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European Union to activate statute to shield firms from USA sanctions against Iran

European Union to activate statute to shield firms from USA sanctions against Iran

The Commission said in a statement it had 'launched the formal process to activate the Blocking Statute by updating the list of US sanctions on Iran falling within its scope, ' referring to an European Union regulation from 1996.

In a clear response to the U.S. move, EU Commission President Jean-Claude Juncker has announced that the bloc plans to apply a 1996 law that would prohibit European companies from complying with any sanctions the United States will reintroduce against Tehran, Deutsche Welle reported.

The measures announced in Brussels will come into force within two months unless the European Parliament or the EU governments formally reject them.

The EU launched formal steps Friday aimed at sparing European firms fallout from U.S. sanctions on Iran as part of efforts to preserve the nuclear deal with Tehran.

Dalia Grybauskaite, the president of Lithuania, noted that Europe does not want a trade war with the United States over the Iran deal.

"We will not negotiate with the sword of Damocles hanging over our heads", Mr. Juncker said.

"We now need to act and this is why we are launching the process to activate the "blocking statute" from 1996".

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European Union foreign policy chief Federica Mogherini, however, said she could not talk about giving Iran guarantees for the economic benefits of the 2015 agreement.

And now that Europe has openly rebelled against Trump's sanctions, one wonders how long before the selling in oil resumes, as it is becoming increasingly clear that unlike 2012, Europe - and most of Asia - will continue buying Iranian oil, suggesting that the decline, if any, in Iranian exports will be a few hundred thousands barrels at most, a number which we expect will shrink to 0 as Iran offers increasingly preferential prices to its non-USD paying clients, especially now that Asian oil demand is soaring.

In recent days, several European companies have announced their intention to wind down business in Iran, raising questions about how much the EU can deliver on its promises. "We are looking for technical solutions to protect our companies", Ms. Grybauskaite said.

The Iran nuclear agreement, known as the Joint Comprehensive Plan of Action (JCPOA, ) signed by Tehran and the five permanent members of the UN Security Council - the US, France, Britain, Russia and China - plus Germany on July 14, 2015, imposes strict restrictions on Iran's nuclear program in return for the loosening of economic sanctions.

What was the reaction to Trump's decision?

Much to Europe's displeasure, foreign companies doing business with Iran are also at the crosshairs of the US sanctions.