U.s. Slams Europe’s rush to be first in line for Iran business

The Wall Street Journal

By Laurence Norman

The U.S. has made no secret of its determination to strictly enforce the remaining energy and banking sanctions on Iran, actively discouraging European companies from rushing to do business with Tehran following November’s nuclear deal.

Yet there was a fresh acknowledgement Monday by a senior U.S. official that the Obama administration still had real concerns about the issue.*

As my colleagues Benoit Faucon and Jay Solomon have reported, the Obama administration has sent Treasury officials to London, Paris and other European capitals to meet business executives and hammer home the message that the November deal – which took effect on Jan. 20 – offered only limited and temporary sanctions relief. Last week, in a joint press conference with French President Francois Hollande, U.S. President Barack Obama said the U.S. would come down on companies that evade sanctions “like a ton of bricks.”

Under the November interim deal, meant to last for six months, Iran clipped back some of its advanced nuclear work in exchange for a suspension of sanctions on Iran’s petrochemicals sales, its automotive sector and trade in gold and precious metals. Washington and Brussels moved to ease financial transfers to Iran over the next 180 days and the U.S. agreed to unfreeze in eight installments some $4.2 billion in frozen Iranian oil revenues held overseas.

Still, the U.S. outreach on sanctions has had mixed results. European business missions have continued to visit Tehran. There is talk of an exchange deal that sees Russia supply a new research reactor in exchange for oil and the likes of China, which like Russia is a member of the six power group that negotiates with Iran, is expected to step up Iranian oil imports.

On Monday evening, a senior U.S. official expressed some of the administration’s frustrations on these business overtures to Tehran, slamming companies who are trying to position themselves for future Iranian business.

Asked if the U.S. still had concerns about European companies’ business overtures to Tehran, the official said:

“I think as the President has implied, we would, of course, prefer countries to wait to see where we get with a comprehensive agreement before rushing off to Iran. There are areas, because of our limited sanctions relief, where business can begin again, and it’s perfectly legitimate for those businesses in the auto-kit sector for instance, in petrochemicals, to see what they can do.

“But what we don’t think is good for business and not good for Iran – it’s not fair, in our view, for the Iranian people for countries to go to Iran and say ‘We want to get in line, so if a comprehensive agreement is reached we can be first in line.’ It raises people’s expectations, and the relief will only come if there is a comprehensive agreement.”

For the Obama administration, a weakening of the sanctions regime means reduced leverage in the talks with Iran and fresh criticism from U.S. lawmakers, many of whom remain skeptical of the Iran nuclear talks. Speaking in Munich earlier this month, Sen. Chris Murphy (D., Conn.) said if lawmakers thought the sanctions regime was slipping, the U.S. Senate could reignite debate on legislation that would increase sanctions on Iran if a deal is not reached by July.

The sanctions bill has been effectively shelved for now.

In the remarks Monday, the U.S. diplomat said the Obama administration genuinely hopes Iran can win sanctions relief – but only through the long road of agreeing a final, comprehensive agreement on Iran’s nuclear activities.

“So we certainly want – and I would say to the Iranian people this evening who listen to any of your reports that we hope they get sanctions relief. And what it will take is the Iranian Government assuring the international community in very concrete, visible, verifiable ways that they will not obtain a nuclear weapon.”