Brussels-Washington Divide Deepens: Fending Off EU Companies from US Sanctions

Written by | Monday, August 28th, 2017

As the foreign policy divide between the European Union and the United States is widening, Brussels is looking into ways to protect European businesses from American sanctions. The EU has been for years against those American sanctions that it considers extraterritorial – laws allowing the White House to sanction foreign companies for doing business with third countries such as Iran, Russia or Cuba. The issue reappeared this summer when Brussels threatened and later retreated from retaliation against the US sanctions on Russia. The White House included possible sanctions against European energy firms doing business with Moscow.
While Brussels has been by and large in line with the US position on the trio of countries, the EU has imposed its own punitive measures against the Kremlin but its rules only apply to member states. Moreover, the growing uncertainty around Washington’s position on the 2015 nuclear deal with Iran is worrying Europeans since the agreement led the White House to scrap most of its sanctions targeting foreign banks and firms for doing businesses with Tehran. If the US administration changes its mind on the deal, European companies could end up paying the heaviest price.
The EU does not have many safe options for countering US pressure, facing limited effectiveness and risk, which is why Brussels looks for fresh ideas. “We need to adapt our national mechanisms and update European mechanisms” against US extraterritorial sanctions, the French foreign ministry said recently. The EU generally opposes US extraterritorial measures but privately admits that they can be effective, for example, as they pushed Tehran back to the negotiating table over its nuclear program. While normally both sides of the Atlantic would coordinate their policy, this has too changed since Donald Trump took office – foreign-policy coordination has weakened and sanctions decisions diverged.

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