EU business leaders have said they are prepared to do everything they can to salvage the Iran nuclear deal in the event of a US withdrawal, as the Danish credit agency extended export guarantees to Tehran in the run-up to a showdown with Donald Trump.
The US president has reportedly decided to decertify Iran’s compliance with the landmark nuclear deal next week. On Thursday, he told a meeting of US military leaders that Tehran was not living up to the “spirit of the agreement” and cryptically added they were witnessing “the calm before the storm”.
If Trump decides not to continue certifying the deal it could unravel, but Europe’s business community hopes the economic benefits of the agreement would encourage Iran to stick to its commitments even if the US falters.
Speaking at the Europe-Iran forum in Zurich this week, Helga Schmid, the secretary general of the European External Action Service, reassured business leaders that the EU was committed to the accord, saying that “as Europeans we will do everything to make sure it stays”.
Business leaders from Iran and Europe gathered for the two-day conference in Switzerland to explore investment opportunities, but the uncertainty before Trump’s decision has created an atmosphere of apprehension, even though many believe the deal may eventually survive.
Trump’s refusal to certify would not automatically mean that sanctions will snap back into place, although that remains as the worst case scenario.
Trump said in his first UN address last month that “the Iran deal was one of the worst and most one-sided transactions the United States has ever entered into”, calling it an embarrassment to his country.
He has reluctantly certified Iran’s compliance in the past, but he has indicated that he may refrain from signing the certification next week, which will throw the ball into the court of Congress.
Schmid said on Wednesday that the agreement could not be changed unilaterally, adding: “We have passed a very clear message: the nuclear deal is working and delivering and the world would be less stable without it.”
Reporting a 94% increase in Iran-Europe trade in the first half of 2017 from the same period in 2016, Schmid said it was important for Iranians to directly feel the benefits of the deal.
She recognised ongoing difficulties with tier-one European banks, and said “as a sign of confidence in our future financial and economic relations, the European commission has proposed to allow the European Investment Bank operating in Iran in the future.”
Major banks are still reluctant to handle Iranian transactions, but 30 Iranian banks have been reconnected to Swift electronic banking and more than 200 international lenders have started correspondent relations with their Iranian counterparts.
Iran’s moderate president, Hassan Rouhani, said in New York in September that the country would respond “decisively and resolutely” if the US walked out on the deal, but gave no details.
Other Iranian officials have hinted that Iran may continue adhering to the deal provided that the US does not obstruct European investments.
Jørn Fredsgaard Sørensen, the director of country, bank and sector risk department at EKF, Denmark’s export credit agency, said it had signed an agreement with Tehran’s finance ministry that would enable the EKF to provide 100% guarantees on financing to those willing to export Danish goods to Iran, even if sanctions were snapped back.
Danske bank, the largest lender in Denmark, has also signed an agreement with 10 Iranian banks.
“This should hopefully give comfort to banks that are not yet willing to work with Iran that they can work with Iran because we show our commitment to it,” Sørensen told the Guardian on the sidelines of Europe-Iran forum.
“I think the Europeans are committed to the nuclear deal but we also believe in it because, if we didn’t believe that Europeans would uphold the agreement, then we shouldn’t be issuing these types of guarantees.
“The right way is to keep interacting with Iran, if we in the west want Iran to be included in the western family of nations is we shouldn’t shut them off. We should engage with them and only if we engage with them can we have a dialogue and criticise if we think there’s something to criticise.”
Austrian and Italian credit agencies have struck similar agreements with Iran, extending export guarantees and credit lines. Austria’s Oberbank has recently signed agreements with 14 Iranian banks to finance Austrian projects.
A senior executive at a European multinational company, who asked to remain anonymous, said he expected the US president to decertify the deal but he believed it would not amount to the end of the agreement.
“There is a lot of serious diplomacy by Europeans at all levels from prime ministers to policymakers to make sure the agreement would survive and there are talks of retaliatory legislation or protective legislations like the ones in place in early 2000s,” he said.
Seyed Mohammad Eslami, a business commentator attending the forum, said there were mixed feelings in Iran about the future of the deal.
“People are worried about what Trump would do on 15 October, but businesses are still continuing with the assumption that the deal will survive,” he said.
“Europe would have to have a plan B, not only to ensure the durability of the agreement but also to protect their own interest because a lot of Europeans have already invested in Iran.”
Adnan Tabatabai, the chief executive at the Bonn-based Carpo thinktank, said: “Europe needs to make sure that Iran gets enough economic and political benefit to keep complying with the deal.
“That means continuing the effort to incentivise European businesses to invest in the Iranian market and develop creative financing mechanism to guarantee that that would happen despite US pressure.”
Source : The Guardian