The Strategist

European companies are leaving Iran


05/29/2018 - 14:49



European companies are curtailing activities in Iran after the recent announcement by John Bolton, who promised fines and other punishments to those who would continue to cooperate with the Iranians.



Maersk Line
Maersk Line
Obviously, European business does not really believe European politicians, at least when it comes to relations with the US and Europe's independence in foreign policy. The European Union has repeated several threats against America, but so far it was the only answer.

Donald Trump announced the US withdrawal from the deal on Iran's nuclear program and reported on the return of anti-Iran sanctions, which, as always, will hurt the European companies. Of course, Brussels acted indignantly and said that it would do everything to keep the deal, although it is clear how this can be done without Washington's participation. However, experience of the previous confrontations of the European Union after the unilateral actions of the White House suggests that all resistance of Europe will be limited by verbal threats, because the Iranian market, despite all its attractiveness, does not compare with the American one.

At least, it seems that European business believes in this view. There’s still several months before the official entry of US sanctions against Iran, but the companies of the Old World, in order to avoid misunderstandings with the US authorities, have already begun to curtail their activities in Iran. The shipping sector, which has broad business ties with Tehran, was one of the first to promptly return to the forthcoming sanctions regime against Iran. The two largest container carriers of the planet, MSC and Maersk Line, stated that they are reviewing their plans for activities in Iran in connection with changed situations, which, of course, means US sanctions. So, Maersk Tankers has already stopped signing contracts for operations in Iran. The company intends to close all existing contracts until November 4. Sanctions, as follows from the statement of the US Treasury, will be introduced in two stages: August 6 and November 4.

The Danish shipping company Torm also closed all business in Iran, and did so now, i.e. immediately, without waiting for autumn.

Another European giant, Siemens, operating in various sectors of the economy, has been supplying Tehran with equipment for oil and gas production for many years. Siemens also made it clear that it stopped accepting new orders from Iranian clients, although the company expressed hope that politicians would somehow fix the situation. 

The French oil and gas giant Total, which is developing a huge gas field South Pars, is also preparing to leave Iran before November 4. Total has already invested in the field app. $ 50 million. The $ 2 billion-worth project is under threat, but these losses are paled in comparison with fines that can be imposed on the violators of sanctions by the US Treasury, and other consequences.

One of the most powerful threats, for example, is the "cut-off" from the US financial system. For many large companies, this threat is even worse than billions of fines. For example, over 90% of all financial transactions in Total pass through US banks.

Total expressed a timid hope that Washington would make an exception for them, but hopes for it are very weak. Apparently, 50.1% of the shares of the joint project, now owned by Total, will be transferred to their partners: Chinese company CNPC and Iranian Petropars.

Now analysts are waiting for similar statements about freezing of cooperation with Iran from other European giants, for example, Volkswagen and Airbus. Both have been actively working in this country after the conclusion of an agreement on its nuclear program and removal of international sanctions. Europe probably understands how naive it is to count on softening Washington's position towards Tehran or on the fact that the Americans would allow European companies to violate sanctions. The last hope probably disappeared after John Bolton's Sunday statement. The adviser to the US president for national security warned that the US can punish European companies if they continue to trade and cooperate with Tehran.

"I think the Europeans will understand that it's in their interest to act in concert with us," Bolton, known for his bad attitude to Iran, frankly declared in an interview with CNN.

source: cnn.com




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