EU Protests US Decision to End Iran Oil Waivers, Stresses Commitment to Nuclear Deal

By James Carstensen | April 24, 2019 | 6:25 PM EDT

E.U. foreign policy chief Federica Mogherini and Iranian Foreign Minister Javad Zarif. (Lennart Preiss/Getty Images)

Berlin (CNSNews.com) – The European Union is criticizing the U.S. decision to end waivers that had allowed a small group of countries to continue importing Iranian oil despite the restoration of U.S. sanctions.

Germany, France and Britain are meanwhile continuing to work on ways to bypass U.S. sanctions on Iran in general, by encouraging European companies to continue trading with Iran without risking U.S. punitive measures.

European Commission spokeswoman Maja Kocijancic said in Brussels on Tuesday that extending U.S. sanctions to countries buying Iranian oil “risks further undermining” the 2015 Iran nuclear deal.

The Joint Comprehensive Plan of Action (JCPOA) eased international sanctions in exchange for curbs on Iran’s nuclear program. President Trump last year withdrew from the deal, and restored unilateral U.S. sanctions.

When the U.S. measures targeting Iranian oil exports came into effect last November, eight countries (Turkey, China, Greece, India, Italy, Japan, South Korea, and Taiwan) were granted six-month waivers, giving them time to wean themselves off Iranian oil. The waivers expire next month, and the administration announced this week that they will not be extended.

“This decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue,” the White House said. The aim is to force the regime to change behavior in the region which the U.S. views as “malign.”

Germany, France and Britain are the E.U. participants in the JCPOA, along with Russia and China, as well as Iran itself.

French Foreign Minister Jean-Yves Le Drian said France was “determined” to continue implementing the JCPOA with its European partners, to ensure trade with Iran could continue.

Britain and Germany set up a mechanism called Instex (“Instrument in Support of Trade Exchanges”) to allow trade between Iranian and foreign companies while avoiding the U.S. banking system and currency. The aim is to give companies confidence that they can do business with Iran without risking U.S. sanctions.

Le Drian told a press briefing work on Instex was “progressing positively with a view to a near completion,” and that Iran must push ahead with its setting up of a mirror mechanism.

Armand Cucciniello, a former U.S. diplomat and political and foreign policy expert, said the E.U. was unlikely to change its stance. He noted that the three E.U. countries involved in the JCPOA were Europe’s most powerful economies, and that the E.U. has “stood to benefit tremendously from business deals” as a result of the nuclear agreement.

Cucciniello said the end of the waivers was not a surprise, and that the eight countries that sought exemptions had had the time to find alternative suppliers.

Five of the countries – Greece, Italy, Japan, South Korea, and Taiwan – have already ended or substantially reduced purchases from Iran. Turkey, India and China appear likely to continue buying the oil, however.

Turkish Foreign Minister Mevlut Cavusoglu has expressly said his country does not accept the U.S. stance, although Cucciniello said if Turkey continues to buy Iranian oil it risks jeopardizing a relationship with the U.S. that is already strained over its purchase of Russian surface-to-air missile systems.

Anna Bradshaw, a partner at international law firm Peters & Peters Solicitors said oil imports were likely to continue, albeit at reduced levels.

“There are two ways that these imports may continue: overtly, through routes not involving U.S. persons or the U.S. financial system, and covertly, through various arrangements designed to evade or circumvent U.S. sanctions,” she said.

On the E.U. countermeasures, Bradshaw said they may have limited impact beyond their symbolic value, noting that there was little evidence that an E.U. “blocking statute” had encouraged E.U. operators to continue trading with Iran.

She also said once Instex does become operational, it would be of limited assistance to companies that are not in the E.U.

Henry Rome, an analyst at the Eurasia Group consultancy, wrote in a recent research note that Iran’s biggest oil customers are China and India and predicted that “the U.S. is unlikely to threaten sanctions against Chinese or Indian oil refiners or banks.”

The State Department stressed this week, however, that there would be no exemptions – and that no grace periods would be given beyond the May 2 waiver expiration date.

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