Nuclear deal exit: As EU strives to maintain trade with Iran, will US sanctions have much impact?

In addition to effectively tearing up the Iran nuclear deal on May 8, President Donald Trump announced re-imposition of American sanctions in place before the landmark agreement. These covered the Islamic Republic’s energy, banking and other sectors, with a provision for penalising foreign businesses worldwide trading with or investing in Iran. This act of economic and diplomatic unilateralism undermining the Western alliance is welcome news for Russian President Vladimir Putin as well as Iran’s Supreme Leader Ayatollah Ali Khamenei.The premise of the nuclear deal – officially called the Joint Comprehensive Plan of Action, or JCPOA – signed by Iran, the five permanent members of the UN Security Council plus Germany and the European Union – was to let Iran rejoin the global economy in exchange for denuclearisation. Trump’s decision undermines the JCPOA’s foundation. Before his rash move on Iran, Trump had angered the 28-member EU by refusing to grant it exemption from the tariffs he imposed on steel and aluminum imports in March. An American president is authorised to take such action to protect national security. EU officials argued that their bloc is a US ally – all members but Sweden are members of Washington-led NATO – but to no avail.“We are witnessing today a new phenomenon: the capricious assertiveness of the American administration,” said Donald Tusk, president of the European Council, on the eve of the EU summit in Sofia, Bulgaria, on 16 May. “Looking at the latest decisions of President Trump, some could even think, ‘With friends like that, who needs enemies?’” After the summit Tusk announced that EU members agreed unanimously to stay in the agreement as long as Iran remains fully committed: “Additionally, the [European] Commission was given a green light to be ready to act whenever European interests are affected.”
Jean-Claude Juncker, president of the EU’s executive arm, the European Commission, said that to protect EU companies doing business with Iran, he would turn to a plan last used to shield European businesses active in Cuba facing sanctions: “the ‘blocking statute’ process.