What Do We Know About the European Commission's Measures to Preserve the JCPOA?

Following the United States' withdrawal from the JCPOA, other countries involved with Iran in this agreement state that they still seek to remain in the JCPOA and preserve this agreement. However, Tehran has warned that if Europe cannot guarantee Iran's benefits from the JCPOA, it will exit the agreement and continue its nuclear program without restrictions. Now, the European Union is trying to implement practical measures following discussions with Iranian officials so that European economic actors can continue their activities in Iran despite the return of U.S. sanctions. But what are the details of the European Commission's actions in this regard and what are their various aspects? At 10:30 AM Central European Time, the European Commission initiated a four-part process that may allow it to continue the implementation of the JCPOA and keep Iran in this agreement, which limits its nuclear program. Although, as an unnamed EU official stated, the tools at Europe's disposal are not a definitive weapon, if fully utilized, they could mitigate the impact of the returning U.S. sanctions. The program outlined by the European Commission includes four parts: the use of the Blocking Statute, the use of the European Investment Bank, continued and strengthened cooperation and assistance to Iran in various fields, and examining the possibility of a one-time transfer of money to the Central Bank of Iran. However, each of these four actions, which began on Friday, has a complicated path ahead. 1. The Blocking Statute In recent days, there have been numerous references to the Blocking Statute. This law dates back to the 1990s when it was established in the EU due to the imposition of two extraterritorial sanctions by the U.S. related to Cuba and the Helms-Burton Act (sanctions on Libya and Iran). By adopting the Blocking Statute, Europeans declared that European companies would be prohibited from complying with U.S. sanctions. Such a law encouraged the U.S. to continue political dialogue, and thus exactly thirty years ago, in May 1998, Europe and the U.S. reached an agreement that the Blocking Statute would not be implemented. Now, however, Europe has decided to implement this law again due to the return of U.S. sanctions and their impact on European companies, and has begun working on an amendment to include sanctions against Iran. According to the Blocking Statute, decisions of courts outside the EU are not recognized, and companies that have suffered damages due to what is considered a violation of sanctions by the U.S. can seek compensation. Meanwhile, each member state can determine within its jurisdiction whether to impose penalties on the sanctioning party and the companies violating the Blocking Statute. According to Article 5 of the Blocking Statute, a European company may be punished by both the U.S. and the EU, but how this will be practically applied is something EU officials currently do not want to comment on. The Blocking Statute also allows for exceptions in cases where justified. For the Blocking Statute to be implemented, a multi-week process must still be followed, and the 28 EU member states must turn the political green light into formal action. After approval in the Commission in the first week of next month, the European Council and Parliament have about two months to raise any objections, and if no objections are raised, the Blocking Statute will come into effect one day before the return of U.S. sanctions on August 4, 32 years after its initial formation. 2. Removing Barriers for the European Investment Bank The second action taken by European allies, which was initiated on Friday, is the official process of removing barriers so that the European Investment Bank can take on the responsibility of financing projects in Iran. The European Investment Bank, based in Luxembourg, supports projects within the Union and also acts outside its borders under a mission defined as "external lending mission" established in 2014. In this context, Iran has been defined as a potential eligible country that is now set to become an actual one with the recent decision of the Commission. However, the European Investment Bank is connected to the U.S. financial system, issuing bonds in New York, and its cooperation with Iran could be challenging. An EU official stated that, as with other countries where the European Investment Bank operates, measures for "due diligence" and "transparency" must also be considered for Iran. To finalize the activities of the European Investment Bank, legal steps similar to the first part must be followed. 3. Confidence-Building Measures Another action that the Commission has begun to take steps towards is what it calls confidence-building measures. In this regard, cooperation with Iran in various fields will continue and be strengthened. The visit of Energy Commissioner Miguel Arias Cañete to Iran is scheduled to take place in the coming days. According to European officials, one of the issues that will be discussed during this visit is facilitating payments for oil purchases from Iran and how to return Iran's investments currently within the EU. In this context, as an EU official stated, the use of euros instead of dollars is among the proposed ideas, although the technical details are not yet clear. 4. One-Time Payment to Iran by 28 Members In its statement on Friday, the European Commission described its fourth action as encouraging member countries to explore ways to make a one-time transfer of money to the Central Bank of Iran. The Commission states that such an approach could help Iranian officials receive revenues from oil sales. One of the fundamental challenges Iran faced during the pre-JCPOA sanctions was the issue of banking transactions and SWIFT's compliance with international sanctions. Lack of access to SWIFT made it impossible for Iranians to use the banking system. Now, an EU official says discussions will be held with SWIFT in this regard, but ultimately it will be that company's decision whether to comply with U.S. sanctions or not. European leaders, including French President Emmanuel Macron, have recently stated that they cannot compel European companies to defy U.S. sanctions or invest in Iran. Another challenge that Europe still has no answer for is the fate of Airbus's contract with Iran for the delivery of passenger aircraft. After the JCPOA was implemented, Airbus received a license from the U.S. Treasury for this purpose, but now the U.S. says it intends to withdraw this license. EU officials say the dimensions of this U.S. decision are still unclear to them. The political decision of the 28 EU member countries, which now must turn into practical actions, ultimately aims to encourage small and medium-sized enterprises to continue the activities they began in Iran over the past two years. The EU states that in this regard, it will continue its dialogue with U.S. officials to clarify the scope of the returning sanctions. Although Brussels must also continue its technical and political discussions with the Iranian side to encourage Tehran to remain in the JCPOA in exchange for the EU's efforts and to keep its nuclear program limited under this agreement.