Trade with Iran and you won't trade with US, Trump warns

Trade with Iran and you won't trade with US, Trump warns

‘Most biting ever’ sanctions imposed overnight as President Rouhani dismisses ‘psychological warfare’

Donald Trump has warned America’s trading partners that anyone who does business with Iran will not be doing business with the US, after his administration reimposed blanket sanctions.

The US president described the new sanctions, which hit Iran’s access to dollars, gold and precious metals, as “the most biting ever imposed”.

“In November they ratchet up to yet another level,” he tweeted. “Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less!”

Within hours of the sanctions taking effect, the German carmaker Daimler, which announced a joint venture in Iran last year, said it was halting its business activities in the country.

The punitive measures came into force in the early hours of Tuesday, and follow Trump’s decision in May to renege on the landmark 2015 deal to curtail Iran’s nuclear ambitions.

The sanctions also target a range of industries, including Iran’s carmaking sector, and will be followed by a set of additional and even more stringent measures by 4 November, including an embargo on the import of Iranian oil and sanctions on its banking sector.

Trump’s latest comments appear aimed at the EU, which is attempting to protect European businesses from the sanctions and has vowed to safeguard firms.

Companies have been instructed that they should not comply with demands from the White House for them to drop all business with Iran. Those who decide to pull out because of US sanctions will need to be granted authorisation from the European commission, without which they face the risk of being sued by EU member states.

“This morning the EU’s updated ‘blocking statute’ entered into force to mitigate the impact of the reimposed US sanctions on the interests of EU companies doing legitimate business in Iran,” a European commission spokesman said.

The UK Foreign Office minister Alastair Burt told the BBC that the “Americans have really not got this right”. He said it was a commercial decision for companies whether to stay in Iran, but that Britain believed the nuclear deal was important “not only to the region’s security but the world’s security”.

The Trump administration said on Monday it was not particularly concerned by the EU decision and that the US strategy was designed to apply maximum pressure on Tehran. Ultimately, the US administration wants a new deal that it says will address “the totality of the Iranian threat”.

Iranians have been anxious about the return of sanctions, which will compound the country’s economic woes. Its currency has been sent into a tailspin in recent months, fuelling street protests over economic grievances, a lack of social and political freedoms, and growing environmental challenges. Some analysts fear the country is on an economic and political precipice.

“There’s a sense of anguish in Iranian society – everyone is worried and waiting,” said Sadegh Zibakalam, a professor of politics at Tehran University.

“There is no hope that the situation will get better. People think that in the best-case scenario, it won’t get worse. Among the youth you see a huge tendency to leave the country,” he said.

On Monday night, Iran’s president, Hassan Rouhani, dismissed the new round of sanctions as “psychological warfare” designed to help Trump’s allies in the upcoming mid-term elections.

He reassured Iranians that his government was able to stave off pressure from the US, but said it was only possible if different factions within the country showed unity. “Our system is stable, we’re all standing together,” he said.

Iran’s foreign minister, Mohammad Javad Zarif, said on Monday that enemies were pulling out all the stops to target “Iran’s existence”, pledging that his country “will overcome this period of hardship”.

The head of the German Association of Chambers of Commerce said German businesses were already “in retreat” from Iran amid fears that legal banking channels between the countries were crumbling under US pressure.

“It’s important that the EU and the German government work to find funding channels,” said Martin Wansleben, who speaks for more than 3 million German entrepreneurs, in a statement. “As well as the financial damage there is also the threat of losing trust in Iran.”

Last week the US ambassador to Germany, Richard Grenell, persuaded the German government to stop a cash transfer of €300m (£268m) from Hamburg to Tehran via the Europäisch-Iranische Handelsbank.

German firms were among the first to take advantage of the opening up of the Iranian market following the Iran deal. Last year German exports to Iran jumped by 16% and were valued at nearly €3bn. But uncertainty over the future of the deal is reversing that trend, Wansleben said, with German exports to Iran down 4% in the first five months of 2018.

Rouhani’s administration is scrambling to mitigate the impact of sanctions and their effect on the plummeting value of the national currency by easing foreign exchange rules.

Internally, many prominent Iranians believe the pressure from the US is mainly intended to provoke regime change. The reformist ex-president Mohammad Khatami, one of the most popular politicians inside Iran but who is currently sidelined, was quoted by local media as saying that efforts to engineer regime change would prove futile so long as people believed in reform.

Khatami has set out 15 suggestions to Iranian leaders to bring the country out of the political deadlock. His suggestions include the release of all political prisoners, and establishment of a free atmosphere for political activities.

Some names have been changed to protect identities

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