European Investment Bank Opposes EU Plan for Activities in Iran

Reuters reported in an exclusive article that the European Investment Bank, under pressure from the United States, which provides most of its funding, has opposed the EU's plan for activities in Iran. The EU's aim with this plan is to protect European investments in Iran and to maintain the JCPOA against the resumption of US sanctions. The opposition from the EU's financial arm highlights the limitations of the EU in protecting companies against sanctions on Iran, which are set to be reinstated following the US exit from the JCPOA on May 7 this year. The European Commission is expected to approve the leaders' plan to encourage the European Investment Bank to support the activities of companies in the region in Iran on Wednesday, June 5. This bank has not yet engaged in any activities in Iran. This action is largely symbolic and is the EU's response to Iran's requests to demonstrate its commitment to upholding the JCPOA. Some European diplomats and sources within the European Investment Bank have stated that the European Commission's plan has raised concerns within the bank. They believe that such a plan could jeopardize the bank's multi-billion dollar funding programs. One European diplomat said, 'The bank is dissatisfied with the European Commission's plan because it sources part of its capital from the US financial market.' As one of the world's largest borrowers, the European Investment Bank borrowed about 56 billion euros from international financial markets last year. The bank is concerned that the US threat to reinstate sanctions on Iran may cause investor panic within the bank. Although Iran was potentially added to the list of eligible countries for the European Investment Bank's activities in March, elevating Iran's status requires approval from European governments and parliament. The EU wants this action to be completed before August 6, the date when US sanctions against Iran are set to resume. Even in that case, any agreement with Iran to commence activities in that country will depend on the decision of the board of the European Investment Bank, whose members are the finance ministers of the 28 EU member states. The European Investment Bank has not yet publicly commented on the European Commission's decision. The European Commission stated in a message sent to Reuters, 'This is a voluntary action, and the European Investment Bank is not obligated to take any action regarding it.' The bank currently avoids operating in countries that are on the high-risk list for money laundering, including Iran. About one-third of its loans are disbursed in dollars, indicating the extent of the influence of the US financial market. Another European diplomat told Reuters, 'This will not be easy. The European Investment Bank is fully aware of the risks posed by US sanctions for its operations.' Two EU sources indicated that the US government has tried through informal channels to encourage the bank not to accept the European Commission's plan. An EU official said, 'The US government is pressuring the bank not to operate in Iran by warning of the consequences of such a plan.' Following the US exit from the JCPOA, other signatory countries, including the three European powers—Britain, France, and Germany—are trying to preserve it. Europeans are focusing on maintaining the economic incentives of this agreement for Iran. The EU's energy chief visited Iran last month and told Iranian officials that the new role of the European Investment Bank and other measures would somewhat mitigate the impact of 'bad developments.' Some experts believe that the US government can use various tools and can deter the European Investment Bank from operating in Iran even without sanctions. They argue that the economic ties between the US and the EU are so intertwined that it seems unlikely that Europeans can utilize existing institutions for financial and commercial activities in Iran.