The European Commission will launch on Friday the process of activating a law that bans European companies from complying with U.S. sanctions against Iran and does not recognize any court rulings that enforce American penalties.
"As the European Commission we have the duty to protect European companies. We now need to act and this is why we are launching the process of activating the 'blocking statute' from 1996. We will do that tomorrow morning at 10:30 A.M.," European Commission President Jean-Claude Juncker said.
"We also decided to allow the European Investment Bank to facilitate European companies' investment in Iran. The Commission itself will maintain its cooperation will Iran," Juncker told a news conference after a meeting of EU leaders.
Later, the EU's financial services chief said that using European Union powers to ban banks in the bloc from complying with U.S. sanctions on Iran would be of "limited" use given the global reach of finance.
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U.S. President Donald Trump decided on May 8 to revive Iran-related sanctions, including sanctions aimed at Iran's oil sector and transactions with its central bank. The move followed his announcement of the U.S.'s intention to pull out of the nuclear deal with Iran.
The EU wants to salvage the Iran nuclear deal, which offers the Islamic Republic relief from economic sanctions in exchange for curbs on its nuclear program and Europe sees as an important element of international security.
The EU's so-called blocking statute bans any EU company from complying with U.S. sanctions and does not recognize any court rulings that enforce American penalties.
But it has never been used and is seen by European governments more as a political weapon than a regulation because its rules are vague and difficult to enforce, serving mainly as a warning to the United States.
"Indeed the EU blocking regulation could be of limited effectiveness there, given the international nature of banking system and especially the exposure of large systemic banks to U.S. financial system and U.S. dollar transactions," Dombrovskis told the European Parliament.
"There are some difficult issues which we will need to address. We are working on how to exactly address those issues," Dombrovskis said.