The European Commission Announces Measures to Block U.S. Sanctions Against Iran

On Friday, May 17, the European Commission announced that it has begun the process of reinstating "blocking regulations" to protect the interests of European companies in Iran against U.S. sanctions. According to the Commission's statement, released a day after the meeting of the Union's leaders in Sofia, the list of U.S. sanctions against Iran falls under the "blocking regulations" established in 1996. These regulations were initially created to protect European companies operating in Cuba from U.S. sanctions. European officials have stated that the recourse to "blocking regulations" aims to neutralize the U.S. withdrawal from the JCPOA and the imposition of secondary sanctions against Iran; the U.S. intends to target Iran's oil sector and financial transactions with secondary sanctions over a 90-day and 180-day period. The "blocking regulations" prohibit EU companies from complying with U.S. sanctions and do not recognize any court ruling for the enforcement of U.S. penalties. These regulations, which were established in the 1990s to counter U.S. sanctions against Cuba, have never been officially implemented. The European Commission states that the planned measures will be implemented within two months unless the European Parliament or European governments officially reject these regulations. At the same time, these measures could be implemented even sooner than the two months if they receive strong political support. The European Union, which was once Iran's main trading competitor and the second-largest buyer of Iranian oil, halted its biting economic sanctions against the Islamic Republic following the Iran nuclear deal with world powers. In 2016, following the implementation of the JCPOA, Iran's exports to Europe, primarily consisting of oil and petrochemical products, grew by 344% compared to the previous year, reaching over 5.5 million euros. On the other hand, European investment in Iran, mainly from Germany, France, and Italy, has exceeded 20 million euros since 2016, covering various sectors including aerospace and energy. However, the recent U.S. decision to withdraw from the JCPOA and reinstate sanctions has complicated the situation for European companies operating in Iran, and some major European firms have stated that they are considering halting their activities in Iran in light of the renewed U.S. sanctions. Other measures proposed by the European Commission include encouraging European countries to transfer money to Iran's central bank and initiating the legal process for granting loans to European projects in Iran by the European Investment Bank. The European Commission is also considering providing financial assistance to Iran as part of its efforts to fulfill European commitments under the JCPOA. The Commission's statement regarding the transfer of money to Iran's central bank, known as a one-off payment, noted that "this approach could help the Iranian government receive oil-related revenues if U.S. sanctions are imposed that could target European companies engaged in oil transactions with Iran." Additionally, according to the European Commission, the EU energy commissioner is set to visit Tehran for three days starting Friday to assure Iranian officials regarding the implementation of these measures and bilateral relations in the energy sector.