PARIS (Reuters) - The European Union could put in place regulations to protect its firms doing business in Iran if the United States withdraws from the 2015 nuclear deal and restores extraterritorial sanctions, a senior EU official said on Thursday.

FILE PHOTO: Iran's national flags are seen on a square in Tehran February 10, 2012, a day before the anniversary of the Islamic Revolution. REUTERS/Morteza Nikoubazl/File Photo -

European countries have been looking to increase trade with Iran since Paris, Washington and other world powers agreed to lift most economic sanctions in 2016 in exchange for limitations on Tehran’s nuclear program.

But U.S. President Donald Trump on Jan. 12 vowed to restore U.S. sanctions unless France, Britain and Germany change what he calls the “worst deal ever” to his liking, effectively putting it on life support until mid-May.

While European nations have been adamant that they would stick to the deal should Washington pull out, Europe would need to find ways to limit any impact from possible U.S. sanctions to ensure their firms continue to do business with Tehran.

Denis Chaibi, head of the Iranian taskforce at the EU’s external action service, said one of the options would be to restore “blocking regulations”, a system from 1996 that would protect its firms.

“We are looking at a number of possibilities. It is not complicated to do it legally in that the legal instrument exists, but it doesn’t require a huge internal debate,” Chaibi told a Euromoney conference in Paris.

The regulations were agreed in 1996 as a countermeasure to the U.S. extraterritorial economic sanctions against Cuba, which EU governments argued benefited U.S. foreign policy interests at the expense of European sovereignty.

“It could be revived or put back, but only if it is clear that the U.S. is putting back sanctions with extraterritorial sanctions and that they are being applied. It can’t be done protectively,” he said.

The so-called extra-territoriality of U.S. sanctions law, which apply to foreign firms carrying out transactions in U.S. dollars even if the operations involve non-U.S. branches, allowed U.S. authorities to fine French lender BNP Paribas nearly $9 billion (5.34 billion pounds) in 2014.

Fears of such fines have been one reason preventing major international lenders and firms from returning.

Iranian officials have repeatedly said reluctance of major European banks to return to Iran has slowed its economic improvement, calling on European leaders to encourage businesses to return to Iran.

Iran’s Supreme Leader Ayatollah Ali Khamenei has praised European signatories of the deal for trying to keep it alive, but has demanded tangible reaction if the United States pulls out of the accord.

The European External Action Service (EEAS), set up in 2009, runs a network of diplomats around the globe, drafts policy papers for EU foreign ministers and is led by the EU’s top diplomat Federica Mogherini. </s> BRUSSELS (Reuters) - The European Union vowed on Monday to counter U.S. President Donald Trump’s renewal of sanctions on Iran, in a test of the EU’s ability to preserve a deal that saw Iran limit its nuclear ambitions in exchange for removing strict curbs on its economy.

As Washington’s so-called “snapback” sanctions are reinstated on Tuesday, a new EU law to shield European companies will also take effect to try to mitigate what EU officials say is their “unlawful” reach beyond U.S. borders.

Despite protests from European allies, U.S. Secretary of State Mike Pompeo said Washington would fully enforce the sanctions. EU diplomats said they were awaiting details on Monday on how they will be implemented.

The EU and other parties to the 2015 deal, China and Russia, are working to maintain trade with Iran, which has threatened to stop complying with curbs on its nuclear work if it fails to see the economic benefits of relief from sanctions under the deal.

“We deeply regret the re-imposition of sanctions by the U.S.,” the bloc said in a joint statement with the foreign ministers of France, Germany and Britain.

They pledged to work on preserving financial flows and Iran’s oil and gas exports - a lifeline of its economy.

EU officials hope the EU’s so-called blocking statute will mitigate the impact of U.S. sanctions for business, including by deterring U.S. authorities from enforcing some penalties.

But they admit it may not be enough to convince European firms to brave U.S. penalties in order to do business with Iran. Senior U.S. administration officials brushed off questions about the EU measure on Monday, warning the risks were real for companies working in Iran.

