Tags: iran | sanctions | blocking statute | tea

Countries Doing Business With Iran About to Be Cut Off

Countries Doing Business With Iran About to Be Cut Off

Wednesday, 25 July 2018 05:14 PM Current | Bio | Archive

The clock is ticking for countries doing business with Iran.

The United States has made it very clear that they will punish those countries that violate their sanctions on Iran. They have made it clear that any country doing business with the Iranian regime will be cut off. If it's "yes" to conducting business with Iran, it's a strong and stringent "no" from business or banking in the United States.

Many companies have already put the brakes on, are slowing down, and pulling out of Iran. Those companies that deal in oil and gas have been the first to announce their intentions. Lukoil, one of the only independent oil companies in Russia, has informed Iran that all plans are on hold. Reliance Industries, headquartered in India and one of the world's largest oil refining companies, has announced that they will stop buying Iranian oil sometime about October or November. French energy company Total, one of the largest in the world, announced that they will drop their natural gas project unless the United States grants them a sanctions waiver.

The sanctions will come in two stages. In August the first stage kicks in, in November, the second. The August sanctions deal with cars, gold, and other metals. The November sanctions address oil and international banking.

Everyone was forewarned. Creative countries have spent time and resources finding new methods to "end-around" and protect themselves from the ramifications of the new United States sanctions being imposed on Iran.

Sri Lanka, which owes Iran $250 million for oil accrued over the past few months, is planning on paying Iran not with currency — but with tea. Asian countries are finding other ways around the U.S. sanction. So is India. And even though they are fearful that the United States might eventually institute sanctions against them as well — after all they are end-arounding the sanctions, not ending their business ties with Iran — they will continue to import their oil from Iran. Many countries, especially countries situated near Iran, need Iranian oil. And It appears that their need for Iranian oil trumps (pun intended) the fear of U.S. sanctions.

The European Union will be applying a safeguard called the Blocking Statute. The statute, Council Regulation (EC) 2271/96, will be officially updated or annexed. Originally drafted in 1996 to protect EU companies from an earlier set of U.S. sanctions on Cuba, Iraq, and Iran it will be reconfigured to counter the demands being set forth by the United States in 2018. It requires a company to announce their intentions to the EU 30 days prior to engaging in activity with Iran. They must submit paperwork enumerating exactly what their dealings with Iran will be and what their deals with the United States are. After that, the company is protected from U.S. action against them.

The Blocking Statute even allows companies doing business from the European Union a vehicle with which to recover damages caused by the U.S. sanctions. The EU will reimburse a company if the U.S. strangles its income. The Blocking Statute actually nullifies and protects a company from legal decisions made against them by U.S. courts.

But not all European companies and corporations will opt for the protection offered them by the statute. Instead many will go all the opposite way and drop all business ties to Iran.

That's because almost all large corporations have branches, divisions, accounts, and partners in the United States. If they do business with Iran, those U.S. partners will be affected by the sanctions and the Blocking Statute cannot protect them. Ultimately, they know that those tie-ins with the United States far exceed any business they would hope to gain from Iranian markets.

They will be forced to make a choice. And the choice will be accepting the sanctions imposed by the United States and dropping Iran. If the United States economy remains strong, it will have been the correct choice. And there is no rational reason to believe that the United States economy will suffer because of the sanctions they are imposing on Iran.

Sanctions and embargoes have been around for a very long time. They certainly go as far back as 424 B.C.E. when Athens was fighting Sparta. Megara, an ally of Sparta, was involved in the conflict and Athens put sanctions on them in order to influence Megara to change their alliance. In the end the Peloponnesian Wars were fought and Megara never changed their alliance with Sparta. After 27 years Athens was terribly weakened and reduced to a second rate power.

Sanctions are a tool that powerful countries make use of. It often takes significant time before they work. Sometimes, that time never comes.

Micah Halpern is a political and foreign affairs commentator. He founded "The Micah Report" and hosts "Thinking Out Loud with Micah Halpern" a weekly TV program and "My Chopp" a daily radio spot. A dynamic speaker, he specializes in analyzing world events and evaluating their relevance and impact. Follow him on Twitter @MicahHalpern. To read more of this reports — Click Here Now.

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The clock is ticking for countries doing business with Iran.
iran, sanctions, blocking statute, tea
Wednesday, 25 July 2018 05:14 PM
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