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Europe Asks U.S. for an Exemption From Sanctions on Iran

The New York Times: In a letter to senior Trump administration officials, European foreign and finance leaders this week tacitly acknowledged that their efforts to preserve the West’s nuclear deal with Iran were failing.

In the letter, sent on Monday to the Treasury secretary, Steven Mnuchin, and Secretary of State Mike Pompeo, the European leaders cited “security interests” in requesting that companies in Europe be granted an exemption from United States sanctions that would be imposed as a result of President Trump’s decision to withdraw from the pact.

“In their current state, U.S. secondary sanctions could prevent the European Union from continuing meaningful sanctions relief to Iran,” said the letter, signed by the finance and foreign ministers of Britain, France and Germany, all signatories to the 2015 accord with Tehran, and by Federica Mogherini, the European Union’s foreign-policy chief, who oversaw the negotiations.

Without that sanctions relief, Iran has threatened to pull out of the deal. That “would further unsettle a region where additional conflicts would be disastrous,” the ministers argue, asserting that the deal was “the best means through which we can prevent a nuclear-armed Iran,” and that there appeared to be “no credible alternatives at this time.”

The letter was first reported on Wednesday by The Wall Street Journal and was then obtained by The New York Times.

The plea is considered unlikely to produce the relief the Europeans want, since the Trump administration’s stated intention is to pressure Tehran into agreeing to an entirely new set of negotiations that would encompass its ballistic missile program and its support for hard-line regimes and militias throughout the Middle East.

The Europeans have been working with the State Department for some time to try to persuade Mr. Trump to remain in the nuclear agreement, which he has consistently called “the worst deal in history.”

They proposed discussing parallel new sanctions on Iran for its missile program, its support of the Syrian government and its backing of the Houthi rebels in Yemen and of groups like Hamas, Hezbollah and Islamic Jihad elsewhere in the Middle East. But the Europeans failed to convince American officials that they could fix the so-called sunset provisions in the original deal, which allow Iran to resume various nuclear activities after a period of years.

Tehran has always denied that it ever intended to build a nuclear weapon, though Western intelligence agencies said Iran tried to do just that before abandoning the effort in 2003. While Iran continued to work on ballistic missiles, there has been no evidence found of a nuclear weapons program since that date.

On Tuesday, however, Iran announced that it was preparing its nuclear facilities to resume large-scale uranium enrichment and had built a factory for constructing advanced centrifuges should Europe fail to preserve the deal.

On Wednesday, the French foreign minister, Jean-Yves Le Drian, said that Iran’s announced intention to increase its enrichment capacity still left it within the limits set out in the agreement, but, he added: “It’s always dangerous to flirt with the red line.” So far, he told Europe 1 radio, the deal remained intact.

Iran’s leadership is divided, but some would prefer to stay in the deal even without the Americans, to avoid possible military strikes from Israel and from the United States and to try to upgrade the economy. But that prospect seems unlikely if European companies are denied a waiver from the “secondary” sanctions.

Iran negotiated the 2015 deal in order to get relief from those crippling secondary sanctions, which Washington is now reimposing and which would deny access to financial systems in the United States to any company doing business with Iran.

The Europeans have been discussing efforts to shield their companies or to persuade them to continue doing business in Iran, possibly by creating a separate European financing arm or by extending loans from the European Investment Bank. But on Wednesday, the bank said it could not afford to ignore the United States sanctions, because it needed to maintain access to capital markets.

Also on Wednesday, the European Commission updated its blocking statute, a mechanism that bans companies in the European Union from complying with extraterritorial legislation adopted by a third country. The mechanism, which dates from 1996 and has never been used, would go into effect two months from now in the absence of opposition from member states or the European Parliament. But few analysts expect it to have much impact, if any, even if it is adopted.

It is very difficult to persuade large companies with interests in the much larger American market to violate the sanctions or to act as guinea pigs in a trans-Atlantic scuffle over legal mechanisms when there is no certain outcome.

Without special exemptions from the secondary sanctions, French multinationals like the energy giant Total and the PSA Group, which makes Peugeot and Citroën vehicles, have already announced that they will pull out of Iran.

The European ministers asked the Americans for specific exemptions for companies, individuals and banks who invested in Iran after the deal went into effect on Jan. 16, 2016; for “key sectors,” like health care, pharmaceuticals, energy, autos and civil aviation; and for banking with the Central Bank of Iran. They also asked for extended periods to wind down their projects for companies that choose to leave Iran, and they made it clear that other requests for exemptions would be forthcoming, including from individual European companies.

The ministers say that their countries “share most of the concerns expressed by the U.S. regarding the status of Iran’s nuclear program after 2025, Iran’s ballistic missiles program and its destabilizing actions in the region.” But they assert that “preserving” the deal “is the best basis on which to engage Iran and address these concerns,” adding that, “As allies, we expect that the United States will refrain from taking action to harm Europe’s security interests.”

Unfortunately for the Europeans, perhaps, Mr. Trump does not seem to share their views on Iran, and he has proved not to be much swayed by appeals based on trans-Atlantic relations.

While it is not clear what he thinks will happen next, his national security adviser, John Bolton, wrote last month that Mr. Trump “decided that this deal actually undermines the security of the American people he swore to protect and, accordingly, ended U.S. participation in it.”

“This action reversed an ill-advised and dangerous policy and set us on a new course that will address the aggressive and hostile behavior of our enemies,” he added, “while enhancing our ties with partners and allies.”

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