The new measure forbids EU persons from complying with U.S. sanctions or related court rulings and allows for firms to sue in court to recover potential damages from parties who withdraw from contracts due to U.S. sanctions.

“For those who have exposure, there is no panacea. What this does is it provides a deterrence. It means that sanctions that are discretionary may never be applied,” one senior EU official said, adding that firms have rarely been fined under U.S. secondary sanctions in the past.

“If they (sanctions) are applied, then that person can go to the court to recover that damage.”

Under the new rules, firms should apply for EU authorization to wind down operations in Iran if it is doing so to comply with U.S. sanctions but not if it is a business decision - a distinction that may be difficult to make.

The threat of EU penalties for European firms who fail to seek such a legal exemption for withdrawing from Iran due to U.S. sanctions has raised alarm among EU businesses that they could be penalized either way.

Seeking to ease concerns, EU officials have stressed the measure seeks to “free not force” firms to remain invested in Iran.

EU officials say they will be strict in reviewing requests for exemptions - wary to undermine its effect by granting too many authorizations.

A number of other countries have asked EU officials for details on the blocking regulations as they also explore ways to bypass sanctions and their effect on oil markets: “There is a clear interest around the world,” one EU official said.

With the U.S. administration taking a hard line on granting waivers from sanctions, many major companies from the oil and gas industry to car manufacturers and consumer goods firms have already announced that they are quitting the country.

German exports to Iran alone fell by four percent in the first five months of 2018 after rising by 16 percent last year, the German Chamber of Commerce and Industry (DIHK) said. </s> BRUSSELS (Reuters) - The European Union voiced deep regret on Monday over U.S. President Donald Trump’s renewal of sanctions on Iran, which will test the bloc’s ability to preserve a 2015 deal under which Iran curbed its nuclear activity in return for sanctions relief.

Despite protest from European allies, U.S. Secretary of State Mike Pompeo vowed to fully enforce the snapback of sanctions, whose implementation will be detailed by the U.S. administration on Monday.

The EU and other parties to the deal, China and Russia, are working to maintain trade with Iran, which has threatened to stop complying with curbs on its nuclear work if it fails to see the economic benefits of relief from sanctions under the deal.

One EU measure to mitigate the impact of U.S. sanctions, known as the blocking statute, will come into force on Tuesday.

“We deeply regret the re-imposition of sanctions by the U.S.,” the bloc said in a joint statement with the foreign ministers of France, Germany and Britain.

“The remaining parties ... have committed to work on, inter alia, the preservation and maintenance of effective financial channels with Iran, and the continuation of Iran’s export of oil and gas.”

The EU’s so-called blocking statute seeks to shield small and medium-sized businesses working in Iran.

It seeks to forbid EU persons from complying with U.S. sanctions, allow for the recovery of related damages and counter court rulings to enforce American penalties.

EU officials admit, however, that the measure does not go far enough in protecting big European firms from the risks of investing in Iran.

With the U.S. administration taking a hard line on waivers, many major companies have already announced that they are quitting the country. </s> The European Union is not taking renewed U.S. sanctions against Iran lying down.

The sanctions, which came into effect Monday at midnight east coast time, are the result of the U.S.’s withdrawal from the Iran nuclear deal, which came with a deadline for businesses to stop any business with Iran when it was announced in May. But a counter-measure from the EU came into effect at the same time. It’s a blocking measure designed to protect European countries and to keep at least some part of the nuclear deal alive.

The measure will allow European businesses affected by sanctions to sue the American government in European member state courts, and require European businesses to receive a waiver if they plan to activities in Iran. American businesses, by contrast, are required to apply for a waiver in order to activities in Iran.

The EU’s defiance of renewed American sanctions represents a serious escalation in tensions between the Trump administration and its European counterparts. EU officials have said the sanctions are “illegal” and vowed to thwart them. In an official statement, Trump promised “severe consequences” for those who violated sanctions, later reiterating the threat on Twitter.

