Economic Interests in Iran