February 23, 2019
The European Union is trying to have it both ways on U.S. sanctions against Iran. It voices solidarity with the Trump administration’s concerns about the Islamic Republic’s rising threat to stability in the Middle East — most recently by expressing alarm at Iran’s ballistic-missile program and other “unacceptable behavior.” At the same time, EU leaders condone efforts by their member countries to skirt U.S. restrictions — as if to reassure the Iranian regime that trade can continue despite the U.S. decision to pull out of the 2015 nuclear deal.
Now, Germany, France and the U.K. have gone so far as to create a special purpose vehicle for trade with Iran that’s clearly designed to get around U.S. sanctions.
This strategy is doomed to fail. The Trump administration won’t be fooled by it — or to any extent mollified by European finger-wagging at the regime in Tehran.
It doesn’t even stand much chance of preventing Iran’s leaders from treating Europe with contempt. Just days after the EU’s missile warnings, Iran showed off an underground missile factory, and claimed to possess a new surface-to-surface ballistic missile.
The countries behind the SPV say it’s meant to allow European companies to supply Iran with life-saving medicines and essential foods. But if that were truly the aim, the Europeans could simply use a channel that Switzerland is setting up for the purpose — which the U.S. looks likely to approve. (Humanitarian trade is already exempt from sanctions, but skittish European banks and companies have nevertheless been afraid of being penalized by the Trump administration.)
The Europeans have pointedly not ruled out using the SPV for other, non-humanitarian trading. And Iran is clearly hoping it will be a conduit for all manner of goods and services denied it by the sanctions. The Trump administration can be expected to swiftly disabuse both sides of such notions.
U.S. officials would be right to insist that the SPV be shut down — if necessary, by threatening sanctions against any person, bank or company associated with its creation. And they’d be wise, at the same time, to endorse the Swiss effort, making it the only approved channel for humanitarian goods and services into Iran.
European countries should drop the SPV and spare the U.S. the trouble of calling their bluff.