European countries that criticised Donald Trump’s decision to withdraw from the Iran nuclear deal have pledged to shield their commercial relations with Teheran from US sanctions in order to keep the Islamic Republic compliant with the agreement. Iran, however, has repeatedly stated that their efforts are insufficient.
The German Chamber of Commerce and Industry has stated that the trade volume between Iran and Germany collapsed by 48 percent from January to April in comparison to the same period in 2018 and reached 529 million euros. According to the newspapers from the German media group Funke, many German companies preferred to abide by US sanctions, fearing that they would lose access to US markets.
According to the report, the sanction policy most impacted Germany’s mechanical engineering sector. It tops the list with a 41 percent share in exports, followed by the chemical industry with 24 percent, and food exports with 13 percent. At the same time, imports from Iran to Germany decreased by 39 percent to 80 million euros over the same period this year. The lion’s share of Iranian exports to Germany consists of food and natural resources.
As the US withdrew from the Joint Comprehensive Plan of Action (JCPOA), despite staunch opposition from the EU and Russia, they re-imposed sanctions on Iran last year and also threatened to punish companies doing business with Iran. This has reportedly prompted many firms to cut their ties with the Islamic Republic. The European governments, however, have been trying to shield their businesses from the sanctions pressure and maintain trade with Iran, keeping it in the deal despite the US demarche.
In order to facilitate trade with Iran in the face of US sanctions, France, Germany, and the United Kingdom launched an alternative payment instrument, INSTEX, five months ago. Iran has repeatedly criticised the tool as a weak measure with limited capacity. EU countries have said that the mechanism will initially deal with food and medicine, while Tehran has sought oil trade to be included in the mechanism.
Iran recently informed the remaining parties to the nuclear deal — France, Germany, the United Kingdom, China, Russia and the European Union — about its decision to abandon some of its voluntary commitments to the deal and gave Europe 60 days to ensure Iran’s interests under the agreement. The Islamic Republic’s Foreign Ministry has pledged to take another decisive step in reducing its obligations under the Iran deal if this tool does not meet their requirements.