…threatens stiff fines and penalties for circumventing sanctions
With reports that the European Union is close to establishing its trade vehicle for facilitating trade with Iran, the Trump Administration has issued a statement warning them not to defy the US sanctions, in any way.
“The choice is whether to do business with Iran or the United States,” Sen. Tom Cotton (Republican-Arkansas), told the AP.
“I hope our European allies choose wisely.”
The US reimposed sanctions on Iran after withdrawing from the P5+1 nuclear deal. EU nations did not withdraw from the deal, and companies are still allowed to trade with Iran. This, however, is difficult because US sanctions are scaring most banks away.
The EU solution is a clearing house for the trades, which allow companies to pay for Iranian goods, and Iran to pay EU companies for services, without any money crossing borders, cutting the banks out of it.
Long-term, the US worries that the alternative money payment system could become successful enough to compete with the international bank transfer system known as SWIFT. The fear is that it could eventually supplant SWIFT as the leading global institution for financial institutions to send and receive information about banking transactions.
Secondly, the US is concerned that other countries might try to route transactions through the European system just to circumvent US sanctions, the adviser said.
Thirdly, while the Europeans have signaled that the alternative money transfer system would be used only for humanitarian transactions, the US is suspicious that it could be used for non-humanitarian transactions to evade US sanctions, the adviser said.
US officials are threatening stiff fines and penalties if the plan goes forward. The EU, however, is betting that the US cannot afford to simply cut off Europe entirely over Iran.