US looks set to lock horns with Europe over Iran nuclear deal

The Trump administration is apparently exasperated at the European Union’s bid to bypass US sanctions on Iran. Infuriated by the EU’s effort to save the Joint Comprehensive Plan of Action (JCPA) agreed in 2015 when Barack Obama was in the White House, Washington has threatened to punish any efforts seeking to circumvent the sanctions.

The US government is said to be putting the Europeans on notice, saying that if they try to bypass the sanctions on Iran, they will be subject to stiff fines and penalties. A senior Trump administration official who spoke on condition of anonymity about EU efforts to set up an alternative payment method to allow trade with the Iranians told the Associated Press that the US “will fully enforce its sanctions and hold individuals and entities accountable for undermining them.”

European leaders, however, are unfazed by the threats and are said to be marching forward with the plan, which, if implemented, could further strain trans-Atlantic relations. AP reported that a spokeswoman for EU foreign policy chief Federica Mogherini said that preparations for the alternative system are “at an advanced stage.”

The EU is working on an initiative that will enable payments from companies that want to trade with Iran and offer protection from US penalties. According to Bloomberg, the proposal could be presented as early as today. EU government envoys are said to be discussing the “three nation initiative” in Brussels and looking into the “positive impact on trade and economic relations with Iran.” A statement is expected soon.

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The Trump administration has deemed the back channel to be an attempt to evade its “maximum pressure” campaign against Iran. In the long term, the US is said to be concerned that the alternative money payment system could supplant the existing bank transfer system known as SWIFT and that other countries might try to route transactions through the European system to circumvent US sanctions.

The EU spokesperson for Foreign Affairs, Maja Kocijancic, said last week, “I hope that we can announce the launch very soon.” His remarks were echoed by France’s Foreign Minister. Speaking about the mechanism known as the “special purpose vehicle” (SPV), Jean-Yves Le Drian said it “should be implemented in the coming days.”

Under the 2015 nuclear deal between Iran and the G5+1 group of countries — the US, Russia, China, UK, France and Germany — the government in Tehran agreed to restricted its declared civilian nuclear power programme, widely seen in the West as a front for developing the means to make atomic bombs, in exchange for an end to international sanctions.

Trump pulled out of the agreement unilaterally last year, calling it “a bad deal”. Though it caused a rift between the US and its European allies, the decision was applauded by Israel and hawks in Washington who lobbied the White House vigorously to cancel the JCPA.