Russia and China are also among the countries that support the Iran nuclear deal and oppose sanctions. This isn’t the first time the EU has opposed sanctions imposed by the U.S. The same mechanism was used to protect EU countries from sanctions against Cuba. </s> EU says encouraging trade with Iran is crucial to nuke deal

WELLINGTON, New Zealand (AP) — The European Union foreign policy chief Federica Mogherini says the EU is encouraging enterprises to increase their business with Iran, as that country has been compliant with their nuclear-related commitments.

Mogherini told reporters Tuesday during her trip to Wellington, New Zealand, that it's up to Europeans to decide who they want to trade with.

"We are doing our best to keep Iran in the deal, to keep Iran benefiting from the economic benefits that the agreement brings to the people of Iran because we believe this is in the security interests of not only our region, but also of the world. If there is one piece of international agreements on nuclear non-proliferation that is delivering, it has to be maintained," Mogherini said.

The United States reimposed stiff economic sanctions on Iran on Monday, ratcheting up pressure on the Islamic Republic despite statements of deep dismay from European allies, three months after President Donald Trump pulled the U.S. out of the international accord limiting Iran's nuclear activities.

Trump declared the landmark 2015 agreement had been "horrible," leaving the Iranian government flush with cash to fuel conflict in the Middle East.

Iran accused the U.S. of reneging on the nuclear agreement, signed by the Obama administration, and of causing recent Iranian economic unrest.

European allies said they "deeply regret" the U.S. action.

Trump said in a statement, "We urge all nations to take such steps to make clear that the Iranian regime faces a choice: either change its threatening, destabilizing behavior and reintegrate with the global economy, or continue down a path of economic isolation."

A first set of reimposed U.S. sanctions affect financial transactions that involve U.S. dollars, Iran's automotive sector, the purchase of commercial planes and metals including gold.

A second batch of U.S sanctions targeting Iran's oil sector and central bank are to be reimposed in early November.

Trump warned that those who don't wind down their economic ties to Iran "risk severe consequences."

European ministers said the Iran deal was crucial for Europe's and the world's security, and the European Union issued a "blocking statute" Monday to protect European businesses from the impact of the sanctions.

Mogherini, speaking at a news conference alongside New Zealand Foreign Minister Winston Peters, said the EU and New Zealand saw the need to maintain the nuclear deal with Iran, notwithstanding the U.S. withdrawal, and that she and Peters had discussed in detail how to keep open trade and financial channels with Iran.

"We are encouraging small and medium enterprises in particular to increase business with and in Iran as part of something (that) for us is a security priority," Mogherini said, explaining that trade is an integral part of the nuclear deal.

Trade between Iran and the EU "is a fundamental aspect of the Iranian right to have an economic advantage in exchange for what they have done so far, which is being compliant with all their nuclear-related commitments," Mogherini said. </s> PARIS/WASHINGTON/BRUSSELS - US officials are touring the globe to pressure countries to shun trade with Iran following Washington's withdrawal from a nuclear deal between Tehran and world powers, a move that undermines European efforts to save the accord, sources said.



US State and Treasury Department officials have traveled to Japan and this week US diplomats are in eastern Europe as Britain, France and Germany scramble to save the 2015 pact and convince Iran that they can continue to do business with Tehran.





