L’UE bluffe sur l’Iran : Munchau
FAZ has the same take as we do on Jean-Claude Juncker’s threat of invoking the so-called blocking statute.
This is a unilateral measure by the EU against European companies that observe US sanctions. If the EU does implement it, it will be largely symbolic as big companies are already pulling out of Iran.
Juncker doubled down yesterday with a pre-announcement that the Commission will take a decision on the blocking statute today, but he mentioned small and medium-sized companies.
He framed this in terms of protecting the companies against US sanctions, but the blocking statute is primarily designed to penalise firms themselves. As Angela Merkel reiterated yesterday, there is no way the EU can shield companies from the wider consequences of US sanctions, which include being cut off from the US goods markets, as well as from dollar funding.
FAZ writes that Juncker’s reference to small and medium-sized companies should be understood as an indication that this measure will have little impact. The French oil company Total has already announced that it will pull out of Iran.
The FT has an interesting story about how the bilateral dispute could eventually affect the Swift network, the provider of financial messaging services which forms a critical part of the global cross-border payments infrastructure.
The issue is whether Swift will get caught in a US-EU crossfire.
Swift is based in Belgium, and thus not subject to US law. It could, in theory, defy the Trump administration if the EU wanted it to. And this is a powerful negotiating tool the EU could use – in theory.
The article also mentioned similar dilemmas for other financial infrastructure providers, like Euroclear and Clearstream.
Clearstream already paid a penalty to the US in 2013 to settle a US claim that it violated the terms of the previous sanctions regime against Iran.
FAZ’s economics editor, Holger Steltzner, notes that the anger the Europeans feel about Donald Trump is exceeded only by their own sense of helplessness. He thinks it is ok for the EU simply to give in to Trump.
The safeguarding of the German exports has to remain Germany’s political priority.
The reality on the ground is that European companies cannot afford to be cut off from the dollar markets.
It is, of course, totally unsatisfactory that the EU is in such a helpless position. The reason it is there has been the refusal to give the euro a robust infrastructure from the outset. We recall the discussion in the 1990s when Germany explicitly rejected any ideas – from France and Italy mainly – to use the euro as a foreign policy tool, and especially as a device to become independent from the US financial sector.
Germany rejected the foreign-policy dimension of the euro for two reasons. The first is that it did not want to distract from the primary goal of price stability as the overriding policy objective in the forthcoming euro regime. And it did not want to upset the Americans by creating a competitor. As we know, the German vision of a limited monetary union prevailed at the start, and throughout the euro’s 20 year history. Even the eurozone crisis did not dent that strategy.
We have consistently argued that this self-limitation is ultimately damaging to EU interests, as is now become clear with Trump in the White House.
We would advise Emmanuel Macron and other supporters of eurozone reform to shift the argument from the economic to the political level.
The reforms are needed so that the EU has a defence against US unilateralism.