{"id":101836,"date":"2019-03-10T10:00:28","date_gmt":"2019-03-10T06:30:28","guid":{"rendered":"http:\/\/www.scfri.com\/?p=751"},"modified":"2022-04-19T15:34:59","modified_gmt":"2022-04-19T11:04:59","slug":"what-are-the-alternative-ideas-for-the-eu-dealing-with-illegal-extraterritorial-sanctions","status":"publish","type":"post","link":"https:\/\/scfr.ir\/en\/strategic-perspective\/opinion\/101836\/what-are-the-alternative-ideas-for-the-eu-dealing-with-illegal-extraterritorial-sanctions\/","title":{"rendered":"What are the alternative Ideas for the EU Dealing with Illegal Extraterritorial Sanctions ?"},"content":{"rendered":"<p>Outside the US, these sanctions are typically implemented by US companies, forced by US law to cease their business with foreign \u2018sanctions evaders\u2019. In consequence, these \u2018evaders\u2019 get shut out of the US market altogether.<br \/>\n<strong>The Union has launched countermeasures contained in the so-called EU \u2018<a href=\"https:\/\/ec.europa.eu%20\u203a European Commission \u203a FPI \u203a What we do\" target=\"_blank\" rel=\"noopener noreferrer\">Blocking Statute<\/a>\u2019 of summer 2018, and in the all-new <a href=\"http:\/\/www.scfri.com\/tag\/instex\/\" target=\"_blank\" rel=\"noopener noreferrer\">INSTEX<\/a> instrument of settlement for commercial accounts between EU member states and Iran, set up by Germany, France, and the UK and endorsed by the EU.<\/strong> But nothing within these countermeasures is even remotely equivalent in its dissuasive power vis-\u00e0-vis the US administration and American companies to the US threat of market access denial.<\/p>\n<p>This dramatic discrepancy in political-economic dissuasive power between European companies\u2019 efforts of defending their lawful business with Iranian partners, and the American economic coercion measures, is the point of departure for the following argument: What can be done to re-balance the situation?<br \/>\nMeasures are needed at the international normative level, and at that relating to the EU\u2019s own instruments.<br \/>\n<strong>First, a recognized and independent international forum to issue authoritative opinions on the legality of international sanctions.<\/strong><br \/>\nThis could be an international body of eminent and recognized experts on international law organizing itself \u2013for instance within a committee of the widely recognized \u2018International Law Association\u2019\u2013 with the explicit mission of routinely evaluating the legality of newly issued punitive national economic sanctions against foreign states and publishing their verdicts. This could serve as a kind of legal benchmarking which official policy actors worldwide could then refer to.<br \/>\n<strong>Second, a European agency entrusted with executing individual European companies\u2019 business with countries subjected to illegal sanctions, the European External Trade Agency (EETA).<\/strong><\/p>\n<p><strong>The EETA, following a logic complementary to that of INSTEX and potentially capable of building on its institutional structure, would go substantially beyond the latter\u2019s tasks.<\/strong> Acting on behalf of European companies, it would carry out the entire contractual, financial and logistical part of their transactions with partners in countries subject to illegal US (or other countries\u2019) sanctions, up to and including the receipt of payment in Euro. These payments would be sequestered on an EETA escrow account, thus interrupting the traceability and the direct link of the Iranian payments with the delivery of goods\/services by a European company, and vice versa. Against the escrow account, EETA could provide credit either directly or via the European Investment Bank to the companies involved in the European side of the transactions \u2013 and beyond, to further disguise the amount of participation of individual companies.<\/p>\n<p>Ideally this procedure would already hide both the setup and the scope of EU member states\u2019 Iranian merchandise and services exchange. But even if those were to be revealed, it could effectively prevent those EU companies involved from being individually exposed to US extraterritorial sanctions, and from having to be defended by their national governments. Sanctions would have to be directed at the EETA itself.<br \/>\n<strong>Third, an EU legal instrument capable of deterring foreign companies from implementing their governments\u2019 illegal sanctions.<\/strong><br \/>\nIn our case, if individual European companies were \u2013in spite of these precautions\u2013 subjected to extraterritorial US sanctions by US companies, EU countermeasures should then centre on the latter\u2019s access to the EU single market.