"The Americans are on a roadshow and going everywhere. They are dogmatic," said a senior European diplomat. "We were clear and told them: if you are coming to tell to us how to apply American laws here then you're not welcome," the diplomat said.Ministers from the three European nations and the EU foreign policy chief have written to US counterparts urging them to protect EU companies working in Iran from getting caught up in Washington's new sanctions on the Islamic Republic.In the June 4 letter, the foreign and finance ministers singled out areas where they expected exemptions for EU firms, including pharmaceuticals, healthcare, energy, automotive, civil aviation, infrastructure and banking.The letter appeared to accept that despite their efforts to circumvent secondary sanctions, the US action could prevent the EU from continuing "meaningful sanctions relief to Iran."The US roadshow suggests there is little appetite in Washington to compromise."We will hold those doing prohibited business in Iran to account," US Under Secretary of the Treasury Sigal Mandelker said in a blunt speech on Tuesday.A second EU official said the US was sending out such teams across the world with a private warning against doing business with Iran.Washington last month said it would impose new economic penalties after pulling out of the accord that world powers struck with Iran under which Tehran agreed to curb its nuclear activities in return for sanctions relief.One EU official said the United States had also pressed the European Investment Bank, which has never done business in Iran, not to invest in European firms doing business there, despite a European Commission proposal it start doing so.The European powers are trying to come up with a package to ring-fence trade with Iran against renewed US financial sanctions to dissuade Tehran from quitting the accord.But the global reach of the US financial system, forcing companies to choose between two irreconcilable options - selling to Iran or to the vast US market - is driving home the limits of European efforts to shield their revived trade with Tehran.According to two diplomats, Andrew Peek, deputy assistant secretary of state with responsibility for Iran and Iraq, was in the Czech Republic on Tuesday and Hungary on Wednesday."The State Department delegation to Europe seeks to garner support for our global effort to pressure Iran and to explain our sanctions policy," an US State Department official said."We are making stops to many countries and will expand our diplomatic outreach efforts worldwide in the coming weeks. Meanwhile, our engagement with the E3 (Britain, France, Germany) is on-going, including during this worldwide diplomatic engagement."Peek briefed senior EU diplomats in Washington in May and warned the bloc to cut investments in Iran, telling EU officials doing business with Tehran helped fund its missile program and support for proxies in Yemen and Syria, diplomats said.One diplomat said the focus on Eastern European nations might be designed to pressure those EU countries most dependent on US security assistance in the face of a resurgent Russia.However, another diplomat suggested the push could backfire."This escalation and strategy of confrontation is a serious mistake and risks provoking even more chaos and instability in the Middle East," said a diplomat aware of the roadshow, saying US efforts had begun to "irritate quite a few of its allies." </s> LONDON — European firms that stop doing business with Iran because of reimposed U.S. sanctions could in turn be sanctioned by the E.U., a special adviser to the 28-country bloc’s top diplomat has warned.

“If E.U. companies abide by U.S. secondary sanctions they will, in turn, be sanctioned by the E.U.,” Nathalie Tocci, an aide to E.U. foreign policy chief Federica Mogherini, told Britain’s BBC Radio 4 on Monday night.

She characterized the measures as an attempt to “protect European companies.”

Tocci said the move was “necessary in order to signal, diplomatically, to the Iranians that Europeans are serious” about trying to salvage the Iran nuclear deal.

Hours earlier, the U.S. announced it was reintroducing sanctions on the Islamic republic.

The Trump administration’s decision to walk away from the landmark 2015 Iran pact signed by the five permanent members of the U.N. Security Council — the U.S., Russia, France, China and the U.K. — as well as Germany and the European Union, dismayed and angered longtime U.S. allies and vital trading partners.

German Chancellor Angela Merkel, French President Emmanuel Macron and British Foreign Secretary Boris Johnson traveled to the U.S. aiming to convince President Donald Trump not to ditch the deal, saying it was working and the only way to halt a regional arms race.

Nevertheless, Trump went ahead and announced on May 8 that the U.S. was withdrawing from what he called the “decaying and rotten” agreement.

Mogherini told reporters Tuesday that the E.U. was doing its “best to keep Iran in the deal, to keep Iran benefiting from the economic benefits that the agreement brings to the people of Iran.”

Tocci, the adviser, conceded that potential E.U. sanctions as part of the so-called blocking statute that came into effect on Tuesday were “politically and symbolically” an important step. The European measures are aimed at allowing firms to recover damages from bodies that enforce American sanctions, and ban companies from complying with the sanctions without E.U. permission.

In 2016, the European Union exported more than 8.2 billion euros ($9.7 billion) worth of goods to Iran, while importing almost 5.5 billion euros ($6.5 billion) from there, according to the European Commission. This is dwarfed by the $1.1 trillion the E.U.-U.S. trade represented in the same year.

Virtually all multinational firms do business or banking in the U.S., leaving European companies vulnerable to American sanctions punishing those operating in and with Iran.

Trump doubled down on his stance on Iran early Tuesday.

