Trump Threatens Sanctions on European Allies

Yesterday, in my piece about Donald Trump blowing up the United States' participation in the Iran nuclear deal, I noted that Trump threatened sanctions against countries who provide assistance to Iran, potentially including European allies who remain in the deal.

This can't be stressed enough: These sanctions Trump is reimposing are largely secondary sanctions, meaning they target European and other companies that do business with Iran. So it's not just about a diplomatic dust-up between the US and Europe. It's a financial hit on Europe.

— Nahal Toosi (@nahaltoosi) May 8, 2018

As you may have noticed, Trump occasionally goes off-script, ahem. But the State Department later confirmed that targeting allies with sanctions is official U.S. policy.

State department briefing confirms this. Its about targeting the #EU (and Boeing). Every European country should be up in arms right now. Its time for #Europe to take a tough line. #Irandeal https://t.co/bAuINRwBxL

— Dina Esfandiary (@DEsfandiary) May 9, 2018

James McAuley at the Washington Post reports:

Beyond the major policy break with Washington, however, another rift loomed: European businesses that have moved into Iranian since the deal took effect.

The United States plan to reimpose sanctions on Iran could also spill over to European firms and others doing business in Iran — possibly raising risks for their U.S. access to the much larger U.S. market.

Moments after Trump's decision, Treasury Secretary Steven Mnuchin told reporters that these Europe-Iran business agreements will be voided. "The existing licenses will be revoked," he said.

In Germany, the U.S. ambassador, Richard Grenell, said via Twitter that "German companies doing business in Iran should wind down operations immediately."

Approximately 120 German companies operate in Iran with their own staff, and 10,000 German companies do business with Iran, according to the German-Iranian Chamber of Commerce.

Grenell's remark sent shock waves through Europe.

"It's incomprehensible that the activities of German companies should still suffer" given the E.U. commitment to the accord, said Erik Schweitzer, the head of the Association of German Chambers of Commerce and Industry, in a statement.

In a statement, the European Union said: "The E.U. has repeatedly stressed that the sanctions lifting has a positive impact on trade and economic relations with Iran. The E.U. stresses its commitment to ensuring that this can continue to be delivered." But the reality is:

European companies will likely respond to an ultimatum from Washington, political analysts said. Given the size of the U.S. market, and the power of U.S. banks, European companies would have comparatively little leverage.

"The E.U. can take steps to mitigate the impact of the sanctions, but overall, companies will be scared. They will also prioritize their businesses with the U.S.," said Luigi Scazzieri, a research fellow at the Centre of European Reforms, a Brussels-based think tank.

Which means that all the economic activity that helps underwrite a stable Iran will be withdrawn. If Iran implodes, that further destabilizes the region — which not only harms the people of Iran, but makes the world less safe and empowers Vladimir Putin, who exploits power vacuums left by destabilization.

Funny how every appalling decision by the Trump administration ends up seeming to work to Putin's favor, eh? What a coincidence.

The collusion continues to be right out in the open.