European governments vowed on Wednesday to try to shield their improved economic ties with Iran from the effects of renewed US sanctions, but business leaders struck a more pessimistic note.
The EU said it remained committed to the 2015 Iran nuclear deal and the suspension of its own sanctions, the day after President Donald Trump announced Washington’s withdrawal from the pact. French Foreign Minister Jean-Yves Le Drian also insisted the deal was "not dead".
However, companies with active Iranian investments or plans mostly stayed quiet on the viability of those projects beyond a "wind-down" period of three to six months until the US reimposes sanctions on entities doing business with Tehran.
Siemens was still "assessing the implications of the Iran decision", the German industrial giant’s chief financial officer Ralf Thomas told reporters on a call.
"One of the strongest industrialised countries in the world has made a political decision — as an industrial company we have to recognise that," Thomas said. Existing projects would be completed "as far as legally possible", he said.
Trump’s move will lead to the reimposition of US penalties that were waived under the three-year-old nuclear deal, including financial sanctions that had made it extremely difficult for global companies to do business with or in Iran.
Companies worst affected are likely to include aircraft manufacturer Airbus, Peugeot maker PSA Group and its fellow French car maker Renault.
France is seeking an understanding with the US to safeguard its car makers’ significant Iran investments, a government official said. PSA, which sold 445,000 vehicles in Iran in 2017, called on the EU to maintain a united front in defence of the nuclear agreement.
Germany’s BDI industry association said the EU, Russia and China should commit clearly to the deal, after Washington’s new ambassador ruffled feathers by tweeting: "German companies doing business in Iran should wind down operations immediately." The nuclear detente had sparked great hopes for the opening of the Iranian market, BDI head Dieter Kempf said. "These hopes have now clearly been dimmed."
Government and company officials said business with Iran had slowed recently in anticipation of Washington’s likely withdrawal from the deal.
France, Germany and Italy have introduced euro-denominated export guarantees designed to avoid US dollar exposure and withstand sanctions, while the EU may resort to sanctions-blocking laws ordering companies not to comply.
In updated advice to businesses, however, the British government said: "How UK companies act in response to US sanctions is a commercial and legal decision for that company."
British exports to Iran rose nearly 40% in 2016 to £262m, dwarfed by the €3bn of German exports recorded in 2017, up 15%. Volkswagen, which resumed exports to Iran in 2017, said it was monitoring the situation closely.
Some European banks that had resumed financing to Iranian entities after the nuclear deal said they had already stopped doing so in anticipation of Trump’s move. "During recent months the operational and reputational risks associated with doing business in Iran have increased," Danske Bank’s spokesman Kenni Leth said.
"Earlier this year we decided to phase out and exit all activities to and from Iran and suspend our existing relations with Iran."
Austria’s Oberbank decided last November not to provide financing to Iranian counterparts "due to the constantly changing political framework", a spokesman said.
Germany’s Hermes export guarantee scheme for Iran remained in place for now, the economy ministry said.
But France’s export finance programme, which had been due to launch in May-June, had been "put on hold" in recent weeks, French officials said.
Euro-denominated export finance was being discussed, an Elysee official said, "but it’s not necessarily that simple". The Bpifrance sovereign fund, due to administer the scheme, declined to comment.
French officials will be focused on helping companies exit Iran within the wind-down periods, said one — or on seeking unlikely US waivers for activities they want to pursue beyond the deadlines.
Companies "will have to choose between their Iranian economic interests and their potential US interests", said a senior diplomat. "Generally that decision is quickly made in favour of the US." That is precisely the risk calculation the Trump administration appears to be banking on.