At midnight Monday, the U.S. began targeting oil-rich Iran’s automotive industry and civil aviation sector, as well as trade in gold and other metals in a set of punitive measures that had been eased under Trump’s predecessor, Barack Obama.

Trump has called for a wholesale overhaul of Iranian regional policies, such as an end to its military support for the Syrian government and regional militant groups like Lebanon’s Hezbollah. The 2015 pact did not curb these actions, one reason Trump has called the agreement “the worst deal ever.”

International inspectors say Iran has been complying with the deal to curtail its nuclear program.

The U.S. is preparing to reimpose the remainder of sanctions lifted as part of the agreement, and target Iran’s oil sector and central bank in early November.

America has also pressured allies to stop importing oil from Iran before the November deadline. Top buyers of Iranian oil include China, India, Turkey and South Korea.

The effects on Iran of Washington’s hardening stance have been stark, with Iran’s rial currency losing two-thirds of its value in six months.

Within hours of the White House announcement on Monday, international firms announced steps to avoid U.S. sanctions.

On Tuesday, German car manufacturing giant Daimler said it had suspended its activities in Iran.

“We will continue to closely monitor the political developments, especially in connection with the future of the nuclear agreement,” the company said in a statement.

Daimler’s announcement came after U.S. Ambassador to Germany Richard Grenell in May warned that firms that continued to do business in Iran would face consequences.

“U.S. sanctions will target critical sectors of Iran’s economy. German companies doing business in Iran should wind down operations immediately,” he tweeted.

In June, auto manufacturer PSA — which makes Peugeot vehicles — began taking steps to suspend its joint-venture activities in Iran while rival Renault has said it will adhere to the U.S. sanctions.

French oil giant Total has said it would quit a multibillion-dollar gas project if it cannot secure a waiver from the sanctions — a request the French government says had been rejected.

F. Brinley Bruton reported from London, and Andy Eckardt and Carlo Angerer from Mainz, Germany. </s> LONDON — European firms that stop doing business with Iran due to reimposed U.S. sanctions could in turn be sanctioned by the E.U., a special adviser to the 28-country bloc's top diplomat has warned.

“If E.U. companies abide by U.S. secondary sanctions they will, in turn, be sanctioned by the E.U.," Nathalie Tocci, an aide to E.U. foreign policy chief Federica Mogherini told Britain’s BBC Radio 4 on Monday night.

She characterized the measures as an attempt to "protect European companies.”

Tocci said the move was "necessary in order to signal, diplomatically, to the Iranians that Europeans are serious" about trying to salvage the Iran nuclear deal.

Hours earlier, the U.S. announced it was reintroducing sanctions on the Islamic republic.

The Trump administration's decision to walk away from the landmark 2015 Iran pact signed by the five permanent members of the U.N. Security Council — the U.S., Russia, France, China and the U.K. — as well as Germany and the European Union, dismayed and angered longtime U.S. allies and vital trading partners.

German Chancellor Angela Merkel, French leader Emmanuel Macron and British Foreign Secretary Boris Johnson traveled to the U.S. aiming to convince President Donald Trump not to ditch the deal, saying it was working and the only way to halt a regional arms race.

Nevertheless, Trump went ahead and announced on May 8 the U.S. was withdrawing from what he called the "decaying and rotten" agreement.

Mogherini told reporters Tuesday that the E.U. was doing its "best to keep Iran in the deal, to keep Iran benefiting from the economic benefits that the agreement brings to the people of Iran.”

Tocci, the adviser, conceded potential E.U. sanctions as part of the the so-called blocking statute which came into effect on Tuesday were "politically and symbolically" an important step to take. The European measured aimed to allow firms to recover damages from bodies that enforce American sanctions, and bans companies from complying with the sanctions without E.U. permission.

In 2016, the European Union exported more than 8.2 billion euros ($9.7 billion) worth of goods to Iran, while importing almost 5.5 billion euros ($6.5 billion) from there, according to the European Commission. This is dwarfed by the $1.1 trillion the E.U.-U.S. trade represented in the same year.

