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As sanctions begin, Europe looks for work around to keep JCPOA alive

Meeting in Vienna (Austria) on 14 July 2015, the Foreign Ministers of the signatory countries of the Agreement announce the success of the negotiations.

The Joint Comprehensive Plan of Action (JCPOA) is seen as key to keeping the Iranian regime engaged and willing to talk regarding other issues, including its military actions in the region and human rights. In early May, however, the Trump administration shifted U.S. policy, withdrawing from the JCPOA and announcing that sanctions were going to come back into force. President Trump and his officials have given allies until November 4 to withdraw from buying Iranian oil or suffer the penalties.

In the past, the U.S. granted some waivers to the sanctions on purchasing limited amounts of Iranian oil, but the Trump administration appears to be unwilling to make such a concession this time around. These events are backing Europe into a corner, one where they are trying to keep Iran engaged, while not risking sanctions on their own governments and companies.

Trying to find the work around

The European Union (EU) is finalizing a plan to mitigate the punitive measures of the sanctions, some of which are scheduled to begin this month. The main weapon is a measure forbidding European companies from complying with the U.S. measures and giving them the ability to recover damages resulting from sanctions “from the person causing them”.

There are questions about the legality of this measure, particularly since its policy contradicts American policy so completely. The EU sees the JCPOA as an economic carrot for the regime and wants to hold the agreement in place to keep them following through on limited nuclear weapons development.

Federica Mogherini, the EU’s foreign policy chief, acknowledged that the way forward was complicated, because of the weight of the U.S. on the global economy and financial system, as well as the trade tensions between the U.S. and the EU over Trump’s decision to impose higher tariffs of European steel. The U.S. also rebuffed a request by Europe for a carve-out from the sanctions for critical industries, such as finance, energy, and health care.

Any punishment threatened by Europe on companies that choose to abide by the U.S. sanctions will pale in comparison to the penalties imposed by the U.S. for disregarding them. That means the European efforts will be largely symbolic, and unlikely to stop companies from moving away from doing business in Iran.

European face sanctions

European companies also face sanctions against their highest-ranking executives, exclusion from public procurement, and well as the financial opportunities lost due to the damage of their reputation in the U.S. marketplace. Plus, the blocking measure would be hard to enforce, as businesses could bring up a slew of reasons why they were leaving the Iranian marketplace unrelated to the U.S. sanctions.

Members of the Iranian resistance support the hardline policy of the U.S., seeing it as a means to galvanize the Iranian people, who are suffering under the regime with high inflation, unemployment, and stagnant wages. The rial also continues to plunge in value, making it difficult for many Iranians to care for their families. Protests are ongoing throughout the country, as Iranians call for changes in the economy and for social justice.

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