Europe, Iran defy Donald Trump, pledge to preserve nuclear deal

Europe and Iran, defying the Trump administration, pledged Monday to preserve the 2015 nuclear deal and defeat intensifying U.S. sanctions, but are having trouble finding a nation willing to host the system that operates the financial workaround, according to leading diplomats.

The showdown highlights the intensifying clash between the Trump administration’s coordinated campaign to squeeze Tehran as part of the U.S. withdrawal from the 2015 deal — and Europe’s fears of running afoul of the tightening noose of U.S. secondary sanctions on Iran, which is OPEC’s third-largest oil producer.

On Monday in Brussels, European Union and Iranian officials discussed what diplomats have called a “special purpose vehicle” (SPV) that could serve as a type of financial clearinghouse that matches purchases of EU goods with Iranian oil and gas sales in a type of barter arrangement, thus avoiding the need to use U.S. dollars or the U.S. financial system.

Earlier this month, the Trump administration reinstated harsh sanctions on Iran’s shipping, financial and energy sectors, leaving proponents of the Obama-era deal, including Britain, China, France, Germany, Russia and the EU, struggling to figure out how to maintain economic ties with Tehran and keep Iran from leaving the nuclear deal.

In a joint press briefing with EU Energy Commissioner Miguel Arias Canete in Brussels, Iran’s Atomic Energy Organization chief Ali Akbar Salehi warned of dire consequences if the nuclear deal could not be salvaged. Iranian officials say they have lived up to the terms of the 2015 deal negotiated in part with the Obama administration, but will not be held bound to the pact if the promised economic benefits do not materialize.

While acknowledging that the EU was “doing its best,” Mr. Salehi added that “if words are not turned into deeds, … the situation would be unpredictable.”

Mr. Canete said that sidestepping the U.S. sanctions is “a hugely complex and unique undertaking,” adding that “nobody should have any doubt on the level of political ambition and determination by the member states involved, in particular France, Germany and the U.K. to swiftly operationalize the SPV.”

Earlier this month Luxembourg emerged as a possible host for the clearinghouse because it oversaw a similar effort during the 2009-2012 eurozone crisis. Belgium and Austria were also mentioned as options.

But thus far, no European country has stepped to host the SPV, leaving a host of questions over what will happen if nobody does.

Monday’s meeting found EU diplomats increasingly pessimistic, with one reportedly calling the last-ditch talks to find a sanctions workaround “symbolic,” while another dismissed the SPV option as insignificant, according to Reuters,

“The prospects are pretty grim,” an EU official told the news service.

Earlier this month while traveling through Europe to seek support for the re-imposed sanctions, the Treasury Department’s top sanctions official brushed aside talk of creating workarounds to evade penalties.

“I’m not concerned about the SPV actually at all,” said Treasury Undersecretary for Terrorism and Financial Intelligence Sigal Mandelker on a stop in London.

“I do believe that we’re going to find additional mechanisms by which we can work together,” she added, “and I very strongly believe that we have a common picture with our European allies concerning threats coming out of Iran.”