Iran: impossible for European companies to escape US sanctions (Karine Berger)

(B2 - Exclusive) By withdrawing from the Iran nuclear deal (JCPOA), the United States was a reminder of the risk of extraterritorial lawsuits for foreign companies. Even if the Europeans decide to maintain dialogue with Tehran, their interests could be targeted by legal proceedings. Is it possible to escape it? Karine Berger is skeptical.

Karine Berger is an economist, polytechnician and a graduate of ENSAE (the French school of statistics. She also worked in the forecasting department of Bercy (the Ministry of Economy and Finance). Suffice to say that the figures and the economy, she masters. She also sat in the National Assembly as deputy for the Hautes Alpes, on the benches of the Socialist Party, from 2012 to 2017. She is the author, with her colleague Pierre Lellouche (former deputy Les Républicains, former Secretary of State for European Affairs and then for Foreign Trade) of an information report on "the extraterritoriality of American legislation." They denounce abusive measures, in particular on the pretext of the fight against corruption. subject of embargoes is also addressed.

The withdrawal of the United States from the Iranian nuclear agreement worries European companies present in this country. What does this decision by Washington change?

Historically, in the United States, there are two types of sanctions that relate to Iran. The primary sanctions apply to all American persons and all companies that have an American interest. Any company that uses dollars, that uses a mailbox that goes through American soil, can be sued. These sanctions had not been lifted as part of the Iran nuclear deal.

What had been lifted were secondary, purely extraterritorial sanctions, such as the Amato-Kennedy Act [specifically targeting "rogue states"], which allows the United States to prosecute you for business you have with the United States. Iran, even if you have no ties to the United States.

The European Union is Iran's third largest trading partner in 2017, after China and the United Arab Emirates. Germany and France are very present on this market, but other countries have greatly developed their trade relations with Tehran, such as Austria, Spain or the Netherlands. What are the risks for their businesses?

Washington gave European companies six months to withdraw. They risk being prosecuted by American justice as companies with ties to the United States. Again, this was already the case before the withdrawal of this agreement. But we are here faced with a political and administrative opportunity that the United States will probably use. The American administrations gave implicit or explicit authorizations in specific fields, such as aeronautics, which meant that the primary sanctions were set aside... Because the United States wanted it.

Can these exceptions not continue?

No, I do not think so. The situation will change. From now on, any company with ties to the United States will no longer benefit from these exceptions. When writing our study, we went to Washington in June 2016. At the time, already, the American administration was absolutely not favorable to this agreement wanted by Barack Obama. The administration followed little by little, giving the impression of no longer launching procedures. But with the political watchword that has just been given, prosecutions will become systematic. In six months, if a company sells in Iran and it is also present in the United States, it will be prosecuted.

Until the return of sanctions against Iran, had you observed efforts, good will, on the side of Washington?

Embargo issues are political. In the United States, they absolutely do not understand where the problem is. For them, there are laws and that's how it is. For them, it is not extraterritoriality. From the moment a company violates American law, there is no debate. This mindset is shared by the entire US administration.

For the United States, the question of the fight against the financing of terrorism is crucial. For them, Iran means supporting Hezbollah. On this terrain, we cannot respond with economic laws. We can only respond politically by clearly affirming our position, even if it means not following the United States in their approach. But that will not be a solution for the companies concerned.

Precisely, for European companies, what is the solution?

There really isn't. There is no legal way to fight against this arbitration that companies will themselves have to make in the context. You cannot convince a European company that it has more interest in doing business in Iran than in the United States. It's not realistic. Any business leader or shareholder knows perfectly well that it is better to do business, even secondary, in the United States rather than in Iran.

Can't the Europeans fight back with comparable tools?

For there to be a response, we would have to find a place where Europe wants to put an embargo and not the United States, where we could sanction American companies. That does not make any sense.

Are French companies not aware of this risk? How do they apprehend it?

I will tell you an anecdote. Two years ago, French companies went to Iran to study the market at the invitation of the French government. Upon their return, an American senator wrote to them all personally to explain to them that what they were doing was unacceptable and that they were going to be prosecuted in the United States. French companies, encouraged by the French government, were therefore threatened by an American elected official. From a business perspective, the choice is simple, especially for banks. Either they go out of business because they can't do without the dollar. Either they drop Iran, because the stakes are not worth it. Arbitration is rational. I do not believe that a French company will maintain its contracts in this new context.

Can't European companies escape this American legal constraint? By refusing to submit to Washington's injunctions, for example?

Oh no. They don't want to escape it. The typical example is BNP Paribas, which is linked to Iran, moreover. They initially refused to respond to the FBI. Result, after a year of dragging their feet, they took the highest fine ever imposed, with more than 7 billion euros. They ended up signing. Because there was a time when American justice threatened to take away their license in the United States.

Supporters of Donald Trump's decision accuse the Europeans of having an Iranian policy that is driven only by economic fallout, at the expense of security. What do you think ?

Hard to say. I'll take a way out. I hope that it is not on purely economic arguments that the question arises. I hope that the French and European positions are above all diplomatic and that the opposition with the United States is not motivated by economic questions. But I do not know.

(Comments collected by Romain Mielcarek)

To download : The 2016 Extraterritoriality Information Report.

Exclusive interview conducted by telephone on May 16.