The European Commission will launch the process of activating a law that bans European companies from complying with US sanctions against Iran, after Washington pulled out of the landmark 2015 nuclear deal.
Jean Claude Juncker, president of the European Commission, said on Thursday the commission has a “duty to protect European companies” from American sanctions.
“We now need to act and this is why we are launching the process to activate the ‘blocking statute’ from 1996. We will do that tomorrow [Friday] morning at 10:30,” he told a news conference in the Bulgarian capital, Sofia, after a meeting of EU leaders.
The EU wants to salvage the nuclear deal and its blocking statute is the most powerful tool at its immediate disposal, as it means EU companies won’t have to comply with US sanctions, and doesn’t recognise any court rulings that enforce American penalties.
Iran will not compromise on self-defence capability
The announcement comes after US President Donald Trump pulled Washington out of the international deal with Iran, which placed limits on its nuclear programme in exchange for sanctions relief.
Britain, France, Germany, China and Russia were signatories of the 2015 pact and have opposed the US pullout.
But companies around the world now face a difficult choice as Washington has threatened to punish businesses that violate US sanctions by dealing with Iran.
The European Commission‘s blocking statute is seen by European governments more as a political weapon than a regulation, because its rules are vague and difficult to enforce, serving mainly as a warning to the US.
The international reach of the US financial system and the US presence of many European companies also raise questions about its effectiveness.
Juncker said the commission has decided to allow the “European Investment Bank to facilitate European companies’ investment in Iran.” That could allow more euro-dominated loans to Iran.