The European Union has updated legislation aimed at countering sanctions imposed by the United States on businesses operating in Iran as part of its pledge to uphold the nuclear deal after Washington pulled out.
The US announced its decision last month to exit the 2015 deal, which aims to prevent Iran from developing nuclear weapons in return for the lifting of sanctions that had stifled its economy.
Wednesday’s development came as the EU and the other parties to the deal vowed to stick to the agreement if Iran continues to implement it.
The European Commission, the executive branch of the EU, revised the so-called blocking statute – legislation that seeks to shield EU companies that continue doing business with Iran, and gives them a framework to recover any damages suffered as a result of US sanctions.
.@JunckerEU @EU_Commission takes next steps in upholding the EU's commitment to the #IranNuclearDeal and protecting the interests of European companies. #EUunityFirst https://t.co/dZg1WZpM5G pic.twitter.com/hSX1XesrvH
— Mina Andreeva (@Mina_Andreeva) June 6, 2018
It also authorised the European Investment Bank (EIB) to finance Iranian projects, while noting it was up to the bank to give the go-ahead for any investments.
EU governments and members of the European Parliament now have a period of two months to object to the two measures; otherwise, they will come into effect in early August, which is when the first round of US sanctions against Iran will take effect.
However, the EIB on Wednesday said it could not ignore US sanctions on Iran, rejecting the EU executive plan that it to do business there in an effort to save the 2015 nuclear deal.
The pushback from the European Union’s lending arm underscores the limits of the bloc’s ability to shield trade with Iran from the reimposition of US sanctions.
Despite its political role in supporting EU policy, the EIB said it “could not be the solution to the problem” of a push by the remaining parties to keep alive their promise of sanctions relief in exchange for curbs on Tehran’s nuclear programme.
“The EU bank is not the right tool,” an EIB spokesman told Reuters news agency, saying its business model “would be incompatible with ignoring possible sanctions against Iran”.
Germany, France and the United Kingdom also appealed to Washington not to punish European companies for doing business in Iran, in a letter sent to US Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin, dated June 4.
They requested exemptions for EU companies that struck deals in Iran after the nuclear deal came into effect, and for key sectors such as energy, civil aviation and infrastructure, as well as exemptions to maintain financing channels with Iran, among other things.
Besides the EU and the US, the Iran nuclear deal was negotiated by Britain, France, Germany, Russia and China. It was formally endorsed by the UN Security Council, incorporating it into international law.
Iran said on Wednesday it was in “preparatory works” to restart nuclear activities in the event of the failure of the 2015 accord.
In such a scenario, Iran could “restart its activities without any limits,” Iran’s ambassador to the International Atomic Energy Agency (IAEA) Reza Najafi told reporters on the sidelines of a meeting of its board in Vienna.
Iran is expected to top the agenda at the Group of Seven (G7) summit on Friday and Saturday in Canada, where seven of the world’s most-developed countries will come together to discuss policy.