Europe is scrambling to come up with a contingency plan in the face of a U.S. threat to end the nuclear deal with Iran - a move that lends a high level of uncertainty to European megadeals, including French Total SA’s $5-billion oil deal with Tehran.
At stake if Trump refuses to certify Tehran’s compliance with the nuclear accord on 15 October and sanctions are re-imposed are deals with European companies worth over $55 billion in total, according to figures from the Financial Times.
If Trump refuses certification on 15 October, Congress would then have 60 days to make a decision on new sanctions, giving Europe two months tome come up with a contingency plan.
Right now, there isn’t one.
“People in Brussels are looking at whether blocking statutes need to be upgraded or updated,” David O’Sullivan, EU ambassador to the US, told the Financial Times on Thursday.
“There’s no definitive plan yet. But if the US were to do something which impinged on the ability of Europeans to do what we could consider legitimate business with Iran, this is something we would like to look at.”
Earlier in October, the French oil giant shrugged off the US sanctions threat, with Total CEO Patrick Pouyanne telling media,
“We knew when we signed that it will not be an easy road. But I prefer to have a problem to solve and to have the opportunity rather than having not signed [and] no opportunities.”
Total signed its deal with Iran in July, making recent history. This was the first deal Iran signed with a foreign energy company since sanctions were lifted in January 2016.
The $4.8-billion deal is to develop Iran’s prolific South Pars natural gas field—the largest gas field in the world, shared with Qatar. Total would lead the consortium.
Iran was the European Union’s top trading partner before sanctions were slapped on Tehran in 2010.
Since sanctions were lifted, trade has still been hampered due to some U.S. financial sanctions that make Western banking institutions still wary of doing business with Iran.
Europe’s options are limited as it seeks a contingency plan. According to analysts interviewed by the Financial Times, one option could be an effort to block legislation related to a new imposition of sanctions by the US, but this would be a complicated “by the international reach of U.S. laws on financial transactions”.
Trump is expected to have a decision on the nuclear deal this afternoon.