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U.S.-Iran trade irks Europeans as companies suffer

Europeans are complaining about rising American trade with Iran as their companies bear the brunt of the sanctions that the U.S. government pushed through against the Islamic Republic.

While Europe’s trade with Iran still dwarfs that of the U.S. by more than 20-to-one, American business has climbed 35 percent since 2011, compared with a 77 percent drop for the European Union, according to data compiled by Bloomberg. Some officials say it’s unfair that U.S. exports, mostly food, pharmaceuticals and medical devices, are rising at a time when European companies are making sacrifices and their banks are being fined for alleged dealings with sanctioned countries.

“The EU needs to address concerns with the U.S.,” said Marietje Schaake, a Dutch member of the EU Parliament who has served on the Foreign Affairs and International Trade committees.

“American sanctions vis-a-vis Iran have had undesired extra-territorial impact on EU business,” Schaake, who was in Iran in December, said in a written response to questions.

Divisions among the allies over measures against Iran may hurt any effort by the U.S. and Europe to partner in a new sanctions regime to punish Russia’s Vladimir Putin for his Crimea land grab, said Ian Kearns, director of the London-based European Leadership Network, a policy-advisory group led by former EU officials.

Once one of Iran’s main commercial partners, the U.S. has largely shut itself out of the $400 billion economy since ties broke off after the 1979 Islamic Revolution. In recent years, it has worked with allies to tighten sanctions, imposed over concerns that the Persian Gulf country is developing a nuclear bomb – an allegation Iran has repeatedly denied.

Jack Straw, the U.K.’s former foreign secretary and current co-head of a U.K. Parliamentary committee on Iran, said after talks with the International Atomic Energy Agency in Vienna last month that there’s a double standard that could “split the international community.”

French officials have this week cried foul over the targeting of BNP Paribas SA, the Paris-based lender that faces a U.S. penalty of as much as $10 billion to settle allegations it transferred funds for clients in violation of sanctions on Iran, Sudan and Cuba, according to people with knowledge of the investigation.

“The fine has to be proportionate and reasonable,” French Foreign Minister Laurent Fabius said on France 2 television Tuesday. “These figures are not reasonable.”

President Francois Hollande will discuss the BNP matter with Barack Obama when the U.S. president visits France this week, a French official said this week.

U.S. trade with Iran rose to $315 million last year from $234 million in 2011, according to U.S. Census Bureau data. During the same period, European trade fell to 6 billion euros ($8.2 billion) from 28 billion euros, European Commission figures show.

The shift happened as Europe followed the U.S. in ramping up sanctions in 2011 and 2012. While U.S. trade is near its 10-year average, European shipments are less than a third. At the end of last year, U.S. companies traded $1 with Iran for every $26 Europe did, compared with $155 two years earlier.

Europe’s main exports to Iran are industrial and agricultural products, according to the European Commission. The U.S.’s biggest exports last year were rice, pulp wood and dairy products, according the U.S. Census Bureau.

The U.S. isn’t seeking to give its companies advantages through its sanctions regime, a senior U.S. administration official said. European trade with Iran will probably see a bounce in the second quarter because of the interim deal reached in Geneva in November, which lifted some sanctions in return for curbs on nuclear work, said the official, who asked not to be named because of the issue’s sensitivity.

U.S. Treasury spokeswoman Hagar Chemali and EU spokesman Michael Mann declined to comment.

One of the European complaints is that U.S. companies get waivers from the authorities there that aren’t available to non-Americans. The Treasury grants licenses for U.S. businesses to trade permitted goods with Iran, and Straw said that creates an advantage over European companies that must make their own assessment of the legal situation.

The U.S. official said it’s not feasible to provide indemnities covering the thousands of transactions that occur every year, and that the U.S. has assured Iran’s trading partners they won’t be penalized for selling humanitarian goods.

Instead, non-American lenders must self-regulate. That’s the way the sanctions were designed to work, according to Juan Zarate, a former Treasury official who helped devise them.

 
A version of this article appeared in the print edition of The Daily Star on June 05, 2014, on page 5.

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Summary

Europeans are complaining about rising American trade with Iran as their companies bear the brunt of the sanctions that the U.S. government pushed through against the Islamic Republic.

While Europe's trade with Iran still dwarfs that of the U.S. by more than 20-to-one, American business has climbed 35 percent since 2011, compared with a 77 percent drop for the European Union, according to data compiled by Bloomberg.

U.S. trade with Iran rose to $315 million last year from $234 million in 2011, according to U.S. Census Bureau data.

At the end of last year, U.S. companies traded $1 with Iran for every $26 Europe did, compared with $155 two years earlier.

The U.S. isn't seeking to give its companies advantages through its sanctions regime, a senior U.S. administration official said.

The U.S. official said it's not feasible to provide indemnities covering the thousands of transactions that occur every year, and that the U.S. has assured Iran's trading partners they won't be penalized for selling humanitarian goods.


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