Trump’s Iran move sparks business crisis
Donald Trump’s removal of the US from the Iran nuclear deal, despite pleas from French President Emmanuel Macron, German Chancellor Angela Merkel and UK foreign minister Boris Johnson, and left existing European deals with Iran in jeopardy.
Trump again criticised the Joint Comprehensive Plan of Action (JCPOA) and called it “disastrous” and “one-sided” while announcing the US withdrawal from the agreement.
Democrats condemned Trump’s decision, calling it a “grave mistake” and claiming his actions recklessly endangered US relations with allies.
Senator Bob Menendez, the leading Democrat on the Senate foreign relations committee, said it more likely that Iran would develop a nuclear weapon.
“With this decision ‘President’ Trump is risking US national security, recklessly upending foundational partnerships with key US allies in Europe and gambling with Israel’s security,” the senator said.
Total, France’s oil and gas giant, signed a US$2 billion deal to jointly develop Iran’s giant South Pars gas field, together with Chinese state oil company CNPC.
Total says the agreement could collapse amid looming US sanctions.
General Electric said it had received millions of dollars in orders from Iran in 2017 for its oil and gas business, including orders for machine parts and equipment used in gas plants.
A company statement said: “[GE] will adapt our activities as necessary to conform with these changes in US law. GE’s activities in Iran to date have been limited and in compliance with US government rules, licences and policies.”
Germany’s Volkswagen last year said it would sell cars in Iran for the first time this century.
Trump’s move could hurt drivers.
Iran has the world’s fourth-largest crude oil reserves and estimates that it has nearly 20 per cent of its natural gas.
After sanctions were eased, Iran boosted production to about 3.8 million barrels a day, about 1 million barrels a day more than in early 2016.
New sanctions on Iranian oil exports would put a dent in global supply and could force rises. Oil prices have already risen by 13 per cent in a month, to their highest level in three years.
Europe may try to protect growing commercial interests in Iran from what is seen as the unfair impact of US sanctions on EU-based business. The governments of Italy and France have backed trade and investment in Iran this year through credit guarantees.
US sanctions, passed by Congress in 2012, which are likely to be reintroduced after Trump’s speech, demand other western nations reduce Iranian oil imports or risk penalties.
The European Union could reintroduce its blocking mechanism first devised in 1996 when the US Congress imposed sanctions on all companies, including non-US businesses, if they did business with Libya or Iran. The blocking mechanism made it illegal for European traders to abide by the US sanctions.
However, the threat of renewed US sanctions has deterred some EU-based firms from investing in Iran and all businesses with links to the oil-rich state will fear the far reach of US economic muscle.
Tehran. Picture credit: Flickr