<\/p>\n<p>To avert both the unlawful commercial coercion of European companies by US business partners, and the security threat created by it, the EU should apply measures symmetrical to those used by the US, i.e. exclude \u2018guilty\u2019 U.S. companies and their EU subsidiaries from doing business on the European single market by means of credible and enforced counter-sanctions. <strong>Access to this market \u2013the world\u2019s second largest goods importer and exporter with a uniform and liberal trade regime\u2013 is highly attractive to American and other non-European providers of goods and services.<\/strong> An access denial risk would likely be a strong disincentive for US companies to comply with the implementation of extraterritorial sanctions. As a result, the US and European companies\u2019 respective economic incentives to avoid a sanctions policy conflict would become much more balanced, compared to the present situation. Again, those so-called \u2018evaders\u2019 among European companies and national governments would not individually be in the USA\u2019s political firing line any more, because the EU would take the counter measures.<\/p>\n<p>The aim of such a strategy should certainly not be to actually introduce and implement a longer-term freeze on the access of US and EU companies to each other\u2019s home markets. Rather, it would intend to expose big multinationally active US businesses themselves even more intensely than so far to the negative effects of their administration\u2019s unilateral anti-Iran sanctions policy, and have them put additional pressure on the US administration to waive their obligation of applying extraterritorial sanctions. That could reinforce a liberal, interdependence-driven counter-reaction to the Trump administration\u2019s unilateral use of the sanctions.<br \/>\nThat such an expectation is not unrealistic was shown by the vocal opposition of nine major US business associations back in 2010 when one of the relevant US sanctions laws was introduced. While it is true that those businesses\u2019 opposition did not change the administration\u2019s course then, things could be different in 2019, if a risk of clear and imminent commercial\/financial disadvantage were linked to such opposition.<\/p>\n<p><strong>Fourth, a UN \u2018Economic Security Council\u2019.<\/strong><br \/>\nFalling squarely within the EU\u2019s objective of strengthening multilateralism, and building upon the aforementioned legal benchmarking mechanism for economic sanctions, it could be a tempting longer-term strategy to make the latter\u2019s verdicts internationally mandatory. They would be applied by a kind of United Nations (UN) \u2018Economic Security Council\u2019 (without veto powers!), thus curtailing nation states\u2019 arbitrary utilisation of punitive international economic coercion. In consequence, commercially, financially and technologically predominant states \u2013such as the United States today\u2013 could then not translate this capacity so easily into globally effective political dominating power any more.<\/p>\n<hr \/>\n<p>This article was originally published on <a href=\"https:\/\/progressivepost.eu\/debates\/beyond-instex-alternative-ideas-for-the-eu-dealing-with-illegal-extraterritorial-sanctions\" target=\"_blank\" rel=\"noopener noreferrer\">The Progressive Post<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Strategic Council Online: If the German-French-UK agreement about INSTEX has shown the willingness of EU member states to act against illegal extraterritorial sanctions of third states, the conflict over the US extraterritorial sanctions against Iran has also shown the need for a strategy of the European Union vis-\u00e0-vis that challenge. The member states and the European Commission share the widely accepted opinion that these sanctions contravene treaty law and international law and are illegal and should therefore not be observed. Moreover, the EU can plead the protection of its external security, which is more threatened by the US Iran sanctions than is the security of the US itself. EU member states have the same right as that invoked by U.S. State Secretary Mike Pompeo before the International Court of Justice on behalf of his country, namely \u201cthe sovereign right \u2026. to take a lawful action necessary to protect (their) security\u201d.<br \/>\nProfessor Christian Deubner &#8211; Member of the FEPS Scientific Council<\/p>\n","protected":false},"author":7,"featured_media":752,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[34],"tags":[33899,26198,33901,33903,33904],"class_list":["post-101836","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion","tag-christian-deubner-en","tag-eu-en","tag-extraterritorial-sanctions-en","tag-feps-en","tag-us-extraterritorial-sanctions-en"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What are the alternative Ideas for the EU Dealing with Illegal Extraterritorial Sanctions ? 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