German exporters to Iran have been feeling the pinch of Washington’s “snapback” sanctions against Tehran.
Germany has seen its exports to Iran hit new depths since the United States walked out of the 2015 nuclear deal with the Islamic Republic, Reuters reported.
Economic data released by the Association of German Banks on Friday showed that no matter how hard Berlin has been trying to safeguard its firms against renewed US sanction on Iran, German exports over the first eight months of 2018 had slipped four percent to 1.8 billion euros, while the threat of long-arm US sanctions had largely frozen banks’ export-related financial transactions.
Washington’s sanctions dashed major European manufacturers’ hopes of expanding their business in Iran’s large and potentially fast-growing and wealthy new market.
German exporters have been the hardest hit by the US move. Germany is the West’s biggest exporter to Iran.
The EU has launched an attempt to protect European businesses from Donald Trump’s sanctions against Iran, as the US administration voiced its intent to apply maximum pressure on Tehran by vigorously applying its punitive measures.
European firms have been instructed that they should not comply with demands from the White House for them to drop all business with Iran.
Those who decide to pull out because of US sanctions will need to be so authorized by the European Commission, without which they face the risk of being sued by EU member states.
A mechanism has also been opened to allow EU businesses affected by the sanctions to sue the US administration in the national courts of member states.
The European Union is considering creating a Special Purpose Vehicle (SPV) to enable trade with Iran and, more broadly, help the bloc avoid the extraterritorial reach of US law.
But despite efforts by European governments to help companies continue their business with the Islamic Republic, both banks and exporters have been backing off for fear of losing the US market.
READ MORE: Germany to Protect Its Companies’ Exports, Investments in Iran From US Sanctions
Earlier this week, Holger Bingmann, head of the association of German exporters, warned that the fall in Iran export volumes so-far was “just the beginning of a downward spiral.”
President Donald Trump announced his intention to hit firms doing business with Iran when he reneged on a deal struck in 2015 designed to help curtail Tehran’s nuclear ambitions in return for limited sanctions relief.