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Why the EU is helping Iran avoid U.S. sanctions

U.S. withdrawal from the Iran nuclear deal in 2018 meant that Iran didn't receive some of the billions of dollars of economic benefits it was promised when it entered the agreement. Now, France, Germany and the U.K. have formed a company intended to direct funds and goods to Iran, bypassing U.S. sanctions. Nick Schifrin talks to David O’Sullivan, EU ambassador to the U.S., about their motivation.

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  • Judy Woodruff:

    The U.S. and its European allies work together on many issues, but, under President Trump, they diverge dramatically over Iran's nuclear program.

    When his administration had the U.S. withdraw from the Iran nuclear deal last year and then snap back sanctions on Iran, the Europeans objected strongly. Today, they took a major step to try and help Iran get around those sanctions.

    Here's Nick Schifrin.

  • Nick Schifrin:

    When the U.S., Iran, and the Europeans signed the 2014 nuclear deal, Iran froze its nuclear program in exchange for billions of dollars in economic benefits.

    The Trump administration's withdrawal from the deal meant Iran never received much of the revenue it was promised, which is why the Europeans today announced a company, financed by Germany, France and U.K., that's designed to allow Iran to both gain some of that revenue, and keep them in the nuclear deal.

    The new company is a kind of clearinghouse that allows Iran to trade goods with foreign companies without any money exchanged. That means they avoid U.S. banks and U.S. dollars, so they could avoid U.S. sanctions.

    The Europeans say the first goods that Iran will receive include drugs and medical devices, which Iran needs.

    To talk about this, I'm joined by David O'Sullivan, the European Union ambassador to the U.S.

    Ambassador, thank you very much. Welcome back to the "NewsHour."

  • David O’Sullivan:

    Thank you.

  • Nick Schifrin:

    Are you trying to undermine U.S. efforts on Iran?

  • David O’Sullivan:

    Absolutely not.

    I think the most important thing to underline is that we, in the European Union, believe that keeping Iran in this nuclear deal — and they are complying with this deal, as was announced just this week by the CIA — and in return for that, they are entitled to expect some economic benefit and some increased trade and economic activity.

    And the purpose of the announcement today to allow this to ho happen. And, as you say, the primary focus in the beginning will be on goods which are not actually under sanction at all, which are humanitarian goods, exceptions to the sanctions regime, but which is sometimes difficult to trade because of the reluctance of financial bodies to deal with anything to do with Iran. So this will make that, we hope, easier.

  • Nick Schifrin:

    Why risk exacerbating the disagreement with the U.S.?

  • David O’Sullivan:

    Well, we respect the decision of administration to withdraw from the agreement.

    But we imagine they also respect the fact that we are still signatories to the agreement, and we feel bound by it. And it is also profoundly in Europe's security interest to prevent Iran from developing or obtaining nuclear weapons.

    But, of course, we also share many of the concerns of the administration on other Iranian activities, and indeed just recently announced sanctions in response to some of the terrorist plots which were uncovered in Europe.

    So we're trying to work with the administration, even as we have some disagreements about this precise deal.

  • Nick Schifrin:

    As you say, the point of this is to try and keep Iran in the deal. Do you think it's enough? Obviously, many companies that deal in Iran have already said that they won't try and use this vehicle because they fear U.S. secondary sanctions.

  • David O’Sullivan:

    Well, at the end of the day, you know, companies will have to decide whether they feel comfortable trading with Iran, and we know that some companies may take the decision not to, for fear of the secondary sanctions.

    But we, on the European side, are determined to make every effort we can to continue to allow Iran to have the commercial benefit from this deal which was promised.

  • Nick Schifrin:

    But if the focus is on drugs, then how do you get Iran that economic benefit that you say it needs in order to stay in the deal?

  • David O’Sullivan:

    Well, I think the focus is on delivering stuff which is already permitted under humanitarian exceptions.

    But, of course, in other ways, we are also continuing to look at ways in which we can improve economic conditions with Iran. There are small and medium-sized European companies who don't necessarily trade heavily with the United States or at all who may be interested in doing business.

    Of course it's challenging. There's no point pretending it isn't, but we still believe it is very much in our national security interests to preserve this deal and to deliver some of the benefits which Iran is entitled to expect.

  • Nick Schifrin:

    Let me read a statement from the State Department — or a State Department spokesperson today — quote — "Entities that continue to engage in sanctionable activity involving Iran risk severe consequences that could include losing access to the U.S. financial system and the ability to do business with the United States or U.S. companies."

    Do you fear the U.S. could actually sanction the U.K., Germany or France?

  • David O’Sullivan:

    I think the U.S. and the European Union are very strong strategic partners.

    We respect fully the decision of this administration to withdraw from the Iran nuclear deal. We believe they should also respect the fact that the European nations have decided to remain party to this, which is sanctioned by U.N. resolutions.

  • Nick Schifrin:

    Do you think any of the U.S. pressure on this effort is misplaced?

  • David O’Sullivan:

    Well, we don't share the administration's analysis, but we understand that they take a different view, and we are friends and allies, but sometimes we take a different view. And that is the case in this instance.

  • Nick Schifrin:

    Two months to Brexit day. Is the E.U. willing to renegotiate the deal, as Prime Minister Theresa May's opponents in Parliament have pushed her to do?

  • David O’Sullivan:

    I think the answer has been very clear.

    We believe that the deal, as signed, or as agreed, is the best deal. The so-called backstop, the provision designed to prevent the reemergence of a hard border between Northern Ireland and the Republic of Ireland is a failsafe mechanism. It's an insurance mechanism.

    It's not the end point we expect to reach. We hope we can achieve the objective of no border. I don't think anyone sees scope for renegotiating that at this point. But, of course, I think people will listen to what Mrs. May has to say. And if there is something in there that can be — that can be done to be helpful, such as the declaration on the future — future relations, I think people will try to be as helpful as possible.

    But it took us 18 months to negotiate this deal. And, in fact, the final version of the backstop which is contained in the deal was actually very much designed by the U.K. itself, not something which was imposed by the European Union.

  • Nick Schifrin:

    Another option, would the European Union be willing to extend the deadline if the British prime minister asks for that?

  • David O’Sullivan:

    This is legally possible.

    It requires the unanimous agreement of the other 27. But I'm sure, if there were to be such a request, people would listen very carefully to the reasons for such an extension. And I'm sure people would try to be helpful.

    But I think they will need to understand what it would be hoped could be achieved during such a delay.

  • Nick Schifrin:

    David O'Sullivan, E.U. ambassador to the U.S., thank you very much.

  • David O’Sullivan:

    Thank you.

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