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Europe Must Confront America’s Extraterritorial Sanctions

The essence of the JCPOA and Resolution 2231 is Iran’s cessation of activities that could lead to the development of nuclear weapons. Strict compliance by Iran is linked to the normalization of international economic relations, including the lifting of UN-agreed sanctions.
Even if the US now absents itself from the JCPOA, it has only two means to block the implementation of the agreement between Iran and the rest of the world. The first would be to foment war. This clearly is on the US agenda, especially with the neoconservative doyen John Bolton back in the White House as National Security Adviser. The world must steadfastly resist another ruinous US military adventure.
Extraterritorial sanctions are the second way the US could kill the JCPOA. It is one thing for the US to decide that it will not trade with Iran. It is quite another for the US government to attempt to block trade with Iran by non-US parties. This is America’s intention; it is up to Europe and China to defeat it, in the interest of global peace, as well as in their own direct economic interest.
In practical terms, the US will be able to enforce anti-Iran sanctions on companies operating in its domestic market, and most likely on subsidiaries of US firms operating abroad. Yet the US will try to go much further, by trying to block non-US companies from dealing with Iran. The US will probably succeed in clamping down on dollar-based transactions, as these are generally cleared through the US banking system. The real issue will come with non-US companies operating outside of the US and interacting with Iran via non-dollar currencies such as the euro and renminbi.
The US will certainly try to punish such companies, whether by targeting their local subsidiaries, by trying to haul them into US courts, or by denying them access to the US market. Here is where the European Union must take a strong stand and move beyond begging Trump for “waivers” for specific European business deals, a process that would make European countries even more subservient to Trump’s whims. Europe should defend a firm and unequivocal “No” to US extraterritorial sanctions, notably on companies operating in non-dollar currencies.
The EU should insist that extraterritorial sanctions violate international law (including the Resolution 2231 and therefore the UN Charter) and the rules of the World Trade Organization. They should recognize that acquiescence would be tantamount to handing the US a blank check to set the rules of war and peace beyond the UN Security Council, and the rules of global trade beyond the World Trade Organization. The EU should be prepared to use the WTO dispute resolution process against the US, and to bring its case to the UN Security Council and General Assembly. Where Europe is afraid to tread, China will surely swoop in to capitalize on business opportunities in Iran. And China would be right to do so.
Europe’s biggest challenge is not legal or even geopolitical. It is psychological. European leaders act as if the US still cares about a trans-Atlantic alliance of shared interests, values, and approaches. Sadly, this is no longer the case.

The US and Europe do still have many shared interests; but they have many divergent ones as well, especially when the US violates international law. Europe needs its own security policy, just as it needs its own trade and environmental policies. The showdown over the JCPOA is therefore a moment of truth. World peace depends on Europe’s defense of the UN Charter and the rules of international trade.

Copyright: Project Syndicate, 2016.

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