Trump administration officials have threatened strong economic penalties if the EU makes it easier to do business with Iran, the Associated Press reported.
“The choice is whether to do business with Iran or the United States,” Sen. Tom Cotton (R-Ark.) told the AP. “I hope our European allies choose wisely.”
The European Commission has been developing a special purpose vehicle, or SPV, to give EU countries a way around U.S. sanctions. German, France, and the U.K. have led the efforts. The SPV would facilitate non-dollar trade with Iran, circumventing U.S. sanctions.
A major catalyst would be natural gas, an important source of energy for Europe. Iran has the world’s second-largest natural gas reserves, according to the U.S. Energy Information Administration.
The U.S. provided eight countries—which are believed to include Japan, South Korea, India, and maybe China—exemptions, allowing them to continue importing oil although at lower levels than in the past.
However, in July 2018, the Trump administration denied broad exemptions to EU firms looking to do business in Iran.
It may be that the real concern on the part of the U.S. is that the EU SPV could potentially supplant SWIFT, which is the international bank transfer system, AP noted. Other countries could then use the EU system to circumvent sanctions.
