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EU creates work-around for U.S. Iran sanctions

Credit: Reuters Studio
Published on January 31, 2019 - Duration: 02:12s

EU creates work-around for U.S. Iran sanctions

Europe has set up a mechanism to keep trading with Iran, despite U.S. sanctions and pressure on its allies.

But those sanctions are so all-encompassing that diplomats say only small, mostly humanitarian transactions will get through.

Robin Emmott and Lucy Fielder report.

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EU creates work-around for U.S. Iran sanctions

The EU has set up a workaround that skirts U.S. sanctions and allows some trade with Iran, despite U.S. pressure on its European allies to cease all such business.

Reuters' Robin Emmott, in Brussels, says Washington isn't thrilled by Europe's efforts, but it won't lose too much sleep either.

SOUNDBITE (English) REUTERS DIPLOMATIC CORRESPONDENT, ROBIN EMMOTT, SAYING: "There could be a way that this gets past Washington, because it focuses mainly on humanitarian trade, and the United States would live with that, because obviously their point is that they want to target what they call the Iranian regime, rather than ordinary Iranians." "Because U.S. sanctions are so all-encompassing, they can reach beyond U.S. frontiers and it's very difficult to get around them.

So it may be that this new trade mechanism can only deal in small amounts of trade, because it's a barter-like system." The move could also help keep alive the flailing joint 2015 nuclear deal.

France, Germany and Britain were key negotiators to what was seen as a huge EU foreign policy achievement.

They opposed U.S. President Donald Trump's decision to pull out last year.

But that hasn't stopped EU relations with Tehran worsening.

This month it slapped its first sanctions on Iran since the nuclear pact was agreed, after Iranian missile tests and after alleged assassination plots were uncovered on European soil.

SOUNDBITE (English) REUTERS DIPLOMATIC CORRESPONDENT, ROBIN EMMOTT, SAYING: "This isn't really a change of heart, this is basically what the EU diplomats like to call a two-track approach.

So they say to Iran look we will keep the deal alive but you must do more.

You want to stop your ballistic missile defense program, you want to curtail your role in Syria's civil war and you want to do what you can to bring Yemen's war to an end.

None of this is going down very well in Tehran, so there have been tensions." The risks of breaching U.S. sanctions have put European companies off the big deals with Iran they once hoped for.

And while Iran has welcomed this latest step, diplomats say it'll bring little relief to its sanctions-hit economy.

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