Virtually all multinational firms do business or banking in the U.S., leaving European companies vulnerable to American sanctions punishing those operating in and with Iran.

Trump doubled down on his stance on Iran early Tuesday.

At midnight Monday, the U.S. began targeting oil-rich Iran's automotive industry, civil aviation sector, as well as trade of gold and other metals are the first in a set of punitive measures had been eased under Trump’s predecessor Barack Obama.

Trump has called for a wholesale overhaul of Iranian regional policies, such as an end to its military support for the Syrian government and regional militant groups like Lebanon's Hezbollah. The 2015 pact did not curb these actions, one reason Trump has called the agreement "the worst deal ever."

International inspectors say Iran has been complying with the deal to curtail its nuclear program.

The U.S. is preparing to reimpose the remainder of U.S. sanctions lifted as part of the agreement, and target Iran's oil sector and central bank in early November.

America has also pressured allies to stop importing oil from Iran before the November deadline. Top buyers of Iranian oil include China, India, Turkey and South Korea.

The effects on Iran of Washington's hardening stance have been stark, with Iran's rial currency losing two-thirds of its value in six months.

Within hours of the White House announcement, international firms announced steps to avoid U.S. sanctions.

On Tuesday, German car manufacturing giant Daimler said it had suspended its activities in Iran.

“We will continue to closely monitor the political developments, especially in connection with the future of the nuclear agreement,” the company said in a statement.

Daimler's announcement came after U.S. Ambassador to Germany Richard Grenell in May warned that firms that continued to do business in Iran would face consequences.

“U.S. sanctions will target critical sectors of Iran’s economy. German companies doing business in Iran should wind down operations immediately,” he tweeted.

In June, auto manufacturer PSA — which makes Peugeot vehicles — began taking steps to suspend its joint-venture activities in Iran while rival Renault has said it will adhere to the U.S. sanctions.

French oil giant Total has said it would quit a multibillion-dollar gas project if it cannot secure a waiver from the sanctions — a request the French government says had been rejected.

F. Brinley Bruton reported from London, and Andy Eckardt and Carlo Angerer from Mainz, Germany. </s> The European Investment Bank 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 own lending arm underscores the limits of the bloc’s ability to shield trade with Iran from the reimposition of US sanctions after President Donald Trump abandoned the nuclear accord last month.

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, saying its business model “would be incompatible with ignoring possible sanctions against Iran.”

The bank’s fears that its ability to raise funds on international capital markets would suffer echoes the calculation made by other European firms quitting Iran rather than risk penalties and access to the much vaster US market. But the comment, the EIB’s first since the EU executive proposed it engage in Iran last month, is a particularly hard blow coming not from a commercial bank but from an institution driven by EU policy.

European Commissioners earlier on Wednesday agreed to enable the bank to work in Iran, where it has never before done business, as part of its response to Iran’s demands that it show proof of its commitment to the nuclear deal. It is still up to the EU’s governing board – made up of the finance ministers of the bloc’s 28 nations – to decide whether to do so. As EU sources exclusively told Reuters on Tuesday, the EIB is under pressure from the United States – where the bank raises much of its funds – to stay away from activities in Iran.

The United States has warned European firms to steer clear of commerce with Iran once sanctions on transactions in dollars with Iranian firms kick in from August. The EU also announced on Wednesday it will activate its blocking statute, a never-before used measure that would order EU firms not to comply with US sanctions.

EU officials admit, however, that while the measure may help protect small to medium-size EU firms with little US exposure, it is not designed to help big global companies. The only hope for those firms to stay in the Islamic Republic, they say, is to seek waivers from Washington’s sanctions. Ministers from Germany, France and Britain wrote to senior U.S. officials this week singling out key areas where they expected exemptions for EU firms, including pharmaceuticals, healthcare, energy, automotive, civil aviation, infrastructure and banking.

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A senior European External Action Service official says that the European Union, in order to protect its companies doing business with Iran, could implement "blocking regulations" based on a legal framework set up in 1996 for E.U. trade with Cuba, should the United States pull out of the 2015 nuclear deal and restore its sanctions.