Efforts by European nations to find ways for businesses to work around United States sanctions on Iran are unlikely to succeed.
Diplomats and experts say those efforts are likely to face difficulties after the Iranian government’s decision to violate its 2015 nuclear deal with world powers. The International Atomic Energy Agency reported on Monday that Iran breached the agreed limit on its supply of low-enriched uranium.
The experts say the financial mechanism, developed by European nations that signed the deal, will not provide Iran with enough to make up for the loss of trade and oil sales.
U.S. President Donald Trump withdrew the United States from the nuclear deal last year. He said that the deal did little to prevent Iran from making a nuclear weapon. He also noted that the country continued to support conflicts in the Middle East.
US sanctions are difficult to get around
The U.S. sanctions prevent Iran from using Western financial markets. Some European nations have hoped to develop a system to help Iran avoid measures barring it from international trade.
France, Germany, and Britain developed the mechanism to trade with Iran legally. All three countries signed the 2015 nuclear deal with Iran. China and Russia also signed the agreement.
The trading system is known as the Instrument in Support of Trade Exchanges, or INSTEX. It is designed to permit countries to trade with Iran through what is described as a barter system. Sales are carried out without the use of United States dollars, so as to avoid the U.S. financial system.
However, the International Atomic Energy Agency confirmed this week that Iran had knowingly enriched more than 300 kilograms of uranium. That is the limit set by the 2015 nuclear deal.
Iranian officials announced last month that they would enrich more uranium than the amount permitted under the agreement. The officials also warned that they plan to enrich uranium to a higher level by July 7. They said, however, that level is still below the 90-percent purity needed for uranium to be used as fuel for a weapon.
The U.S. government has denounced Iran’s uranium enrichment program. Trump recently tweeted that Iran is “playing with fire.” The administration has said it would “never allow” Iran to develop nuclear weapons.
Europe’s answer not clear
Many European companies were concerned about doing business with Iran before the country breached its nuclear limit.
Brian Hook, the U.S. special representative for Iran, noted last Friday that, “if you look at trading volumes, the EU (European Union) does more trade with Kazakhstan than it does with Iran.” He added that Europe does not have much demand for Iranian products.
INSTEX’s designers say it was meant for trade in basic goods, like food, medicine and humanitarian aid. But Iran has said that is not enough. It wants to use INSTEX to sell oil.
Henry Rome is with the Eurasia Group, a research organization. He described INSTEX this way: “It’s basically a barter system. They [the Iranians] had high expectations that it could handle such things as oil.”
Iran is suspected of secretly selling crude oil to China. But most of the money it earns from oil sales has disappeared because of the U.S. sanctions.
For many companies, the risk of facing sanctions because of trade with Iran outweighs any gain from trading with Iran. Also, most of Iran’s top businesses are tied to government-linked groups, like the Islamic Revolutionary Guard Corps. The U.S. measures target that group specifically.
Now, some European countries find themselves in a difficult position. Should they take actions designed to punish Iran or try to save the 2015 nuclear deal?
One British diplomat said that Iran is trying to “copy North Korean brinksmanship.” Britain’s Foreign Secretary, Jeremy Hunt, said in a statement Monday that he is “deeply worried” about Iran’s move. He added that the British government remains committed to the deal.
However, Britain has started to voice serious concerns. That is especially the case after mining incidents in the Strait of Hormuz and Iran’s shooting down of a U.S. drone aircraft in the same area.
I’m Mario Ritter Jr.
Jamie Detmer reported this story for VOA News. Mario Ritter Jr. adapted it for VOA Learning English. George Grow was the editor.
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Words in This Story
sanction –n. measure put in place to cause a country to obey international law, usually by limiting or banning trade
breach –v. a failure to do what is required by a law or agreement
barter –v. to exchange goods for other goods rather than money
volumes –n. amounts
brinksmanship –n. the method of permitting a situation to become extremely dangerous in order to get a desired result